BSP wants foreign bank branch capital in pesos

By Riza Lozada

The Bangko Sentral ng Pili­pinas (BSP) recently revised foreign exchange regulations amid the entry of more foreign banks in the country includ­ing a requirement that foreign currency capital of a foreign bank’s branch be converted to pesos at the prevailing ex­change rate at the time of the remittance.

It also required the use of the Manual of Regulations for Banks (MORB) as the general reference for the domestic op­erations of foreign banks.

“The said amendments to the rules on the operations of foreign banks seek to align foreign exchange policies with the latest changes, particular­ly on foreign bank entry, as well as in the required cap­italization of foreign banks in the Philippines, especially the branches,” BSP Governor Amando Tetangco Jr. said.

Section 4 (ii) of Repub­lic Act (RA) 10641, otherwise known as An Act Allowing the Full Entry of Foreign Banks in the Philippines stated that “foreign banks that shall be au­thorized to establish branches pursuant to Section 2(iii) of this Act shall permanently as­sign capital of an amount not less than the minimum capital required for domestic banks of the same category. The per­manently assigned capital shall be inwardly remitted and con­verted into Philippine curren­cy.”

The BSP’s policy-making Monetary Board (MB) has ap­proved the operations of nine foreign banks in the coun­try after the enactment of RA 10641, signed in 2014, that relaxed rules to allow foreign banks to set up branches in the country.

The law was approved as part of the country’s contri­bution to the economic in­tegration of the Association of Southeast Asian Nations (ASEAN).

Foreign banks with lo­cal branches include Japa­nese lender Sumitomo Mitsui Banking Corp., South Korean Shinhan Bank, and Taiwan’s Cathay United Bank and First Commercial Bank and gov­ernment-owned Industrial Bank of Korea.