Growth spurt

The rural banking industry is now starting to feel the effects of the policies laid down by regulators to encourage more growth among rural banks.

In the coming months, 13 rural and cooperative banks will get to open new branches after the Bangko Sentral ng Pilipinas gave them authority to open new branches in different parts of the country, in line with the BSP’s efforts to promote a more inclusive financial system. The BSP said this is a continued evidence of the strength and vitality of the banking system, which will further boost the government’s financial inclusion efforts.

Among those that were given the green light to expand include five regular branches of Agribusiness Rural Bank, Inc.; one regular branch of Banco Laguna, Inc.; two regular branches of Bangko Kabayan; one regular branch of Bank of Florida, Inc.; 15 microfinance-oriented branches of Bank of Makati; one microfinance-oriented branch of Card Bank, Inc.; one regular branch of Cooperative Bank of Cotabato; four regular other banking offices of Rural Bank of Gattaran (Cagayan), Inc.; one microbanking office of Rural Bank of Guinobatan, Inc.; three regular other banking offices of Rural Bank of Mabitac; one regular branch of Rural Bank of Tangub City; a regular branch of Saviour Rural Bank, Inc.; and a regular branch of South Bank.

The BSP has likewise approved the branch expansions of six universal and commercial banks and six thrift banks.

In addition to this, the merger and consolidation wheels are finally starting to turn as big banks take advantage of the incentives laid out under the Strengthening Program for Rural Banks (SPRB) Plus, which expands the original SPRB to include strong and well-managed thrift banks and commercial banks as among eligible Strategic Third Party Investor or so-called “white knights” entitled to incentives when investing in rural banks. The SPRB Plus is aimed at further reinforcing the rural banking system and improve the delivery of financial services to rural communities.

Just recently, it was announced that the Rural Bank of Angeles (RBA), a subsidiary of Asia United Bank, would buy all the assets of Cooperative Bank of Pampanga (CBP).

RBA will purchase all the assets of CBP, including its six branches and head office, and assume all its liabilities.

This could be just one of many merger activities that will transpire in the industry. The SPRB Plus offers a number of financial and regulatory relief and incentives to improve the prospects for success of new banking partnerships. Financial assistance may be granted by Philippine Deposit Insurance Corp. to augment capital shortfalls and attract new investors. On the other hand, the BSP offers an expanded package of regulatory relief and branching incentives for commercial, thrift and rural bank that step forward as white knights.