A PROGRAM aimed at encouraging mergers and consolidations in the banking industry, set to expire next week, has been extended by regulators for another year.
In a statement on Tuesday, the Bangko Sentral ng Pilipinas (BSP) said that it and the Philippine Deposit Insurance Corp. (PDIC) “have approved the extension of the Strengthening Program for Rural Banks (SPRB) Plus from Dec. 31, 2014 to Dec. 31, 2015...”
This, the BSP said, was “in response to the clamor of banking industry associations for the program’s extension to accord opportunity and encourage more mergers, consolidations and acquisition of eligible rural banks and thrift banks by strategic third-party investors.”
In August 2012, the BSP and the PDIC launched SPRB Plus, a P5-billion program that encourages healthy banks to come to the aid of their troubled peers.
SPRB Plus allows universal and commercial banks to take over ailing rural or thrift banks. It is an enhancement of the SPRB launched in 2010, which only allowed strong rural banks to take over weak ones.
The program was created by the PDIC and the BSP to prop up troubled small banks and at the same time pave the way for orderly exits.
Strategic third-party investors or white knights can apply for branching incentives and financial assistance. Special branch licensing fees can also be waived, based on the amount of capital infused.
According to the statement, seven SPRB plus applications involving 14 banks have been approved by the BSP and the PDIC as of Dec. 18.
In addition, four strategic third-party investors were granted branching incentives, without the financial assistance component from the PDIC, for their acquisition of eligible banks, the central bank said.
The BSP also noted that two other applications for acquisition are currently being processed.
“With this extension, we expect to receive more proposals. We urge the industry to avail of this limited opportunity. Considering the much stronger condition of the banking system today, this may be the last extension,” BSP Governor Amando M. Tetangco, Jr. was quoted as saying in the statement.
source: Businessworld
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