BANKING New guidelines to ease mergers of rural banks: PDIC

The Philippine Deposit Insurance Corp. (PDIC) sees more rural banks going into mergers and consolidation until 2019, under new guidelines.

Under the enhanced Consolidation Program for Rural Banks (CPRB), PDIC now accepts fewer than five participating rural banks provided that the resulting bank will have a capital adequacy ratio of at least 12 percent and an unimpaired capital of at least P100 million.

“The enhanced CPRB guidelines outlined more flexible terms to be able to create better opportunities for rural banks to further strengthen and enhance their viability,” said PDIC President Roberto Tan in a statement.

The CPRB was first launched in August 2015 but expired in August this year. The old program required five banks for consolidation, while the relaunched program does not, as long as the surviving bank meets requirements.

The relaunched CPRB will be available for the next two years until Oct. 26, 2019.

“The program underscores the continuous need to enhance the viability of rural banks, recognizing their crucial role in pro- viding financial services to local communities,” said PDIC.

“Through mergers and consolidations, rural banks can improve their financial capacity and generate better value for shareholders, strengthen management and governance, develop synergies and economies of scale, and expand their market reach,” it added.

Advice and support

The new CPRB has also expanded the list of potential financial advisers that proponent banks may engage for financial advisory services. PDIC said rural banks may now choose a financial adviser from audit firms listed in the Top 1,000 Corporations in the Philippines and investment houses that are not subsidiaries, affiliates or units of banks.

Since the launch of the first CPRB in August 2015, three bank groups involving 13 rural banks have availed themselves of the CPRB financial advisory support.

As of June 2017, there are 495 rural banks nationwide with 2,788 banking offices, with total deposits amounting to P161.9 billion, representing about 7.4 million accounts.