MANILA, Philippines — The Philippine rural banking sector saw numerous regulatory actions in recent months, as two rural banks have consolidated their operations while one lender was ordered to close shop.
In a circular letter posted by the Bangko Sentral ng Pilipinas, the BSP said the Securities and Exchange Commission has approved the merger between Producers Savings Bank Corp. (PROSB) and Community Rural Bank of San Felipe (Zambales) Inc. (CSNFE).
The decision was finalized on Oct. 30 and consolidated the two entities, with PROSB as the surviving corporation. The Articles and Plan of Merger were executed on Jan. 30 and Feb. 15, respectively,
Under the agreement, all assets and liabilities of CSNFE will be absorbed by PROSB, bolstering its capacity to serve rural communities.
The merger is part of ongoing efforts to enhance the resilience of rural banks through consolidation, addressing challenges posed by a competitive and evolving financial landscape.
To strengthen the sector, the central bank has rolled out the Rural Bank Strengthening Program to enhance the operations, capacity, and competitiveness of the industry.
The regulator earlier raised the minimum capital requirements for rural banks to at least P50 million to enhance the operations, capacity and competitiveness of small banks.
Under the new capital structure, the minimum capitalization of rural banks will be P50 million for those with a head office and only up to five branches, P120 million for those with six to 10 branches, and P200 million for small banks with more than 10 branches.
While some banks consolidate, others face closure for failing to meet regulatory standards.
The Monetary Board, in a resolution dated Nov. 14, ordered the closure of the Community Rural Bank of Medellin (Cebu), Inc. This prohibits the rural bank from doing business in the Philippines, in line with Republic Act 7653 or the New Central Bank Act.
The Philippine Deposit Insurance Corp. has been appointed as receiver, tasked with overseeing the bank’s liquidation to protect depositors and uphold financial stability.
In a separate circular letter, the Monetary Board also revoked the registration of Uno Forex Inc. as a money changer and foreign exchange dealer on Aug. 8.
The decision stemmed from serious violations of anti-money laundering regulations under Republic Act 9160 and breaches of the BSP’s Manual of Regulations for Non-Bank Financial Institutions.