Taiwan’s First Commercial Bank starts PHL operations
Posted on January 07, 2017
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TAIWAN-BASED First Commercial Bank started its formal operations in Manila last month, the Bangko Sentral ng Pilipinas (BSP) announced on Friday, marking the newest foreign lender to set up shop in the Philippines.
First Commercial Bank is the third Taiwanese lender to enter the Philippines following the passage of Republic Act 10641 in July 2014 that opened the country to more foreign banks. Prior to the new law, only 10 offshore banks could do business in the country at a time, meaning that a new player can only enter once one of the accredited firms pull out.
Two other Taiwanese lenders, Cathay United Bank and Yuanta Commercial Bank Co. Ltd., already opened banking units in the country in the past two years. In September, the BSP also gave the green light for Hua Nan Commercial Bank Ltd. to operate in the Philippines.
Other foreign banks that got the BSP’s nod to set up shop here since the passage of the law are the Japan-based Sumitomo Mitsui Banking Corp.; South Korea’s Industrial Bank of Korea, Shinhan Bank, and Woori Bank; and the Singapore-based United Overseas Bank Ltd.
The law states that foreign banks — which should be publicly listed in their home country — can operate in the Philippines by acquiring, purchasing or owning up to 100% of the voting stock of an existing bank.
New players can also invest in up to 100% of the voting stock of a new banking subsidiary incorporated, while a third mode of entry would be through establishing branches with full banking authority.
The central bank recently updated its foreign exchange rules to accommodate the big-time entry of funds from foreign banks to ther Philippine branches, easing current regulations to cater to the capital needs of new industry players.
In March 2015, the BSP also signed a bilateral agreement with Bank Negara Malaysia that would allow three banks from one country to operate in the other, subject to the requirements set by each central bank.
BSP Governor Amando M. Tetangco, Jr. said they expect more international banks to venture into the Philippines as the firms consider tapping the huge market and ride on the country’s stellar economic growth, at a time of weak global expansion.
It takes about two months for the central bank to process and evaluate foreign bank applications, according to BSP Deputy Governor Nestor A. Espenilla, Jr.
