September 02, 2014

BSP issues new guidelines on branch relocation

The Philippine Star today reported that the central bank (BSP) would require banks who want to relocate or open offices or branches in Metro Manila to pay special licensing fees of up to P20m. Based on BSP Circular No. 847, banks planning to relocate or open branches in Makati, Mandaluyong, Manila, Paranaque, Pasay, Pasig, Quezon and San Juan would have to pay a special licensing fee of P20m/ branch for universal and commercial banks and P15m/office for thrift banks. This follows the BSP’s move to lift branching restrictions in key cities in Metro Manila.

Our take: BSP’s Circular No. 847 facilitates the relocation of existing branches or opening of new branches into key cities in Metro Manila which were previously restricted for branching. It enables local banks to open as many branches as they want, provided that they are willing to pay the special licensing fees which we believe are not that significant.

This may facilitate stronger banking competition in urban locations and allow aggressive banks to establish their presence within these areas. Moreover, we view these moves as a headstart given by the BSP to allow local banks to further strengthen their presence in Metro Manila, ahead of the possible entry of bigger foreign banks and the ASEAN integration. – WealthSec