Philippine central bank grants incentives to thrift bank investors

Posted at 12/13/09 11:49 AM

MANILA, Philippines - The policy making body of the Bangko Sentral ang Pilipinas (BSP) is dangling an incentive for rural banks to merge and consolidate.

On Friday, the Monetary Board of the BSP said in a statement that it has approved, in principle, the grant of financial incentives and regulatory relief to third party investors eyeing local rural banks.

The policy body said the financial incentives are applicable to mergers, acquisitions and consolidations with, or among, rural banks, especially those that are capital deficient.

The incentives will be drawn from the P5 billion common fund that the BSP and the state-owned Philippine Deposit Insurance Corporation will put up. Both regulators will contribute P2.5 billion each to the fund.

Interested parties can draw from the fund when they subscribe to preferred shares to reinforce the capital position of the thrift bank, and/or through direct loans.

Efforts to beef up the capital base of local thrift banks came in the heels of the Legacy Group’ thundering collapse. At least 14 rural banks under the group led by businessman-turned-politician Celso de los Angeles closed one after the other in December 2008 when its capital base could no longer keep up with client withdrawals.