BSP: Some Local Banks Can Compete on Regional Scale

An official of the Bangko Sentral ng Pilipinas (BSP) said some of the country’s larger banks are prepared to set up operations in countries within the region once the Association of Southeast Asian Nations (Asean) Banking Integration Framework (ABIF) starts.

Reports said BSP Deputy Governor for the Supervision and Examination Sector Nestor Espenilla Jr. said that although the Bangko Sentral does not expect all local banks to be considered as qualified Asean banks (QAB), some can already penetrate the regional level considering the strength of their balance sheets.

Espenilla reportedly said “It will be unlikely that all of our banks will be QAB. But some of our banks may be ready. I won’t mention names, but you have to look at what have been the moves of the big banks? You notice the big banks are beginning to go beyond Philippine borders. So they are testing, they are testing their wings.”

The deputy governor also added the Asean formula for that singular yardstick for banks to be considered QABs has already been changed to reflect local conditions instead.

Business Mirror quoted Espenilla saying “The regional consensus on one yardstick] is the original discussion, but it is going nowhere so the consensus was made into just following the local rule. That means, if for example, one jurisdiction requires ‘x’ million dollars of capital, then that should be the capital of the bank. If in another jurisdiction the requirement is different, then they could have a different amount of capital, too.” Espenilla added the big lenders in the country are not required to be QABs.

He said the consensus cannot have a discriminatory rule. “What is important is it cannot have a discriminatory rule. Whatever the rule of the jurisdiction is, that will also follow for the QAB. That is the discipline of that process; reciprocity and level playing field,” he said, adding that for some banks who may want to be a QAB in our jurisdiction, they have to comply with whatever is the BSPs rule on licensing and capital, etc..

Espenilla earlier said that he sees ABIF happening about five or more years from now.

The implementation of ABIF is set to happen after the 2015 ASEAN Economic Community (AEC).

Source: Business Mirror