The Philippines is opening up its banking industry, beginning with the lifting of a 17-year ban on new licences.
Bangko Sentral ng Pilipinas, the country’s central bank, approved lifting the ban on establishing new banks, Bloomberg reports.
The first phase, which allows existing thrift banks to apply for a license to convert into a universal or commercial bank, will apply until the end of 2017, it said in a statement.
The second phase will start in January 2018 when all restrictions on granting new licenses will be fully lifted, the central bank said.
“This initiative provides local businesses the avenue to explore opportunities in the banking sector amid the opening of the industry to foreign capital infusion,” central bank governor Amando Tetangco said in a statement.
The two-year transition period gives interested investors enough time to position themselves amid evolving policy reforms in the sector and ongoing regional integration, he said.
Foreign banks including Japan’s Sumitomo Mitsui Financial Group Inc. and Singapore’s United Overseas Bank Ltd. have received approval to open branches after the Philippines loosened its rules on foreign ownership in 2014.
Local lender Security Bank Corp. last month agreed to sell a 20 percent stake to Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank, in a US$773 million deal.
Wealthy families running some of the largest Philippine banks need to attract foreign capital and know-how if they are to withstand growing competition from overseas lenders and avoid “stagnation,” central bank deputy governor Nestor Espenilla said in January.
The central bank in 1999 imposed a moratorium on new banks to encourage mergers and consolidation as it sought bigger and stronger lenders.
It allowed licenses to still be granted in areas without banks.
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