FOUR more big Asian banks are interested to expand in the Philippines as the country continues to attract foreign investments despite the $81-million money laundering scam that rocked the domestic banking industry in February.
Bangko Sentral ng Pilipinas Deputy Governor Nestor Espenilla Jr. said Tuesday there could be five “possible” applications that might be approved by the policy-setting Monetary Board in the coming weeks or months.
“There is one pending. Then one application in process. Then one saying will submit soon. Two are expressing interest [to expand]. So five more possible,” Espenilla said in a text message.
Espenilla added the big Asian banks were listed companies. The board will reveal the identities of the applicants once these firms discloses the Bangko Sentral approval in their home countries.
Bangko Sentral officials assured earlier the domestic banking industry remained sound and strong despite the $81-million money laundering scam that broke out recently. The illegal funds entered the country’s financial system through a branch of Rizal Commercial Banking Corp.—one of the biggest universal banks—on Jupiter Street in Makati City.
The dirty money later ended up in local casinos and laundered by a number of individuals. Bangko Sentral fined RCBC P1 billion—the biggest ever—in connection with its involvement in the scam.
Espenilla earlier said foreign banks favored partnerships with local lenders as the best mode of establishing their presence in the country. He said the banks wanted to reach and be familiar with the domestic market.
So far, Bangko Sentral approved the entry of eight Asian banks since the domestic banking industry was further liberalized in July 2014. Two were approved this year, the latest of which was the application of First Commercial Bank of Taiwan, one of Taiwan’s largest.
Prior to that, the Monetary Board approved in May the entry of Woori Bank, South Korea’s second-largest bank, taking over Wealth Development Bank, the financial arm of the Gaisano family’s Viscal Development Corp.
Espenilla said establishing a branch usually resulted in a limited presence and the tendency would be to basically cater to that foreign bank’s own clients and corporates.
The Monetary Board in 2015 approved six applications. These were United Overseas Bank Ltd. of Singapore, Yuanta Commercial Bank Co. Ltd. of Taiwan, Industrial Bank of Korea, Shinhan Bank of Korea, the Japan-based Sumitomo Mitsui Banking Corp., and the Taiwan-based Cathay United Bank.
Foreign banks under Republic Act 10641 are allowed to control up to a combined 40 percent of the total assets of the banking system. This was 10 percentage points higher than the previous 30-percent limit.