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Perks for bank mergers, buy-ins back soon?

Monetary officials are considering restoring regulatory incentives for bank mergers and acquisitions to further strengthen the banking industry.

BSP Deputy Governor Nestor Espenilla Jr., in his speech during the Chamber of Thrift Banks general membership meeting Tuesday, said the central bank had been strongly advocating M&A because “we don’t want to see banks close.”

The central bank has introduced several programs to encourage M&A and these include the Strengthening Program for Rural Banks (SPRB Plus), its enhanced version, SPRB Plus, and the Consolidation Program for Rural Banks.

SPRB was implemented from 2010 until 2013, SPRB Plus ended on Dec. 31, 2014 after a one-year extension of its predecessor, while CRPB has a two-year implementation period that will end on Aug. 25, 2017.

Banks that availed of the SPRB and its enhanced version were given financial assistance, which is a combination of preferred shares and direct loan, and regulatory incentives, which include waiving of the special branch licensing fees equivalent to the amount of capital contribution of the strategic third party investors.
   
Espenilla said they were considering restoring the regulatory incentives under SPRB Plus because “we’re still encouraging mergers and consolidations.”
   
“And that’s also a way of helping those that have problems. This is a possible way out,” he said.
   
The central bank official said the program had several success stories “and in fact there are some more in the pipeline.”
   
He said they have observed that foreign players were mostly interested on acquiring thrift banks (TBs) while consolidations mostly involved rural banks and commercial banks He said there was no one size, fits all rule for the players, thus, the menu approach.
   
“It depends really on the requirements of the transaction because it is transaction-driven,” he added.