Gullas urges national government to consider auction for digital bank licenses

CEBU, Philippines —  Cebu First District Representative Eduardo Gullas has urged the national government to consider an auction system for lucrative digital banking licenses.

Gullas, who is also the House Assistant Majority Leader, said this is to help raise new money badly needed to sustain the fight against the COVID-19 pandemic.

Gullas said an auction format will allocate the digital banking licenses to the private parties that value them the most and provide government additional non-tax income at the same time.

“There are still many parties out there that clearly want to venture into digital banking, so an auction of additional licenses might be viable,” said Gullas in a statement on Sunday.

Gullas made the statement shortly after the Bangko Sentral ng Pilipinas (BSP) decided to stop accepting applications for new digital bank licenses effective September 1, and to close the window for three years.

Gullas said citing the Department of Finance that BSP is a huge source of non-tax government revenue, remitting a total of P40.53 billion in cash dividends to the national treasury in 2020 alone.

“There’s no question that a digital banking license can be gainful, considering 51.2 million adult Filipinos, or 72 percent of our adult population, remain unbanked,” Gullas said.

“We expect more Filipinos to open digital banking accounts in light of the dramatic shift to online transactions induced by the pandemic,” Gullas added.

Under BSP guidelines, a digital bank “offers financial products and services that are processed end-to-end through a digital platform and/or electronic channels with no physical branch/sub-branch or branch-lite unit offering financial products and services.”

Parties that wish to operate a digital bank pay an application fee of only P250,000 plus a license fee of P12.5 million.

In contrast, parties applying for a brick-and-mortar universal bank pay an application fee of P500,000 and a license fee of P25 million.

Gullas cited that the BSP has so far issued digital banking licenses to five entities: UNObank, an affiliate of Singapore’s DigibankASIA Pte. Ltd.; TONIK Digital Bank Inc., a subsidiary of Singapore’s TONIK Financial Pte. Ltd.; Union Digital Bank, a firm controlled by Union Bank of the Philippines; Overseas Filipino Bank, a unit of the state-owned Land Bank of the Philippines; and GOtyme, a joint venture between the Gokongwei Group and Singapore’s TymeBank.

Besides the five, the BSP said it is currently processing the digital banking applications of two other unnamed aspirants.

PayMaya Philippines Inc. earlier said it intends to launch a digital bank after its parent, Voyager Innovations Inc., raised $167 million for the purpose.

Publicly listed AbaCore Capital Holdings Inc. also previously disclosed that its unit, Philstar Development Bank, is forming a joint venture with SquidPay Technology Inc. to go into digital banking.

Gullas further said that in the past, Philippine National Bank and Rizal Commercial Banking Corp. likewise bared separate plans to apply for a digital banking license. — KQD (FREEMAN)