Locally incorporated foreign lenders are no longer required to sell at least 10 percent of their equity to the wider public as part of a menu of regulations to obtain a universal banking license in the Philippines.
This was learned on Monday from Herminio M. Famatigan Jr., president and CEO at Maybank Philippines, who told reporters the central bank mandate had been overtaken and rendered obsolete by more recent events.
“There is no more listing requirement for locally incorporated banks like us. Under new rules we clarified with the central bank, foreign banks are not anymore required to list,” he said.
The rule pertains to the mandatory sale of at least 10 percent of any lender’s equity to the public to acquire universal banking status, a privilege that allows lenders to engage in so-called allied undertakings as insurance or investment banking activities.
With the rule change imposed by the Bangko Sentral ng Pilipinas (BSP), foreign lenders seeking universal banking licenses have only until December 31, 2015, to observe the mandate.
According to Famatigan, the no-listing rule formed part of a wave of reforms the BSP introduced to liberalize the local banking system and permit greater participation from even foreign entities in the banking space.
“We sought clarification and the BSP came out categorically there is no more listing as a requirement for obtaining a unibank license,” he reiterated.
He said Maybank, for instance, has no compelling reason to acquire a unibank license if only to engage in investment banking activities because that function is already performed by ATR Kim Eng.
He also said locally incorporated lenders intending to acquire a unibank license must sell at least 10 percent of their equity by listing a portion of their shares at the Philippine Stock Exchange.
This means listing is an option rather than a mandatory exercise if one aims for a unibank license, Famatigan said.
Famatigan heads a lender 44 percent of whose portfolio has been committed to retail lending.
Maybank’s lending business is anchored on auto loans followed by housing or mortgage loans and finally by credit cards.
The goal, according to Famatigan, is to double the bank’s mortgage lending business by the end of the year given that the demand for housing units is huge.
Maybank typically grants housing loans in the P3 million-to-P10 million range, the type typically purchased by first-time homebuyers as distinguished by speculators who do not intend to occupy the units they purchase.
Jun Vallecera