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BSP Lists Possible Regulatory Incentives for Bank Mergers and Consolidations


The Bangko Sentral ng Pilipinas (BSP) recently issued a Memorandum to all Banks and Quasi-Banks (QBs) listing the possible regulatory incentives that may be requested by merging/consolidating banks and QBs.  The list is based on regulatory incentives that have been provided in past cases.

The granting of regulatory incentives for consolidating banks and QBs is in line with the BSP’s broader thrust of strengthening the players in the financial system and of promoting financial stability. 

Merging or consolidating institutions generally benefit from their combined financial and technical capabilities, bringing about greater resilience against market fluctuations.  The synergy resulting from business combinations also augments the ability of constituent banks/QBs to cope with growing competition.

The BSP Memorandum provides the following list of sample incentives as reference but banks requesting for incentives must ensure that these are aligned with their needs for purposes of a merger or consolidation:

  1. Revaluation of premises, improvements and equipment;
  2. Staggered booking of unbooked valuation reserves over a maximum period of 5 years;
  3. Temporary relief from compliance with capital adequacy ratio (CAR) and/or maximum period for amortization of goodwill;
  4. Conversion/upgrading of head offices, branches, and other offices;
  5. Condonation of liquidated damages/penalties on loan arrearages to the BSP;
  6. Relocation of branches/offices within 1 year in cases of duplication of branches in certain areas;
  7. Installment payment of outstanding penalties in legal reserve deficiencies and interest on overdrafts with the BSP over a 1-year period;
  8. Reasonable period to comply with real estate loan limits;
  9. Restructuring past due obligations with BSP over a 10-year period;
  10. Concurrent officership between a merged or consolidated bank or financial institution  (FI)  and another bank/FI, and concurrent directorship between banks; and
  11. Continued effectivity of right or privilege under a rehabilitation program or any special authority granted by the MB.

All requests for specific incentives are evaluated by the BSP on a case-by-case basis and are approved on the basis of alignment with BSP objectives.


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