House passes bill to allow foreign ownership of banks-A A +A
Friday, May 16, 2014
MANILA -- The House of Representatives recently passed on third and final reading a bill that will allow foreign ownership of banks in the country.
Batangas Representative Nelson Collantes said that House Bill 3984 seeks to amends Republic Act 7721 or An Act Liberalizing the Entry and Scope of the operations of Foreign Banks in the Philippines and for other purposes.
The bill said that the Monetary Board may authorize foreign bank to operate in the Philippine banking system through any one of the following modes of entry: by acquiring, purchasing or owning up to 100 percent of the voting stock of an existing bank; by investing in up to 100 percent (from 60 percent) of the voting stock of a new banking subsidiary incorporated under the laws of the Philippines; and by establishing branches with full banking authority.
The measure added that "foreign bank branch may open up to five sub-branches as may be approved by the Monetary Board."
The amendments also include the removal of the restrictions allowing only those among the top 150 foreign banks to enter the country and capital requirements of the P210 million permanently assigned capital instead requiring foreign banks to establish branches of an amount that not less than the minimum capital required for domestic banks of the same category."
The bill, however, said that "the foreign bank applicant must be widely-owned and publicly-listed, unless the foreign bank applicant is owned- and -controlled by the government of its country of origin."
Collantes said that on participation in foreclosure proceedings, the bill provides that "foreign banks which are authorized to do banking business in the Philippines through any of the [mentioned] modes of entry shall be allowed to bid and take part in foreclosure sales of real property mortgaged to them, as well as to avail of enforcement and other proceedings and accordingly take possession of the mortgaged property, for a period not exceeding five year from actual possession: provided that, in no event shall title to the property be transferred to such foreign bank."
"In case said bank is the winning bidder, it shall during the said five year period, transfer its right to a qualified Philippine national, without prejudice to a borrower's right under applicable laws," Collantes said
It also said that "should the bank fail to transfer such property within five-year period, it shall be penalized one half of one percent per annum of the price at which property was foreclosed until it is able to transfer the property to a qualified Philippine national."
The lawmaker explained that the opening of the banking sector to more established foreign banks was spurred by the economic benefits foreseen with the liberalized economy brought about by the General Agreement on Trade and Tariff.
"The Philippines benefited from this move by fostering competition in the banking industry which, in turn, raised the efficiency levels of banks through adoption of new technology and enhancement of human resource skills, reduced operating costs, instilled corporate governance structure reforms, encouraged more transparency and further developed the supervisory and regulatory framework, Collantes stressed.
He said that the economic and financial integration of the Asean region is expected to bring across the region opportunities for growth and expansion particularly in the banking industry. (Sunnex)