BSP Simplifies Guidelines on Establishment of Branches

Consistent with the BSP’s policy of promoting a competitive banking environment and ease of doing business, the Monetary Board (MB) approved the amendments to the guidelines on the establishment of branches to provide banks with more flexibility in expanding their branching network to strategic locations.

The new regulation removed the use of theoretical capital as well as the combined capital requirement tied to geographic location in evaluating branch applications since the branch network size and location of head office are already embedded in the latest minimum capital requirement for banks.

The MB also reaffirmed the general thrust of allowing banks to establish branches anywhere in the Philippines, including in the cities previously considered as restricted areas, namely, Makati, Mandaluyong, Manila, Parañaque, Pasay, Pasig, Quezon and San Juan.

The move is aligned with the initiatives on banking system liberalization which include the removal of the branch moratorium in restricted areas and the gradual lifting of the suspension on the establishment of new domestic banks.

Anchored on their overall business model and strategic direction, smaller banks may now establish branches in Metro Manila subject to higher capitalization and special licensing fee if said branches are to be located in the cities previously considered as restricted areas.

The policy initiative is aligned with the BSP’s banking reform agenda that is anchored on the promotion of sound risk management systems and Financial Stability.