More rural bank mergers sought

FURTHER rural banking sector consolidation is being encouraged with the revival of a program that expired last August, a senior Bangko Sentral ng Pilipi

“It is a relaunching with some amendments,” central Deputy Governor Chuchi Fonacier told reporters, referring to the Consolidation Program for Rural Banks (CPRB) launched in August 2015 by the BSP, Philippine Deposit Insurance Corp. and Land Bank of the Phulippines.

The CBRP aimed to strengthen and enhance the viability of rural banks given their importance services to communities and in promoting financial inclusion and stability.

Availing rural banks were given assistance in terms of - cess improvement and capacity building. Equity was also available via LandBank and the Bangko Sentral provided incentives to participating banks.

“In the old CPRB, it’s fixed - laxed for as long as [the] capital adequacy ratio of 12 percent … and P100-million capital could be met,” Fonacier said.

Original rules mandated that

the consolidation or merger of any group of five proponent banks — the head offices or majority of branches of which should preferably be located in the same region or area — should result in a surviving entity with rural bank capital adequacy ratio ( RBCAR) of 12 percent and a combined unimpaired capital of at least P100 million.

Prior to the CBRP’s expiration, the regulations were revised to allow a smaller group as long as the RBCAR and capital requirements are met and “provided the Countryside Financial Institutions Enhancement Program Technical Committee will favorably endorse the said application, taking into consideration the objectives of the program.”

Earlier this year, PDIC President Roberto Tan was quoted as saying that two consolidation transactions could be approved before the end of this year.

The two groups, which comprise nine banks, were part of four that participated in the CPRB, Tan said without providing more details.