BANGKO Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. has advised Cebu banks to seize opportunities in the recent global and regional developments, among which include the ASEAN Banking Integration and the exit of Britain from the European Union.
In his official letter to the Cebu Bankers’ Club (CBC), Tetangco advised Cebu-based banks to take these opportunities as magnets to gain fresh foreign investments, benchmarking as well to Cebu’s opportunities for growth.
“These investments can be channeled to Cebu’s growth sectors especially in information technology and business process management, agriculture, tourism, as well as to financial inclusion initiatives,” Tetangco said.
The ASEAN banking integration framework (ABIF) permits banks meeting certain criteria to be classified as “Qualified ASEAN Banks” and provides these institutions with widened access to other ASEAN markets.
While the UK’s vote to exit the EU may spell financial volatility and bankers see effects on remittances.
According to the BSP governor, Cebu banks’ total assets grew by 20 percent from the end of 2014 to end of 2015, while total loans jumped by 18 percent, and total deposits by 16 percent.
Tetangco, however, reminded Cebu bankers to brace for the “down-side risks” brought about by the changing landscape, emphasizing the importance of risk culture and good governance.
Recently, the Philippines, in a new law, has allowed full foreign ownership of finance companies in the country, further liberalizing the country’s financial sector.
Republic Act 10881 or an act amending investment restrictions in specific laws governing adjustment, lending, and financial companies as well as investment houses cited in the foreign investment negative list lapsed into law without the signature of former president Benigno Aquino III last July 17.
This is one of the 29 bills passed under the 16th Congress that have lapsed into law without Aquino’s signature.
“Given the country’s development objectives and the need to increase investments to achieve these, amending the limitations on foreign investments or participation in certain activities listed in the foreign investment negative list (is) necessary,” the law states.
Before the law took effect, foreign investors were allowed up to 60 percent ownership in financing companies and investment houses, 69 percent for lending companies and 40 percent for adjustment companies.
The law, however, requires foreign-owned financing companies in Metro Manila and in first class cities to have a paid up capital of not less than P10 million. It requires P5 million for those in other classes of cities, and P2.5 million for those in municipalities.
It also allows the Securities and Exchange Commission (SEC) to adjust the minimum paid up capital levels as it deems warranted by its prudential oversight requirements. The Bangko Sentral ng Pilipinas (BSP) will continue to regulate lending and financing companies as well as investment houses.