Foreign banks now allowed full entry in the Philippines

On July 18, 2014, President Benigno Aquino III signed into law Republic Act 10641, allowing more participation of foreign banks in the Philippine banking industry.

RA 10641 (“An Act Allowing the Full Entry of Foreign Banks in the Philippines”) amends the 20-year old Republic Act 7721 (“An Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines”) to effectively liberalize further the domestic banking sector.

Highlights of RA 10641

Among the salient features of RA 10641 are:

1. Under the old law, foreign banks are allowed to operate in the Philippines only by acquiring, purchasing or owning up to 60% of the voting stock of an existing bank. Under the new law, foreign banks are now allowed to:

  • acquire, purchase or own up to 100% of the voting stock of an existing bank;
  • invest in up to 100% of the voting stock of new banking subsidiary incorporated under the laws of the Philippines; and
  • establish branches with full banking authority

2. Only established, reputable and financially sound foreign banks shall be allowed entry. The law requires the foreign bank applicant to be publicly-listed in its country of origin, unless the bank is owned and controlled by the said country or sovereign state.

3. The law still provides safety nets by requiring majority of the banking resources to be owned by domestic banks. The law requires at least 60% of total banking resources to be in the hands of domestic banks majority owned by Filipinos.

4. Approved foreign banks must permanently assign capital amounting to not less than the minimum capital required for domestic banks of the same category.

5. The foreign bank branch may open up to five sub-branches, as may be approved by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP).

6. The Monetary Board is also given the power to suspend the further entry of foreign banks under any or all of modes of entry as warranted by the country’s interest.

Senators Sergio Osmeña III and Senator Cynthia Villar co-authored the bill in the Senate.

The law is said to be in response of the Philippines to the proposed ASEAN economic integration, with the ASEAN Banking Integration Framework (ABIF) set to take force in 2020.

Under the ABIF, qualified ASEAN banks can operate within ASEAN jurisdictions on equal terms as domestic banks of that jurisdiction subject to certain prudential and governance standards.

Must read other awesome, related posts:

About the Author

PSEi support seen at 6,200 and 6,000 amid weaker Peso

In a not-so-surprising move, the U.S. Federal Reserve (Fed) yesterday raised interest rates by 75 basis points (bps) or 0.75% in a bid to tame rising inflation in the United States. This was the third consecutive 0.75% rate hike by the Fed, which brings the federal funds rate, the central bank’s benchmark interest rate, to ... Read more

Official SWIFT Code of BDO, BPI, Metrobank, Philippine banks

When sending cash remittances or wire transfer to a bank account in the Philippines (such as BDO, BPI, Metrobank, Landbank, DBP, etc.), you’ll surely need the SWIFT Code of the bank. Look no further because you can find all the SWIFT Codes you need in this list! Make sure you’re using the right bank code ... Read more
blank

How to Waive your Credit Card Annual Fee (BDO, BPI, Metrobank, RCBC, Citibank, UnionBank)

Without a doubt, one of the most annoying fees that credit cardholders have to pay is the annual fee. Majority of cardholders are familiar with this fee and majority of us likely pay this grudgingly year after year after year. In the case of my credit card with BPI (Bank of the Philippine Islands), I’m ... Read more
blank

Why Filipinos do not become business owners or entrepreneurs

For a majority of Filipinos, entrepreneurship does not seem to be a typical, expected path. This is not surprising, considering that in school, students are primarily taught to become employees after graduation. Students train for years to become staff workers, reporting to a supervisor, and just waiting to receive their wages or salaries every month. ... Read more
blank

My experience investing in Mutual Funds in the Philippines

I started investing in mutual funds when I was 22 years old. As an Overseas Filipino Worker (OFW) then, I was fortunate to be able to save some money at that young age because of my work abroad. One time while I was on vacation in the Philippines, I saw a large billboard in EDSA ... Read more
blank

Income Tax Tables in the Philippines (2022)

The Philippines’ new tax reform bill, known as TRAIN or Tax Reform for Acceleration and Inclusion, was signed into law on December 19, 2017 and its implementation began on January 1, 2018. What are the new income tax rates under the TRAIN law? How will TRAIN affect income taxes of individuals and corporations? How is the ... Read more
blank

PSE Stocks Performance under each Philippine President (1987-2021)

Did you know that Philippine stocks were able to achieve an astounding growth of 800% in a span of 30 years? From 1987 until 2018, the Philippine Stock Exchange index (PSEi) rose from 1,000 points to a peak of 9,000 points — generating a return of 800% over 30 years. (The PSEi is an index ... Read more
blank

SSL 2022: Salary Increases for Teachers, Nurses, Gov’t Employees

Good news to all government employees! There’s a new round of salary increases beginning January 1, 2022! Millions of employees of the Philippine government — including public school teachers, nurses and staff of government hospitals, and workers in local and national government agencies, etc. — will be getting an automatic salary adjustment this 2022 under ... Read more
blank

PSE Trading Hours in 2022: What time open, when closed?

Before you take the plunge into stock trading and investing, make sure you understand what stocks are and how the Philippine Stock Exchange (PSE) operates. Unlike other investments that are relatively safe, stock trading is risky and loss of money is a possibility. So before you deep dive into the exciting world of stock trading, ... Read more

Price Floor and Price Ceiling of PSE Stocks

Trading bands in the PSE come in two forms: Price Ceiling, or the upper price limit, and Price Floor, or the lower price limit.

Leave a Comment