THE Bangko Sentral ng Pilipinas (BSP) announced on Monday that it has revised its guidelines to streamline the licensing requirements for banks applying for special authorities.
The new guidelines, said to be in line with the Central Bank’s efforts to apply a risk-based approach to their processes and promote the ease of doing business, classify licenses for special authorities under three categories.
“The requirements set out for each category are proportionate to the magnitude of risks that may arise from engaging in a specific activity and take into account the capability of the BSFI to manage the risks,” the Central Bank said in a statement.
According to the BSP, the activities of the Type A license such as the establishment and sale of branches/ branch-lite units (BLU), equity investment in allied and non-allied undertaking, trust and other fiduciary business, among others, are likely to expose the bank to increased risks.
As such, the application for a Type A license requires compliance with three basic prudential criteria and prior BSP approval.
These prudential criteria are: a CAMELS rating of at least “3,” governance and independent control functions that meet what is considered appropriate for the BSFI, and compliance with BSP directives.
Meanwhile, the Type B license does not require compliance with the prudential criteria but shall be subject to BSP approval.
Examples of activities with Type B license are conversion to a lower bank category and amendment of articles of incorporation/by-laws.
“These activities are related to the primary banking license granted; hence, the application will be evaluated regardless of the risk profile of the bank,” the BSP said.
Applying for Type C licenses, on the other hand, no longer requires prior Bangko Sentral approval since these are largely part of business decisions made to manage operations.
“The bank only needs to notify the BSP that it intends to engage in Type C activities, which include, among others, relocation of approved but unopened branches/BLU, permanent closure and surrender of branch/BLU license and servicing of deposits outside bank premises,” the BSP said.
The BSP also decided to lift special licensing fees for applications to establish branches in cities previously considered as restricted areas.
“The approved guidelines cover the first set of special authorities with streamlined licensing requirements. The Bangko Sentral shall continue to align the requirements for other activities requiring special authorities with the new framework to promote efficiency and reduce business costs,” the BSP said.