BSP relaunches merger program for rural lenders

The government launched anew the rescue program for problematic rural lenders under updated terms that allow them to consolidate or merge under more flexible terms until 2019. 

The Philippine Deposit Insurance Corp. (PDIC) said the program will run until October 29, 2019, consistent with the goal of putting more resilient rural lenders and a less fragmented system by encouraging mergers and consolidation.

The participating entities are the PDIC, the Bangko Sentral ng Pilipinas (BSP) and the Land Bank of the Philippines.

The new Consolidated Program for Rural Banks (CPRB) seeks to boost and enhance rural bank viability and financial stability via a consolidation, including lowering the number of banks involved in a proposed merger.

Regulations now allow less than five banks to consolidate, provided the resulting bank has capital adequacy ratio of 12 percent and combined unimpaired capital of at least P100 million.

In the old CPRB that expired in August, merging lenders numbering four or fewer require a favorable endorsement from the Countryside Financial Institutions Enhancement Program Technical Committee.

Earlier, Deputy BSP Governor for the Supervision and Examination Sector, Chuchi Fonacier, said three proposed consolidations seeking approval have been filed at this point.

Fonacier said the applications are in different stages of completion, although one is in the “advanced” phase and in the process of gathering the documents for the formation of their new umbrella bank.

The BSP said approval of the proposed consolidation could come early in 2018. 

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Bianca Cuaresma graduated cum laude from the University of Santo Tomas (UST) with a degree in AB Journalism. She was with the BusinessMirror during her internship in 2012 where she was assigned at the Department of Foreign Affairs (DFA) beat. She continued to be of service to the paper after she graduated in 2013. In 2014, she was awarded as the Reporter of the Year by the paper for her coverage in the Bangko Sentral ng Pilipinas (BSP). She is a BusinessMirror reporter for 3 years now, and has covered general assignments and agencies related to banking and finance in the country.