(21 November 2016 – Philippines) The Philippines’ central bank, Bangko Sentra ng Pilipinas (BSP) will start bilateral talks with it Thai and Indonesian counterparties with the entry of the nation's lenders high on the agenda in preparation for the full regional integration of Southeast Asia’s banking sector.
The central bank’s Governor Amando M. Tetangco Jr. said efforts are underway ahead of formal discussions with the Bank of Thailand and the Otoritas Jasa Keuangan (OJK) of Indonesia to facilitate the entry of Philippine banks to other member-states of the Association of Southeast Asian Nations (ASEAN).
These proposals come ahead of the ASEAN Banking Integration Framework (ABIF) eyed to be in full effect by 2020.
“I am pleased to report that we are about to initiate formal discussions with the Bank of Thailand and with the OJK of Indonesia under the same ABIF guidelines,” Tetangco said in a speech before the Bankers Association of the Philippines.
Earlier this year, Tetangco signed an agreement with his counterpart Governor Zeti Akhtar Aziz of the Bank Negara Malaysia in Kuala Lumpur, the first bilateral deal forged by the Philippines under the ABIF.
Under the agreement, three qualified ASEAN banks (QABs) from one country can set up branches in the other, subject to the banking regulations of the host economy. These bank units will be treated as subsidiaries of the parent foreign bank.
Tetangco said the key challenges to the local banking sector are the looming rate hike in the United States, uneven global growth prospects, and “disruptive” technology, although Philippine lenders are seen to withstand such headwinds.
“For the Philippines, strong domestic aggregate demand, particularly private consumption, has long shielded us from external shocks. Even during the Asian Financial Crisis, we were not as affected because we were not as open as others in the region. However, there is a need to explore ways of broadening the domestic economic base,” the central bank chief added.