Fewer Philippine banks in 2015

Fewer Philippine banks in 2015
The central bank's order to close 14 rural banks in 2015 leads to the continuing decline of established banks in the country

MANILA, Philippines – The number of banks operating in the Philippines continued to decline in 2015 with the exit of weak players, particularly rural banks.

The latest data of the Bangko Sentral ng Pilipinas (BSP) released on Monday, March 28, showed the number of big and small banks operating in the country reached 632 in 2015, less than 2014’s 648.

“This indicates the continued consolidation of banks as well as the exit of weaker players in the banking system,” the BSP said.

The number of big banks or universal and commercial banks went up to 40 in 2015, from 36 in 2014 with the entry of new foreign banks. (READ: Bank of Tokyo Mitsubishi acquires 20% stake in Security Bank)

These consisted of 21 private domestic banks, 12 foreign bank branches, 3 government banks, and 6 foreign bank subsidiaries.

Easing foreign restrictions helped

President Benigno Aquino III signed Republic Act No. 10641 in July last year, amending the foreign banks law by removing the limit of foreign banks in the country earlier set at only 10.

Foreign banks under the new law have also been allowed to own as much as 100% of any local bank, removing the previous cap of 60%.

So far, the BSP has also allowed 6 more foreign banks to set up shop in the Philippines. 

These include Sumitomo Mitsui of Japan, Cathay United Bank of Taiwan, the Industrial Bank of Korea, Seoul-based Shinhan Bank, Yuanta Bank of Taiwan, and United Overseas Bank Limited (UOB) of Singapore.

Dragged by closure order

The BSP said the number of thrift banks inched up to 69 last year from 68 in 2014, while the number of rural and cooperative banks decreased to 524 from 543.

The BSP’s Monetary Board ordered the closure of 14 rural banks that were placed under the supervision of the state-run Philippine Deposit Insurance Corporation (PDIC) in 2015.

These include the Community Bank Incorporated (Rural Bank of San Alfonso), Community Rural Bank of Magsaysay (Davao del Sur) Incorporated, Rural Bank of Labrador (Pangasinan) Incorporated, Rural Bank of Magsingal (Ilocos Sur) Incorporated, Rural Bank of Pres. Roxas (North Cotabato) Incorporated, Rural Bank of Sta. Magdalena (Sorsogon) Incorporated, Siargao Bank (A Rural Bank) Incorporated, Surigaonon Rural Banking Corporation, Farmer’s Rural Bank Incorporated in Batangas, Xavier-Punla Rural Bank Incorporated, Rural Bank of Buguias, Rural Bank of Calasiao, the Rural Bank of Caba (La Union), and the Peñafrancia Rural Bank of Calabanga (Camarines Sur) Incorporated.

The BSP, together with PDIC and Land Bank of the Philippines, has issued the guidelines for the Consolidated Program for Rural Banks (CPRB) to further encourage mergers and consolidations among rural banks.

Meanwhile, the BSP reported the number of branches and other offices of Philippine banks went up by 3.8% to 10,756 last year, from 10,361 in 2014.

“The number of banks declined but operating network continued to expand,” it added.

The branches of big banks increased by 3.9% to 6,060 from 5,833 while the branches of thrift banks went up by 8.6% to 2,086 from 1,920.

Despite the exit of weak players, the number of branches of rural and cooperative banks increased by two to 2,610 from 2,608.

Total resources of the country’s banking sector strengthened further last year amid external shocks brought about by the normalization of the near-zero interest rates in the US as well as the economic slowdown in China.

Data showed total resources of the Philippine financial system increased by 7.4% to P12.4 trillion last year from P11.5 trillion in 2014. 

Universal and commercial banks accounted for 90% of the total banks’ assets last year. – Rappler.com

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