Bank services improve in Philippines
MANILA: Accessibility of bank services further improved as the number of bank branches in the country continued to grow in the first half of the year, the Bangko Sentral Pilipinas reported.
Data from the BSP showed that there were 24,192 bank head offices and branches in the country as of end-June, up from 22,915 as of the same period last year.
The number of players in the local banking industry actually declined, but the central bank said this was more than offset by the move of existing banks to branch out.
The BSP, which is advocating mergers and acquisitions in the banking sector, said the decline in the number of industry players and the increase in the actual number of bank offices was a welcome development.
Regulators said the country has too many players in the banking sector and it would be wise to trim their number. The BSP said that in the case of the Philippines, the ideal situation was to further reduce the number of players and make existing banks bigger and more financially stable.
Data from the BSP showed that bank operators in the country fell slightly to 7,365 in June this year from 7,376 in the same period a year ago.
On the contrary, bank branches (excluding head offices) grew from 15,539 to 16,827, resulting in the rise in the total number of bank offices.
The BSP said there was still much room for consolidation in the country's banking sector, encouraging commercial banks to acquire some of the rural banks.
Unlike the commercial banking sector, the rural banking sector has witnessed clo- sures over the past two years. Regulators said two of the most common problems encountered by rural banks were the lack of capital and mismanagement.
The BSP believes the acquisition of rural banks and other smaller banks is a viable investment option for commercial banks.
In November, the central bank issued a circular tightening the requirements for putting up rural banks. Moreover, the BSP has put up a P5-billion fund that may be tapped by commercial banks that are acquiring rural banks.
For regulators, having troubled rural banks acquired by bigger banks is much better than allowing the former to close down. This is because closures are costly for the government, as these entail payment of deposit insurance coverage by the Philippine Deposit Insurance Corp. - PB News