February 19, 2014

BSP expects entry of more foreign banks

The Philippine Star today reported that the BSP will come up with proposed amendments to liberalize the entry of foreign banks into the country. This will prepare the country for the ASEAN integration by 2015.

The current law, which was approved in 1994, limits the number of foreign banks allowed to enter the country to 10. The article also quoted the regulator as saying that the form of liberalization – whether increasing the limit or completely removing it – will still be assessed.

Our Take: The move to liberalize the entry of foreign banks will potentially spur inter-regional competition and will pave the way for the entry of bigger banks from the Southeast Asian region into the domestic market. We believe that local banks can maintain their key edge given their strong relationships with domestic clients and their enhanced balance sheets.

However, we believe that there is still room to enhance their product offerings to stay competitive. They should also take advantage of the lifting of the branching restrictions in Metro Manila by July this year to beef up their networks in addition to ongoing expansion in other growth areas across the country to widen their market base. – WealthSec