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AN ACT ALLOWING THE FULL ENTRY OF FOREIGN BANKS IN THE PHILIPPINES, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 7721
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
“SEC. 2. Modes of Entry. – The Monetary Board may authorize foreign banks to operate in the Philippine banking system through any one of the following” modes of entry: (i) by acquiring, purchasing or owning up to one hundred percent (100%) of the voting stock of an existing bank; (ii) by investing in up to one hundred percent (100%) of the voting stockof a new banking subsidiary incorporated under the laws of the Philippines; or (iii) by establishing branches with full banking authority.”
“SEC. 3. Guidelines for Approval. – In approving entry applications of foreign banks, the Monetary Board shall: (i) ensure geographic representation and complementation; (ii) consider strategic trade and investment relationships between the Philippines and the country of incorporation of the foreign bank; (iii) study the demonstrated capacity, global reputation for financial innovations and stability in a competitive environment of the applicant; (iv) see to it that reciprocity rights are enjoyed by Philippine banks in the applicant’s country; and (v) consider willingness to fully share their technology.
“Only established, reputable and financially sound foreign banks shall be allowed entry in accordance with Section 2 of this Act. The foreign bank applicant must be widely-owned and publicly-listed in its country of origin, unless the foreign bank applicant is owned and controlled by the government of its country of origin.
“In the exercise of this authority, the Monetary Board shall adopt such measures as may be necessary to ensure that the control of at least sixty percent(60%) of the resources or assets of the entire banking system is held by domestic banks which are majority-owned by Filipinos.”
“SEC. 4. Capital Requirements. – (i) For Locally Incorporated Subsidiaries – The minimum capital required for locally incorporated subsidiaries of foreign banks shall be equal to that prescribed by the Monetary Board for domestic banks of the same category.
“(ii) For Foreign Bank Branches - Foreign banks that shall be authorized to establish branches pursuant to Section 2(hi) of this Act shah permanently assign capital of an amount not less than the minimum capital required for domestic banks of the same category. The permanently assigned capital shall be inwardly remitted and converted into Philippine currency.
“The foreign bank branch may open up to five (5) sub-branches as may be approved by the Monetary Board. Locally incorporated subsidiaries of foreign banks pursuant to Section 2(h) of this Act shall have the same branching privileges as domestic banks of the same category.”
“SEC. 8. Equal Treatment. – Foreign banks authorized to operate under Section 2 of this Act, shall perform the same functions, enjoy the same privileges, and be subject to the same limitations imposed upon a Philippine bank of the same category. The single borrower’s limit of a foreign bank branch shall be aligned with that of a domestic bank.
“The foreign banks shall guarantee the observance of the rights of their employees under the Constitution.
“Any right, privilege or incentive granted to foreign banks or their subsidiaries or affiliates under this Act, shall be equally enjoyed by and extended under the same conditions to Philippine banks.”
SEC. 6. A new provision in Section 9 is hereby inserted in the same Act, in lieu of the original provisions of Section 9 repealed by Section 11 of Republic Act No. 10000. Section 9 shall now read as follows:
“SEC. 9. Participation in Foreclosure Proceedings.—Foreign banks which are authorized to do banking business in the Philippines through any of the modes of entry under Section 2 hereof shall be allowed to bid and take part in foreclosure sales of real property mortgaged to them, as well as to avail of enforcement and other proceedings, and accordingly take possession of the mortgaged property, for a period not exceeding five (5) years from actual possession: Provided, That in no event shall title to the property be transferred to such foreign bank. In case said bank is the winning bidder, it shall, during the said five (5)-year period, transfer its rights to a qualified Philippine national, without prejudice to a borrower’s rights under applicable laws. Should the bank fail to transfer such property within the five (5)-year period, it shall be penalized one half (1/2) of one percent (1%) per annum of the price at which the property was foreclosed until it is able to transfer the property to a qualified Philippine national.”
SEC. 7. Transitory Provisions. –Foreign banks which are already authorized to do banking business in the Philippines through any of the modes of entry under Section 2 hereof may apply to change their original mode of entry.
Foreign banks operating through branches in the Philippines upon the effectivity of this Act shall retain their original privilege upon entry to establish a limited number of sub-branches. However, the previous restriction on the locations of such additional branches is hereby lifted.
The existing Philippine branches of foreign banks shall comply within one (1) year from the effectivity of this Act with the minimum capital requirements as prescribed under Section 4(ii) of this Act, unless otherwise extended by the Monetary Board.
“SEC. 12. Applicability of Other Banking Laws. – The provisions of Republic Act No. 7653, otherwise known as the New Central Bank Act and the provisions of Republic Act No. 8791, otherwise known as The General Banking Law of 2000', insofar as they are applicable and not in conflict with any provision of this Act, shall apply to banks authorized pursuant to this Act.”
“SEC. 13. Rule-Making Powers of the Monetary Board of the Bangko Sentral ng Pilipinas and Compliance Reports. – The Monetary Board is hereby authorized to issue such rules and regulations as may be needed to implement “the provisions of this Act. On or before May 30 of each year, the Monetary Board shall file a written report to Congress and its respective Banks Committees, on the developments in the implementation of this Act. The implementing rules and regulations of this Act shall be published in at least two (2) newspapers of general circulation.”
SEC. 10. Repealing Clause. – All laws, decrees, executive orders, proclamations, rules and regulations and other issuances or parts thereof insofar as they are inconsistent with the provisions of this Act are hereby repealed or modified accordingly.
(Sgd.) FELICIANO BELMONTE JR. Speaker of the House of Representatives
(Sgd.) FRANKLIN M. DRILON President of the Senate
(Sgd.) MARILYN B. BARUA-YAP Secretary General House of Representatives
(Sgd.) OSCAR G. YABES Secretary of the Senate
Approved: JUL 15 2014
(Sgd.) BENIGNO S. AQUINO III President of the Philippines
Source: Supreme Court E-Library
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