Foreign-owned banks balk at new Philippine regulation

Philippines wants them to list on the Philippine Stock Exchange.

Foreign-owned banks are divided over the merits of a circular from the Bangko Sentral ng Pilipinas, the central bank, ordering them to list on the PSE. The banks have three years from December 19, 2012 to comply.

The central bank issued Circular No. 775-2012 dated Nov. 28 requiring lenders that are majority-owned by foreign banks and operating in the Philippines to list on the PSE.

Circular 775 said the basis of these were provisions in Republic Act 7721 or “An Act Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines and for other purposes.”

Section 2 of this law cited the listing requirement for foreign banks that entered the country by buying as much as 60% of an existing bank or investing in up to 60% of the voting stock of a new subsidiary incorporated in the country.

Chief Executive Officer Sergio G. Edeza of the Bank of Commerce President said the circular “. . . has to be followed” since Malaysia’s CIMB is the bank’s dominant stockholder with a 60% share.

He said the bank is covered by the circular given the entry of Malaysia’s CIMB Group into the bank.

HSBC Philippines CEO Jose Arnulfo Veloso said his bank is looking into this and if the regulation applies to HSBC Savings Bank. He said the bank will consider all avenues to best achieve the compliance.