BSP, PDIC, LBP Launch Incentive Program for Stronger Cooperative Banking System
Manila—(PHStocks)—(PIA)—The Bangko Sentral ng Pilipinas (BSP), Philippine Deposit Insurance Corp. (PDIC), and the Land Bank of the Philippines (LBP) approved the revival of the Strengthening Program for Cooperative Banks (SPCB) with the expansion of eligible Strategic Third Party Investor (STPI) to further strengthen the cooperative banking system according to BSP statement.
BSP Governor Amando M. Tetangco, Jr., PDIC President Valentin A. Araneta and LBP President Gilda E. Pico, recently signed a memorandum of agreement (MOA) to support the development of a stronger cooperative banking sector.
The program labeled as Strengthening Program for Cooperative Banks Plus (SPCB Plus) will expand the eligible STPI or so-called “white knights” to include strong and well-managed rural banks and thrift banks whether or not majority owned by cooperative banks and commercial banks.
The program will be available until September 17, 2014 and shall replace the original SPCB Module II which expired last August 3, 2012.
According the PDIC, the Program will give financial incentives and assistance to cooperative banks and their partner STPIs, through a combination of preferred shares and direct loan to strengthen the cooperative bank’s capital position, according to PDIC.
While the BSP said, the program is envisioned to further strengthen the cooperative banking system, boost confidence in the banking system, and improve the delivery of financial services to the countryside and rural communities.
BSP data showed that as of October 2013, 5 applications involving 19 cooperative banks have been received which reflect strong expression of interest in the said program.
Eligible STPIs may be CBs (Cooperative Banks), thrift banks (TB), rural banks (RB), primary cooperatives or federations of cooperatives provided such entities have a CAMELS (Capital Adequacy, Asset Quality, Management, Earnings, Liquidity, and Sensitivity to Market Risk) rating of at least 3, PDIC said.
Where the STPI is either a TB or RB, the bank should also be at least 67% owned by CBs, primary cooperatives and/or federation cooperatives. In case the STPIs are primary cooperatives or federations of cooperatives, a certification or endorsement of good standing from the Cooperative Development Authority (CDA) will be required in addition to a proven good track record based on their audited financial statement, the PDIC added.
Improved capital position with a networth of at least P100 million and a minimum risk-based capital adequacy ratio (RBCAR) of 15% are expected to attain by the surviving banks through SPCB Plus.
PDIC added that capital support component will be made available through a financial assistance from PDIC and LBP by way of infusion of equity in the form of perpetual, non-cumulative preferred shares, convertible to common shares at the end of 10 years.
LBP will also grant credit facilities to enable STPIs to further scale up their operations at an accelerated rate. While, BSP will provide regulatory relief to enable the surviving banks to expand operations.
