Enter the foreign banks

Published by the Visayan Daily Star Publications, Inc.

NINFA R. LEONARDIA Editor-in-Chief & President

CARLA P. GOMEZ Editor CHERYL CRUZ Desk Editor PATRICK PANGILINAN Busines Editor NIDA A. BUENAFE Sports Editor RENE GENOVE Bureau Chief, Dumaguete MAJA P. DELY Advertising Coordinator

CARLOS ANTONIO L. LEONARDIA Administrative Officer

A bill has been passed in Congress that will allow the entry of foreign companies into the Philippine Banking System and is supposed to improve trade and create more employment in the country.

As the approved measure states, the Monetary Board now has the authority to enable foreign banks to come in and join our banking sector. Through this, they can acquire, purchase, or even own up to 100 percent in an existing bank or invest as much in a new one.

This is quite a change from the existing law that allows foreign banks to invest or own only 60 percent in financing institutions in the country. The bill, however, also specifies that only reputable, established and financially sound institutions may be allowed to come in.

In implementation of this new law, however, the Monetary Board is required to ensure that the control of at least 60 percent of the entire banking system continues to be held by banks, the majority of which is owned by Filipino citizens.

There are several other requirements that foreign institutions have to comply with and which the Monetary Board is bound to monitor and supervise, intended to protect the national interest. There are, of course, penalties also prescribed to be imposed on those who fail to comply or violate any of the requirements or regulations involving the entry and operations of such banks.

The development, meanwhile, is believed to be welcomed by the country’s smaller banks that have been encountering difficulties lately, because this could be an opportunity for them to strengthen their operations, or to give up their units by selling stocks or equity to interested foreign banks.*