The Philippines and Malaysia on Monday signed a bilateral agreement advancing the further integration of the banking systems of the two countries in the region.
In a statement released by the Bangko Sentral ng Pilipinas (BSP) on Monday, the central bank said it has agreed with Malaysia’s central bank, Bank Negara Malaysia (BNM), on the guidelines regarding the entry of qualified Asean banks (QABs) between the two countries.
“The guidelines are contained in the Heads of Agreement [HoA] signed by BSP Governor Amando M. Tetangco Jr. and BNM Governor Zeti Akhtar Aziz in Kuala Lumpur on March 14,” the BSP said.
The BSP said the agreement is in line with the strengthening of intraregional trade and investments under the Asean Banking Integration Framework (Abif).
The HoA is one of the first bilateral agreements to be signed under Abif.
This, according to the central bank, “marks a milestone within the broader Asean community.”
“While the HoA outlines market access and operational flexibilities that may be accorded to QABs from each jurisdiction into the other, these QABs shall operate under the prevailing laws and regulations in the Philippines and Malaysia, respectively,” the BSP said.
Tetangco said the agreement shows the central bank’s commitment to support regional financial integration.
Tetangco added that “…being among the first Asean economies to do so only further highlights the importance we place upon the Abif as a regional initiative, and as the future of our region.”
The QABs are strong and well-managed banks, headquartered in Asean and majority owned by Asean nationals. Banks that apply for QAB status must be endorsed by the home country regulator to and may be accepted by the host country regulator based on their bilateral agreement.
The Abif is designed to realize the vision of “One Asean Community,” using these QABs as the vehicle for maximizing the vast trade and investment potential of the region.