Guidelines on the Establishment of Banks
Classification of Banks
Banks in the Philippines may be classified as
(1) Universal banks, (2) Commercial banks, (3) Thrift banks, (4) Rural banks, (5) Cooperative banks, (6) Islamic banks, and (7) Digital banks. Their respective powers and scope of authorities, as well as the prerequisites for the grant of authorities are provided under Section 101 of the Manual of Regulations of Banks (MORB) as amended by Bangko Sentral ng Pilipinas (BSP) Circular No. 1134 dated 28 December 2021.
Establishment of Banks
Consistent with relevant laws, rules and regulations, the licensing framework of the Bangko Sentral encompasses the assessment of the transparency of ownership and control structure; suitability of shareholders, including the ultimate beneficial owners (UBOs); fitness and propriety of directors and senior management; and adequacy of capital, including sources of initial capital and ability of shareholders to provide additional financial support, where needed. The assessment shall likewise cover the strategic and operating plan, including an appropriate system of corporate governance, risk management and internal controls, projected financial condition, consumer assistance mechanism, and compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.
Full Entry of Foreign Banks
Foreign banks intending to operate in the Philippines may apply for any of the classification of banking license mentioned above and enter the banking system through any one of the following modes as provided under Republic Act (R.A.) No. 10641 (An Act Allowing the Full Entry of Foreign Banks in the Philippines):
Mode 1: By acquiring, purchasing or owning up to 100 percent of the voting stock of an existing domestic bank;
Mode 2: By investing in up to 100 percent of the voting stock of a new banking subsidiary incorporated in the Philippines; or
Mode 3: By establishing branches with full banking authority.
Foreign bank applicants must comply with the following selection criteria pursuant to R.A. No. 10641:
a. Geographic representation and complementation;
b. Strategic trade and investment relationships between the Philippines and the country of incorporation of the foreign bank;
c. Demonstrated capacity, global reputation for financial innovations and stability in a competitive environment of the applicant bank;
d. Reciprocity rights enjoyed by Philippine banks in the applicant’s home country;
e. Willingness to fully share their banking technology;
f. Established, reputable and financial soundness of the applicant bank; and
g. Widely-owned and publicly-listed, unless the applicant bank is owned and controlled by the government of its country of origin.
The determination as to whether a foreign bank applicant is widely-owned and publicly listed, established, reputable, and financially sound shall be based on the information derived from submitted documents as required under Appendix 2 of the MORB. Further, if the foreign bank is owned/controlled by a holding company, this requirement may apply to the holding company.
The BSP also take into account the feedback provided by the foreign bank’s supervisory authority on the (i) proposed investment of the foreign bank concerned in the Philippines, (ii) relevant supervisory information, and (iii) compliance of the applicant foreign bank with the capital requirements in its country of origin.
Relevant Regulations and Documentary Requirements
The application for authority to establish a bank shall be submitted to the
Supervisory Policy and Research Department (SPRD) and
Islamic Banking Supervision Group (IBSG), in the case of Islamic Banks. The prospective applicant bank may engage the Bangko Sentral in discussion before submitting the formal application. It is the responsibility of the organizers of the proposed bank to ensure completeness of the documentary requirements and compliance of the same in form and substance prior to submission to the BSP.
In establishing a new banking organization, the documentary requirements to be submitted to the Bangko Sentral are listed in Appendix 33 of the MORB. In the case of foreign bank applicants, the documentary requirements to be submitted during Stage 1 of the application process are enumerated in Appendix 2 of the MORB. Following are the relevant regulations, guidelines, forms, sections/appendices in the
MORB for the establishment of banks:
Basic Guidelines
Minimum Capitalization
| Sec. 121 | Minimum Required Capital
(as amended by
1142 dated 29 March 2022,
1151 dated 24 August 2022,
1154 dated 14 September 2022 and
1164 dated 5 January 2023) |
Ownership Structure and Stockholdings Limits
|
Sec. 122 | Shares of Stocks of Banks |
Fitness and Propriety of the Proposed Directors/Officers
|
Sec. 132 | Board of Directors
(as amended by Cir. Nos.
1129 dated 12 November 2021 and
1154 dated 14 September 2022) |
| Sec. 134 |
Officers
(as amended by Cir. Nos.
1129 dated 12 November 2021 and
1154 dated 14 September 2022) |
| Sec. 137 | Confirmation of the Election/Appointment of Directors/Officers; Bio-Data of Directors and Officers; Interlocking Directorships and/or Officerships
(as amended by Cir. Nos.
1129 dated 12 November 2021,
1136 dated 11 February 2022 and
1154 dated 14 September 2022) |
|
Sec. 138 | Disqualification and Watchlisting of Directors and Officers |
Documentary Requirements
|
App. 2 | Application Requirements for the Entry of Foreign Banks (App. to Sec. 103)
(as amended by Cir. No.
1154 dated 14 September 2022) |
| App. 33 | Basic Guidelines in Establishing Banks (App. to Sec. 102)
(as amended by Cir. No.
1154 dated 14 September 2022) |
| App. 34 | Rules and regulations for cooperative Banks (App. to Sec. 102) |
| App. 101 | Required Certifications and Supporting Documents for the Confirmation of the Election/Appointment of Directors/Officers of BSFIs
(App. to Secs. 137, 161 and 412) (as amended by Cir. Nos.
1129 dated 12 November 2021 and
1136 dated 11 February 2022) |
Forms
Guidelines on the Establishment of Representative Office (RO)/Offshore Banking Unit (OBU) of Foreign Banks
Foreign banks can also operate in the Philippines through the establishment of a representative office/offshore banking unit, kindly refer to the following:
Representative office of a foreign bank
Offshore banking unit of a foreign bank
Processing Timelines
In line with R.A. No. 9485 (Anti-Red Tape Act of 2007), as amended by R.A. No. 11032 (Ease of Doing Business and Efficient Government Service Delivery Act of 2018), the enrolled services in the
BSP Citizen's Charter contains the detailed documentary requirements, procedures and timelines for processing of client’s request for the grant of authority to establish a bank, foreign bank branch and representative office/offshore banking unit.
Banks
The application for
grant of authority to establish a bank constitutes a 3-stage process, as follows:
|
Stages | Applications |
Timeline* |
| 1 | Application for BSP approval to establish a bank | 20 working days |
| 2 | Application for issuance of Certificate of Authority (COA) to Register with the Securities and Exchange Commission (SEC) its Articles of Incorporation (AOI) and/or By-Laws (BL) indicating its purpose to establish a bank | 15 working days |
| 3 | Application for the issuance of COA to operate a bank | 5 working days |
*The date of the acknowledgment letter is the start of the processing timeline.
A provisional receipt will be issued to signify receipt of application letter with the complete documentary requirements, subject to preliminary assessment to determine if the application fully satisfies the formal and substantive requirements of relevant laws, rules and regulations. Applications with incomplete documentation will be returned and considered “closed”, without prejudice to re-submission of application with complete documentary requirements. A separate acknowledgment letter for every stage shall be sent to the applicant upon determination of completeness and sufficiency of the application in form and substance. This signifies acceptance of complete application and commencement of the processing timeline.
Upon completion of Stage 1 of the licensing process, the organizers of the applicant bank are notified of the BSP’s action on the application to establish the bank. Following the BSP’s approval, the organizers of the applicant bank will submit under Stage 2 the proposed AOI and BL to facilitate the BSP’s issuance of the COA to register the said documents with the SEC.
Pursuant to Section 102 of the MORB, as amended by Circular No. 1154 dated 15 September 2022, the SEC shall not register the AOI and BL of any bank, or any amendment thereto, unless accompanied by a COA issued by the BSP, under its seal.
Prior to the application for the issuance of COA to operate under Stage 3, the bank must substantially comply with the conditions of BSP approval and pre-operating requirements, including registration by the bank of its AOI and BL with the SEC, among other requirements.
This process and timelines do not apply to acquisition or purchase of voting stocks of an existing bank. These should be coordinated with the supervising department of the concerned bank.
Foreign Bank Branches
The application for
grant of authority to establish a foreign bank branch, constitutes a 2-stage process, as follows:
|
Stages | Applications |
Timeline* |
| 1 | Application for BSP approval to establish a foreign bank branch | 20 working days |
| 2 | Application for the issuance of COA to operate a foreign bank branch | 5 working days |
*The date of the acknowledgment letter is the start of the processing timeline.
A provisional receipt will be issued to signify receipt of application letter with the complete documentary requirements, subject to preliminary assessment to determine if the application fully satisfies the formal and substantive requirements of relevant laws, rules and regulations. Applications with incomplete documentation will be returned and considered “closed”, without prejudice to re-submission of application with complete documentary requirements. A separate acknowledgment letter for every stage shall be sent to the applicant upon determination of completeness and sufficiency of the application in form and substance. This signifies acceptance of complete application and commencement of the processing timeline.
Upon completion of Stage 1 of the licensing process, the BSP will issue a letter addressed to the SEC endorsing the foreign bank’s application and to facilitate the issuance of license to transact business in the Philippines.
Prior to the application for the issuance of COA to operate under Stage 2, the foreign bank must substantially comply with the conditions of BSP approval and pre-operating requirements, including the issuance by the SEC of license to transact business in the Philippines, among other requirements.
Representative Office/Offshore Banking Unit
The application for
grant of authority to establish a representative office/offshore banking unit, constitutes a 2-stage process, as follows:
|
Stages | Applications |
Timeline* |
| 1 | Application for BSP approval to establish an RO/OBU | 15 working days |
| 2 | Application for the issuance of COA to operate an RO/OBU | 5 working days |
*The date of the acknowledgment letter is the start of the processing timeline.
A provisional receipt will be issued to signify receipt of application letter with the complete documentary requirements, subject to preliminary assessment to determine if the application fully satisfies the formal and substantive requirements of relevant laws, rules and regulations. Applications with incomplete documentation will be returned and considered “closed”, without prejudice to re-submission of application with complete documentary requirements. A separate acknowledgment letter for every stage shall be sent to the applicant upon determination of completeness and sufficiency of the application in form and substance. This signifies acceptance of complete application and commencement of the processing timeline.
Upon completion of Stage 1 of the licensing process, the BSP will issue a letter addressed to the SEC endorsing the foreign bank’s application and to facilitate the issuance of license to transact business in the Philippines. Prior to the application for the issuance of COA to operate under Stage 2, the foreign bank must substantially comply with the conditions of BSP approval and pre-operating requirements, including the issuance by the SEC of license to transact business in the Philippines, among other requirements.
Contact Us
The Director
Supervisory Policy and Research Department
Policy and Specialized Supervision Sub-Sector
Financial Supervision Sector
Bangko Sentral ng Pilipinas
Email:
sprd@bsp.gov.ph
SPRD Direct Lines: (+632) 8708-7514 or 8708-7516
BSP Trunkline.: (+632) 8811-1277 locals 2766, 2687 or 2679
For Applicants of Islamic Banking License
The Deputy Director and Head
Islamic Banking Supervision Group
Financial Supervision Sub-Sector III
Financial Supervision Sector
Bangko Sentral ng Pilipinas
Email:
ibsg@bsp.gov.ph
IBSG Direct Lines: (+632) 5306-2147 and 5306-2147
BSP Trunkline.: (+632) 8811-1277 Local: 2147 or 2148
Islamic Banking Webpage:
Bangko Sentral ng Pilipinas Islamic Banking (bsp.gov.ph)
