The Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) approved-in-principle today the Strengthening Program for Rural Banks (SPRB), a milestone project jointly conceptualized by the BSP and the Philippine Deposit Insurance Corporation (PDIC) to encourage mergers, consolidations and acquisitions (MCAs) via the grant of financial assistance (FA) to eligible strategic third party investors (STPI) desiring to enter into MCA with eligible rural banks (RBs), mainly those that are capital deficient. The SPRB was also earlier approved by the PDIC Board. The SPRB will be available for a period of two years.
The SPRB recognizes the vital role of rural banks in providing financial services to the community, particularly to their specialized or niche markets. It intends to promote the merger, consolidation and acquisition between or among eligible STPIs and eligible RBs, to create a stronger rural banking system that can more effectively serve the countryside and better contribute in ensuring balanced and sustainable economic growth in our country.
Under the SPRB, a common fund of up to P5.0 Billion, to be shared equally between the BSP and the PDIC of up to P2.5 Billion each, will be established. The FA to eligible STPIs will be drawn from this fund. In conjunction with the FA, regulatory relief and other available incentives may likewise be extended to eligible STPIs. The FA to be granted will be a combination of: a) subscription to preferred shares (PS) to provide additional capital to reinforce the capital position of the STPIs; and b) direct loans.