BSP processing consolidation of 15 small banks

MANILA, Philippines - Fifteen small banks are set to merge and consolidate as of end-June this year.

Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said these applications were approved by the Philippine Deposit Insurance Corp. and are currently being processed by the central bank.

These deals were made under the BSP and PDIC’s Strengthening Program for Rural Banks Plus, to encourage mergers and acquisitions among rural and thrift banks, and also to weed out problematic banks.

The program dangles incentives to investors for them to rescue ailing banks to minimize bank closures and by its name, strengthen the small lenders in the industry.

 “In addition, there are five other applications for consolidation and acquisition in the pipeline,” Tetangco said.

The SPRB Plus, which will be in place until the end of the year, provides white knights or strategic third party investors financial assistance, regulatory reliefs, and branching and other incentives once they rescue problematic banks.

Last year, 18 banks were ordered closed and placed under the receivership of the PDIC.

Central bank data showed the number of head offices last year slid to 673, although bank branches continued to expand to 9,262. This was a result of continued consolidations and the exit of weaker lenders, the BSP said.

“The Philippine rural banking sector continues to grow and expand... even as natural calamities devastated wide areas in the Visayas (late last year),” Tetangco said.

The rural banking sector has increased its resources by 8.8 percent to P209.4 billion in the first quarter from year-ago levels, Tetangco said. Total loans rose by 6.5 percent to P138 billion in end-March, while deposits climbed 10.6 percent to P145 billion.

But the rural banking sector face stiffer competition from bigger banks as the latter increase their presence in the province.