The Philippines and Malaysia signed a bilateral agreement on the entry of banks between the two countries under the Asean Banking Integration Framework.
Bangko Sentral ng Pilipinas said the two countries became the first Southeast Asian economies to sign the banking integration framework.
Bangko Sentral said in a statement it agreed with Bank Negara Malaysia on the guidelines regarding the entry of qualified Asean banks between the two countries.
Bangko Sentral Governor Amando Tetangco Jr. said this was in line with strengthening intra-regional trade and investments under the Asean Banking Integration Framework.
The guidelines are contained in the heads of greement signed by Tetangco and Bank Negara Malaysia Governor Zeti Akhtar Aziz in Kuala Lumpur on March 14.
The agreement is one of the first bilateral agreements to be signed under ABIF and marks a milestone within the broader Asean community.
The heads of agreement outline market access and operational flexibilities that may be accorded to qualified Asean banks from each jurisdiction into the other. These QABs shall operate under the prevailing laws and regulations in the Philippines and Malaysia, respectively.
“By signing this agreement, the BSP manifests its commitment to support greater regional financial integration and economic development through the ABIF,” Tetangco said.
“Being among the first Asean economies to do so only further highlights the importance we place upon the ABIF as a regional initiative and as the future of our region,” Tetangco said.
A key provision of the agreement is that it allows up to three QABs from each jurisdiction to operate in the other country. These QABs will enter the host jurisdiction only in the form of a subsidiary of the parent bank in the home jurisdiction in line with the principle of reciprocity.
As these qualified Asean banks from Malaysia enter the Philippines, they will be regulated under applicable Bangko Sentral regulations and within the legal framework defined under Republic Act No. 10641, which further liberalized the domestic banking system.
Qualified Asean banks are strong and well-managed banks, headquartered in the Asean region and majority owned by Asean nationals. Banks that apply for QAB status must be endorsed by the home country regulator to and may be accepted by the host country regulator based on their bilateral agreement.
ABIF is designed to realize the vision of “One Asean Community,” using these qualified Asean banks as the vehicle for maximizing the vast trade and investment potential of the region.