There are five foreign banks that are expected to apply for digital bank license with the Bangko Sentral ng Pilipinas (BSP) soon, according to a senior BSP official.
“The BSP received expressions of interest (EOI) from around five foreign banks abroad and already operating in the country regarding the establishment of digital banks,” said BSP Deputy Governor Chuchi G. Fonacier.
Fonacier said four of the five banks are still in the process of completing the necessary documents to apply for digital bank license.
“(The four banks) have yet to provide the complete documentary requirements so we can proceed with the assessment process. (But) one branch of a foreign bank here has already submitted its application for conversion of its existing banking license to that of a digital bank,” she said.
From date of Monetary Board approval, applicant banks are given a year to complete pre-operating requirements and commence banking operations. Existing banks converting to digital banks should complete the transition within three years from date of acquiring a Monetary Board approval.
Digital banks, which will require at least P1 billion capitalization, have minimal or zero-reliance on physical touchpoints but it will have to set up one office as central hub in the Philippines to receive and resolve customer complaints.
The BSP issued Circular No. 1105 in December 2020 for the establishment of digital banks. It is the BSP’s seventh bank category. Qualified foreign banks may own or control up to 100 percent of the voting stock of a digital bank.
Last Thursday, during his regular press briefing, BSP Governor Benjamin E. Diokno said they are receiving EOIs from a number of foreign banks abroad for a possible digital bank business in the Philippines. These EOIs are from banks based in Europe and the Asian region.
There are 29 foreign banks with branching operations in the Philippines. Twelve of these foreign banks are global systemically important banks or GSIBs. They account for seven percent or P1.4 trillion of the total banking system assets as of end-April this year.
After further opening the foreign banking sector in 2014 when Republic Act No. 10641 was signed into law, the BSP approved 12 foreign bank applications, of which five are from Taiwan and three from South Korea.
Before 2014, there were 17 foreign banks already operating in the country which entered the banking landscape via two previous laws.
Before March 2020 when the global pandemic was declared, the BSP said there were at least three foreign banks based in Hong Kong, South Korea and Indonesia that were intending to set up branches here but plans did not push through because of the COVID-19 health crisis.
Of the 29 foreign banks here, 24 are branches of foreign banks and five are subsidiaries. In the meantime, the BSP has already granted three digital bank license to three entities. The first official digital bank in the Philippines is government-owned Overseas Filipino Bank, which converted its thrift bank license to a digital bank license last March. The second and third digital bank license approved is Tonik Digital Bank and UNOBank, both are Singaporean banks.
Source: Manila Bulletin (https://mb.com.ph/2021/06/28/bsp-says-5-foreign-banks-to-seek-digital-license/?utm_source=rss&utm_medium=rss&utm_campaign=bsp-says-5-foreign-banks-to-seek-digital-license)
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