BSP plans to restore perks to induce M&As

By Riza Lozada

Monetary offi­cials plan to re­store regulatory incentives for bank mergers and acqui­sitions (M&A) to further strengthen the banking in­dustry, BSP Deputy Gover­nor Nestor Espenilla Jr. said.

In his speech during the Chamber of Thrift Banks (CTB) general membership meeting, Espenilla said the Bangko Sentral ng Pilipinas (BSP) wants to encourage M&A among local finan­cial institutions because “we don’t want to see banks close.”

The BSP has introduced several programs to encour­age M&A and these include the Strengthening Program for Rural Banks (SPRB Plus), its enhanced version, SPRB Plus, and the Consolidation Program for Rural Banks (CPRB).

SPRB was implemented from 2010 until 2013, SPRB Plus ended on Dec. 31, 2014 after a one-year extension of its predecessor, while CRPB has a two-year implementa­tion period that will end on Aug. 25, 2017.

Banks that used the SPRB and its enhanced ver­sion were given financial as­sistance, which is a combina­tion of preferred shares and direct loan, and regulatory incentives, which include waiving of the special branch licensing fees equivalent to the amount of capital contri­bution of the strategic third party investors (STPIs).

Espenilla said they were considering restoring the regulatory incentives under SPRB Plus because “we’re still encouraging mergers and consolidations.”

“And that’s also a way of helping those that have problems. This is a possible way out,” he said.

Espenilla added the pro­gram had several success stories “and in fact there are some more in the pipeline.”

He said the BSP had ob­served that foreign players were mostly interested on acquiring thrift banks (TBs) while consolidations mostly involved rural banks (RBs) and commercial banks (KBs).

He said there was no one size, fits all rule for the players, thus, the menu ap­proach.

“It depends really on the requirements of the trans­action because it is transac­tion-driven,” he added.