THE Philippines and Thailand signed yesterday a letter of intent (LOI) to begin bilateral discussions on banking integration.
Representing the Philippines was Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. while Veerathai Santiprabhob represented the Bank of Thailand, the central bank of the Thai government.
“The document marks the common desire to explore the possibility of a full bilateral agreement under the Asean Banking Integration Framework (ABIF),” said Tetangco in his speech during the Asean Finance Ministers’ and Central Bank Governors’ Meeting at the Shangri-La’s Mactan Resort and Spa in Lapu-Lapu City.
ABIF advances the underlying principles governing qualified Asean banks (QABs), which will be the vehicle for the achievement of regional banking integration. Under the framework, QABs must meet global banking standards as well as the prudential regulations of both host and home countries, said Tetangco.
On the same day, BSP and Bank Negara Malaysia (BNM), the central bank of the Malaysian government, signed the declaration of conclusion of negotiations (DCN) on the entry of QABs between the two countries.
Signing on behalf of Malaysia was BNM Governor Muhammad bin Ibrahim, while Tetangco signed for the Philippines.
“The benefits of a harmonized Asean financial market are often cited and having QABs allows us to reap these benefits in concrete terms. The significance of this DCN then is that we are essentially opening to the two jurisdictions the envisioned upside of stronger cross-border finance,” Tetangco pointed out.
According to BSP, the DCN between BSP and BNM will eventually be reflected in the respective schedule of commitment (SoC) of each country. The SoC reflects the final offers that each jurisdiction makes to a specific counterpart jurisdiction, as well as offers that are made available to all jurisdictions.
Under the ABIF timeline, each Asean-5 country is to conclude at least one bilateral agreement with another Asean-5 country by 2018. Asean-5 refers to Indonesia, Malaysia, Philippines, Singapore and Thailand. By 2020, ABIF targets the conclusion or near conclusion of at least one bilateral agreement for each of the 10 Asean members.