Phl most improved in Asean in bank liberalization – Fitch

The Philippines has taken the biggest steps toward banking sector liberalization among Southeast Asian countries, international credit rating agency Fitch Ratings said yesterday.

“The Philippines has taken the biggest steps toward banking sector liberalization, removing the cap on foreign ownership of banks in 2014,” Fitch said in a report on the status of banking integration in the Association of Southeast Asian Nations (ASEAN).

Fitch said foreign banks since then have started to enter the Philippine market, a move which is seen to boost the economic growth of the country.

“The larger Philippine banks have sufficient access to capital and have little immediate need to sell major stakes to foreign investors, but foreign banks have established their own subsidiaries and branches in the country,” Fitch said.

“Entry by foreign banks is likely to support investment and economic growth

in the near term by helping to fund much? needed infrastructure investment,” it said.

Former president Benigno Aquino III signed Republic Act 10641 in July 2014 amending the foreign banks law by removing the limit of foreign banks in the country.

Nine foreign banks have already entered the Philippines.

These are the First Commercial Bank of Taiwan, Sumitomo Mitsui of Japan, Shinhan Bank of South Korea, Cathay United Bank of Taiwan, the Industrial Bank of Korea, Yuanta Bank of Taiwan, the United Overseas Bank Ltd. of Singapore, Seoulbased Woori Bank and Hua Nan Commercial Bank Ltd. of Taiwan.

Six more foreign banks have expressed interest to set up shop in the country.

According to Fitch, fewer barriers on cross border bank ownership provides a wider pool of investors, especially for undercapitalized banking systems.

“Foreign capital could also support growth in large markets with low, but rising banking penetration, such as the Philippines and Indonesia,” Fitch said.