The Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corporation (PDIC) have approved the extension of the Strengthening Program for Rural Banks (SPRB) Plus from 31 December 2013 to 31 December 2014 with certain amendments and enhancements, to encourage more mergers, consolidations and acquisition of eligible rural banks (RBs) and thrift banks (TBs) by strategic third party investors (STPIs).
Among the approved amendments and enhancements include the relaxation of the required ownership control in an eligible bank by an eligible STPI to at least 60% (from at least 67%) of the outstanding capital stock of the eligible bank to align with the provisions of BSP Circular No. 809 dated 23 August 2013 on the rules and regulations implementing R.A. No. 10574 (An Act Allowing the Infusion of Foreign Equity in the Capital of Rural Banks, Amending R.A. No. 7353, Otherwise known as “The Rural Banks Act of 1992”).
The financial assistance (FA) from PDIC may now also be in the form of either a combination of Preferred Shares (PS) and Direct Loan, or Direct Loan (DL) only. Furthermore, as support to banks affected by typhoon Yolanda, the amount of the PS component of the PDIC FA is increased from 50 percent to 100 percent of the required additional capital to restore the eligible bank’s capital adequacy ratio to a minimum 10 percent.
The SPRB Plus, which is a joint project of the BSP and the PDIC, is an enhanced version of the original SPRB which was launched in 2010 exclusively for rural banks (RBs). In furtherance of the objectives of SPRB Module I and to promote participation under the Program, its scope was broadened and enhancements were made under the SPRB Plus such as inclusion of TBs, in addition to RBs, as among the eligible banks as well as the inclusion of TBs, universal and commercial banks (UKBs), non-bank corporations and group of companies as eligible STPIs.
With the exception of STPI UKBs and banking groups which can only avail of incentives from the BSP without the financial assistance component, all other eligible STPIs, including non-bank corporations which are not subsidiaries of UKBs, may avail of both the FA and the incentives consisting of regulatory reliefs and branching/other incentives.
The SPRB Plus aims to strengthen the banking system and to minimize bank closures.
As of 31 December 2013, five (5) merger/consolidation applications involving ten (10) banks have been approved by the PDIC and are being processed by the BSP. Moreover, there are two (2) other applications for consolidation/acquisition that are in the pipeline.