PDIC, BSP allocate P5B to support rural banks

CEBU, Philippines - The Philippine Deposit Insurance Corporation (PDIC) and the Bangko Sentral ng Pilipinas (BSP) have allocated a P5 billion fund to help rural banks strengthen their capitalization and encourage banks to merge and consolidate their resources.

This is part of the government’s bid to strengthen the banking industry in the country, help capitalized banks that needs further capitalization in order to provide services to majority of Filipinos.

PDIC president Jose Nograles announced that PDIC in partnership with BSP is launching the Investor-Investee Helpdesk that will make easier for investors looking for banks to acquire, merge, consolidate with, or invest in, to identify investees or banks seeking interested acquirers, and vice-versa.

The Investor-Investee Helpdesk will complement the Strengthening Program for Rural Banks (SPRB), a joint initiative of the PDIC and BSP.

The SPRB will give financial incentives and assistances through the P5 billion pooled fund, to investors who are willing to acquire capital deficient banks, PDIC will set up SPRB lane where applications will be filed.

Evaluation of applications will be jointly undertaken by the PDIC and BSP. The SPRB will run for two years and is expected to be implemented shortly.

“This is part of PDIC’s thrust to promote mergers, consolidation, and acquisition in the local banking industry to help develop a sound and stable system and maintain financial stability in the country,” Nograles said in a press conference.

Nograles said that through mergers, consolidations and acquisitions, banks could achieve higher lending capacities and economies of scale and improve quality of their services.

The Investor-Investee Helpdesk is provided free of charge. It will help banks identify prospective investors and investees based on information on investor’s preferences and investee’s attributes and considering pre-defined criteria such as bank type, asset size, number of branches, and location of head office.

This will particularly benefit banks with capital deficiency and those that are looking for potential acquisitions.

The implementing guidelines were issued during the launch and will be disseminated to member banks by way of a Bulletin.

Under the guidelines, all interested member banks may enroll in the facility to be included in the Helpdesk database.

Banks are required to submit written request for PDIC’s help in identifying prospective investor/investee, to be accompanied by their latest audited financial statements, duly accomplished application/registration from containing relevant background information, and board resolutions and/or certification of the board secretary declaring intent to locate prospective investor/investee.

Registered members shall retail their active status in the Helpdesk database for a period of six months which may be extended upon written request to the PDIC.

“We are hopeful that with this facility, we will be able to contribute to the strengthening of the banking system,” Nograles said.— Ehda M. Dagooc