The Bangko Sentral ng Pilipinas (BSP) looks to hosting more foreign banks in the country this year. These are those lenders in search of places with a high growth potential.
“…The Philippine banking community is going to be even more dynamic with the entry of six banks from these jurisdictions…the entry of these six banks to the Philippines could catalyze further innovations in our banking sector. We expect more to come in,” central bank Governor Amando M. Tetangco Jr. said at the annual bankers’ reception the BSP hosted on Tuesday night.
Tetangco referred to six banks from Japan, South Korea, Taiwan and Singapore, whose applications to operate in the Philippines were approved following the signing into law further liberalizing the country’s banking sector.
At the sidelines of the annual event, BSP Deputy Governor for the Supervision and Examination Sector Nestor A. Espenilla Jr. said apart from the six foreign banks, there remains one more application for approval by the BSP.
This pertained to the application of a lender from within Asia that Espenilla refused to disclose.
Espenilla told reporters it would make sense if more foreign banks express their interest in putting up branches or invest in the local financial sector as the Philippines continues to grow far more than others in the region this year.
“There are very few growth areas in Asia, so it is quite logical that foreign banks are looking at the Philippines because their home markets are stagnant. So if they are looking for growth, the Philippines is one because we have good prospects,” the deputy governor said.
The International Monetary Fund (IMF) recently said the Philippines growth outlook remains one of the strongest in the region.
“Despite the weaker global economic outlook, the Philippines growth forecast for 2016 was only marginally lowered from 6.3 percent to 6.2 percent to reflect the more challenging external environment,” the IMF said. The country’s forecast growth is significantly higher than forecast growth averaging 4.8 percent this year for the five original members of the Asean.
Only recently, Security Bank Corp. signed a landmark partnership deal with the Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU), Japan’s largest bank, allowing the foreign financial giant to contribute P37 billion in fresh capital for the local lender with its purchase of 20-percent newly issued shares.
The transaction is touted as the largest equity investment in a Philippine financial institution by a foreign investor once completed in the second quarter.
Espenilla also said that as foreign banks come to the Philippines, there is also the possibility that Philippine banks start thinking about making their presence felt in other countries in the region.
“I think you should also watch the growing number of Philippine companies that are expanding overseas. So the next logical thing—because Japanese banks follow Japanese companies—so perhaps there are also some Filipino banks [thinking about] operating regionally,” he said.
“I am not saying now, but I think that is in the horizon, especially with the Asean Banking Integration Framework which seeks to establish the free flow of financial services in the region,” he added.