The Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corporation (PDIC) recently signed the Supplemental Agreement to implement the Strengthening Program for Rural Banks (SPRB) Plus to strengthen the thrift and rural banking industry to effectively serve the countryside and improve the delivery of financial services to rural communities. The SPRB Plus is an enhanced version of the original SPRB (SPRB Module I), a program launched by the BSP and the PDIC in 2010 exclusively for rural banks (RBs).
SPRB Module I, which has been running for two (2) years, was created primarily to encourage mergers and consolidations among rural banks (RBs) especially those in the countryside, thereby, fostering a stronger rural banking system. Strategic third party investor (STPI) RBs intending to acquire eligible RBs, thru merger or consolidation, can avail of financial assistance from the PDIC and regulatory relief from the BSP.
SPRB Plus is designed to encourage participation of more banks in the program. Under the SPRB Plus, eligible STPIs now include strong and well-managed thrift banks and commercial banks. As eligible STPIs, they are entitled to regulatory incentives and/or financial assistance as the situation may warrant when investing in eligible banks under the Program especially those serving the countryside and underbanked customers. Non-bank corporations may also qualify as white knights. With the exception of STPI commercial banks 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 commercial banks, may avail of both the FA and the incentives.
In conjunction with the financial assistance granted through PDIC, additional incentives on top of the regulatory relief under SPRB Module I are likewise offered by the BSP to broaden participation under the Program and promote successful banking partnerships. Branch licenses in restricted areas shall be granted by the BSP for free based on the amount of capital contribution of the STPI KBs and TBs to bring the eligible banks’ risk-based capital adequacy ratio to 10 percent. In the case of STPI RBs, they can establish branches outside Metro Manila equivalent to the number of branches of the acquired bank/s. To further attract investors, the BSP likewise gives additional premium for STPIs acquiring three or more eligible banks. STPI UKBs and TBs shall be granted one additional branching license in restricted areas while STPI RBs shall be granted one additional branching license in areas outside Metro Manila for every 3 eligible banks resolved under the Program.
The SPRB Plus expects eligible STPIs not only to sustain and strengthen the financial condition of resulting banks but also to improve their quality of corporate governance and management.