BSP tells 5 foreign banks to apply for digital license – Manila Bulletin

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Five foreign banks are expected to apply for a digital banking license from Bangko Sentral ng Pilipinas (BSP) soon, according to a senior BSP official.

“The BSP has received expressions of interest (EOI) from about five foreign banks abroad and already operating in the country regarding the creation 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 paperwork to apply for a digital banking license.

BSP Deputy Governor Chuchi G. Fonacier (Bloomberg file photo)

“(The four banks) have not yet provided the complete documentary requirements so that we can proceed with the assessment process. (But) a branch of a foreign bank here has already applied to convert their existing banking license to that of a digital bank, ”she said.

From the date of the Monetary Council’s approval, candidate banks have one year to fulfill the prerequisites for operation and begin banking operations. Existing banks that convert to digital banks are expected to complete the transition within three years from the date of obtaining Monetary Board approval.

Digital banks, which will require a capitalization of at least 1 billion pesos, have minimal or no reliance on physical touchpoints, but they will need to set up an office as a 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. This is the seventh banking category of the BSP. Qualified foreign banks can own or control up to 100% of the voting shares of a digital bank.

Last Thursday, during his regular press briefing, BSP Governor Benjamin E. Diokno said they were receiving EOIs from a number of foreign banks overseas for possible digital banking activity in the Philippines. . These EOIs come from banks based in Europe and the Asian region.

There are 29 foreign banks with branches in the Philippines. Twelve of these foreign banks are Global Systemically Important Banks or GSIBs. They represented seven percent or 1.4 trillion pesos of total banking system assets at the end of April this year.

After further opening up the foreign banking sector in 2014, when Republic Law No. 10641 was enacted, the BSP approved 12 applications from foreign banks, including five from Taiwan and three from South Korea.

Before 2014, there were already 17 foreign banks operating in the country which entered the banking landscape through two previous laws.

Prior to 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 intended to establish banks there. branches, but plans were unsuccessful due to the health of COVID-19. crisis.

Of the 29 foreign banks here, 24 are branches of foreign banks and five are subsidiaries. In the meantime, BSP has already granted three digital banking licenses to three entities. The first official digital bank in the Philippines is the government bank Overseas Filipino Bank, which converted its savings bank license to a digital banking license last March. The second and third approved digital banking licenses are Tonik Digital Bank and UNOBank, both of which are Singaporean banks.



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