Moratorium on branch-banking in the Philippines ends

The restrictions were partly for overcrowding control.

Effective July 1, the Philippine central bank (BSP) has now lifted the branch-banking moratorium allowing universal, commercial, and thrift banks to set up branches in the eight restricted zones in Metro Manila.

According to a research note from Maybank Kim Eng, the restrictions were put in place to avoid overcrowding of banks in the metropolis and encourage lenders to expand in the provinces.

The cities where the restrictions were imposed on included Makati, Mandaluyong, Paranaque, Pasay, Pasig, Quezon, and San Juan.

Here’s more from Maybank Kim Eng

The move is Phase 2 of the BSP’s liberalization scheme to promote growth in the industry. Phase 1 was implemented in 2011 wherein it allowed banks that have less than 200 branches in the restricted areas to apply and set up branches until 30 June 2014.

A total of 162 branch licenses were granted to seven banks. Aside from the standard processing fee of PHP200k, the seven banks had to pay a non-refundable special licensing fee of PHP20m for every universal or commercial branch applied for and PHP15m for every thrift bank branch application.

Data from the BSP showed that there were 10,020 banks and bank branches across the country at end-March 2014, wherein more than half were owned by the big universal and commercial banks.

We believe the liberalization will make banks more competitive ahead of the ASEAN banking integration.