BSP sets ₱1-B capital for banks going digital

Banks making the shift to digital banking will have to put up at least ₱1 billion in capital under new requirements issued by the Bangko Sentral ng Pilipinas (BSP).

The requirement covers existing thrift banks, rural banks and cooperative banks whose operations are determined by the BSP to have evolved into a business model similar to that of a digital bank.

Under Circular No. 1240 issued Sept. 21, affected banks will have six months from receipt of the BSP notice to meet the minimum capital requirement.

The same ₱1-billion threshold will apply when an acquisition is intended to transform an existing thrift, rural or cooperative bank into a technology-driven banking business.

Banks making the transition must also comply with prudential standards governing digital banks.

The BSP may impose additional safeguards depending on the bank’s operations and risk profile, including enhanced supervisory reporting, restrictions on certain activities or new digital products, and stronger risk management and internal control systems.

The new rules cover banks whose business models or risk management systems are no longer aligned with their registered business models and risk profiles.

They also apply to banks using digital platforms that have recorded significant growth in their loan or deposit balances.

“The requirements aim to ensure that these banks can adequately manage risks arising from the nature, scale, complexity, and risk profile of their operations,” the BSP said.

At the same time, the BSP said it may grant additional digital bank licenses, including through the conversion of existing thrift, rural and cooperative banks, subject to its licensing framework.

A digital banking license would allow a converted bank to offer its services to a broader customer base, including clients outside its traditional geographic area of operation.

However, conversion will remain subject to regulatory review.

The BSP will assess an applicant’s readiness to operate digitally, governance and technology systems, business model and value proposition, as well as its available resources and capabilities.

There are currently seven licensed digital banks operating in the Philippines.