MANILA, Philippines - Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. wants to widen the minimum public float for universal banks to ensure increased transparency and accountability.
Under the listing rules of the Philippine Stock Exchange, a company that goes public must sell an initial 10 percent of its initial outstanding capital.
“I personally think that the 10 percent minimum public ownership requirement is on the low side. Public ownership of a financial institution must be expanded. This should help improve their operations,” Tetangco said.
When asked by how much the minimum public float requirement should be increased, Tetangco said: “It is something that we need to study.”
A check on the PSE website showed that UnionBank had the lowest public float among the listed banks at 19 percent, which is almost double the exchange’s 10 percent requirement. Security Bank had the largest public float at 73 percent.
Public float or free float represents the shares of a corporation that are in the hands of public investors as opposed to locked-in stock held by company officers, controlling-interest investors, or government.
Universal banks are mandated by law to go public three years after acquiring their universal banking licenses.
Being publicly-listed will make bank operations more transparent to the public as companies listed on the local bourse are required to submit regular disclosures which include financial statements and other transactions that have a material impact on its shareholders.
Universal banks represent the largest single group, resource-wise, of financial institutions in the country, offering the widest variety of banking services among financial institutions.
In addition to the function of an ordinary commercial bank, universal banks are also authorized to engage in underwriting and other functions of investment houses, and to invest in equities of non-allied undertakings.
As of the end of Feb. 2014, there were 36 universal and commercial banks, 14 of which are foreign lenders.
To qualify as a universal bank, a lender must have a minimum capital of P4.95 billion. The BSP, however, recently approved an increase in local banks’ minimum capitalization to as much as P20 billion for universal banks with more than 100 branches.