The Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corporation (PDIC) have approved an enhanced version of the Strengthening Program for Rural Banks (SPRB) to encourage faster consolidation in the banking industry especially of small sub-scale banks. Labeled as the Strengthening Program for Rural Banks Plus (SPRB Plus), the program expands the original SPRB to include strong and well-managed thrift banks and commercial banks as among eligible Strategic Third Party Investor (STPI) or so-called “white knights” entitled to incentives when investing in problematic country-side based banks. This program is envisioned to further strengthen the rural banking system, boost confidence, and improve the delivery of financial services to rural communities.
The SPRB Plus is the second enhancement of the SPRB. Previously, SPRB Module II or the Strengthening Program for Cooperative Banks (SPCB) was launched in November 2011 to strengthen cooperative banks.
SPRB Plus offers a variety of financial and regulatory relief and incentives to improve the prospects for success of new banking partnerships. Financial assistance may be granted by PDIC to augment capital shortfalls and attract new investors. BSP has also put on the table an expanded package of regulatory relief and branching incentives for commercial, thrift and rural bank that step forward as white knights. In the original SPRB, only strong rural banks were allowed to act as white knights of other rural banks and with a more limited incentive package.
The SPRB Plus expects eligible STPIs not only to sustain and strengthen the financial condition of resulting banks but also to improve their quality of corporate governance and management. Both BSP and PDIC have received strong expressions of interest from a number of players in the industry to take part in the SPRB Plus indicating the strong buy-in of the banking sector to strengthen the system.
As of March 2012, PDIC has received 17 applications for the current SPRB involving 31 rural banks. Four of these applications have been approved by the PDIC Board and two are in process. For the SPCB, 24 out of 40 cooperative banks have expressed interest since its launching in November 2011. PDIC is now evaluating three SPCB applications involving 14 cooperative banks.