Moody's backs BSP moves to consolidate rural banks

Posted at 08/10/2012 6:05 PM | Updated as of 08/10/2012 6:05 PM

MANILA, Philippines - Credit rating agency Moody's said the Bangko Sentral's move to grant more incentives to banks acquiring weaker rural banks is a credit positive for Philippine lenders.

"We believe that the enhanced program, which expands the investor pool from only rural banks previously to now also include universal and commercial and thrift banks, will increase the pace of consolidation in an overcrowded Philippine banking system," Moody's said, in a statement.

The Bangko Sentral on Wednesday took new steps to encourage universal and commercial banks to help consolidate the rural banking industry.

There are 574 rural banks in the country, accounting for 80% of the entire banking industry. Some of them shut down in recent months due to insolvency.

The BSP will grant an additional branch license to large-tiered banks for every three rural banks they buy. Without that incentive, a branch license costs P20 million per branch. - ANC