Question & AnswerQ&A (Republic Act No. 10641)
The main purpose of Republic Act No. 10641 is to allow the full entry of foreign banks in the Philippines by amending Republic Act No. 7721, enabling foreign banks to acquire, invest in, or establish branches in the Philippine banking system.
The Monetary Board may authorize foreign banks to operate through: (i) acquiring up to 100% of the voting stock of an existing bank; (ii) investing up to 100% of the voting stock of a newly incorporated banking subsidiary; or (iii) establishing branches with full banking authority.
The Monetary Board considers geographic representation and complementation, strategic trade and investment relationships between the Philippines and the foreign bank's country, the bank’s capacity, reputation, and financial stability, reciprocity rights for Philippine banks, and willingness to share technology.
Foreign bank applicants must be established, reputable, financially sound, widely-owned and publicly listed in their country of origin, unless government-owned and controlled from their country.
The minimum capital for locally incorporated subsidiaries of foreign banks must be equal to that prescribed by the Monetary Board for domestic banks of the same category.
Foreign bank branches must permanently assign capital of not less than the minimum required for domestic banks of the same category; this capital must be inwardly remitted and converted into Philippine currency.
Foreign banks authorized by the Act have the same functions, privileges, and limitations as Philippine banks of the same category. They must observe employee rights, and any rights or incentives given to foreign banks must also be extended to Philippine banks under the same conditions.
Yes. Under Section 9, foreign banks authorized under the Act can bid in foreclosure sales and enforce proceedings to take possession, but cannot transfer the title. They must transfer ownership to a qualified Philippine national within five years or be penalized.
The bank shall be penalized one half (1/2) of one percent (1%) per annum of the foreclosure price until the property is transferred to a qualified Philippine national.
Yes. Existing foreign banks may apply to change their original mode of entry and can open up to five sub-branches without restrictions on location, subject to complying with the minimum capital requirements within one year.
RA 7653 (New Central Bank Act) and RA 8791 (General Banking Law of 2000) apply insofar as they do not conflict with RA 10641.
The Monetary Board is authorized to issue rules and regulations to implement the Act and must file a written annual report to Congress and its Banks Committees by May 30 on the Act’s implementation.