MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) has ordered another rural bank closed barely a week into 2016, as it encouraged small banks to consolidate and strengthen the country’s banking system.
The BSP’s Monetary Board issued Resolution No. 4 on Jan. 7, shutting down the Rural Bank of Villaviciosa Inc. in Abra, as provided under Republic Act 7653 or the New Central Bank Act.
The bank regulator prohibited the rural bank from doing business in the country, and ordered its assets and operation placed under the supervision of the state-run Philippine Deposit Insurance Corp. (PDIC).
The Abra rural bank was the first to be closed by the BSP this year.
Last year, 14 rural banks were closed and placed under the supervision of the PDIC.
BSP Governor Amando Tetangco Jr. earlier said the bank regulator would continue to offer incentives in order to encourage weaker banks to consolidate, merge, and beef up their capital base.
“In this manner, the banking system will be strengthened and bank closures will be minimized. On the issue of bank closures, it is important to consider this in the context of protecting the public and enhancing the service,” Tetangco said.
The BSP together with the PDIC and Land Bank of the Philippines have issued the guidelines for the consolidation of rural banks.
Data from the central bank showed the number of big and small banks operating in the country reached 635 in September last year, or lower by 17 than the 652 recorded in September 2014.