Question & AnswerQ&A (Republic Act No. 10641)
The Monetary Board may authorize foreign banks to operate through any of the following modes: (i) acquiring, purchasing, or owning up to 100% of the voting stock of an existing bank; (ii) investing up to 100% of the voting stock of a new banking subsidiary incorporated in the Philippines; or (iii) establishing branches with full banking authority.
The Monetary Board shall ensure geographic representation and complementation, consider strategic trade and investment relationships, evaluate the foreign bank's capacity, reputation, and stability, ensure reciprocity rights for Philippine banks in the foreign bank's country, and consider the foreign bank's willingness to share technology. Only established, reputable, and financially sound foreign banks, which are widely-owned and publicly-listed or government-owned, shall be allowed entry.
The Monetary Board must adopt measures to ensure that at least 60% of the resources or assets of the entire banking system are held by domestic banks which are majority-owned by Filipinos.
Locally incorporated subsidiaries of foreign banks must have a minimum capital equal to that prescribed by the Monetary Board for domestic banks of the same category.
Foreign bank branches must permanently assign capital of an amount not less than the minimum capital required for domestic banks of the same category, which must be inwardly remitted and converted into Philippine currency. These branches may open up to five sub-branches as approved by the Monetary Board.
Foreign banks authorized under the Act shall perform the same functions, enjoy the same privileges, and be subject to the same limitations as Philippine banks of the same category. The single borrower limit will be aligned with that of domestic banks. They must also guarantee the rights of their employees under the Constitution.
Foreign banks authorized under the Act can bid and participate in foreclosure sales of real property mortgaged to them and take possession for a period not exceeding five years, but title cannot be transferred to the foreign bank. If the foreign bank is the winning bidder, it must transfer the property rights to a qualified Philippine national within five years or pay a penalty of 0.5% per annum of the foreclosure price until transfer occurs.
Yes, foreign banks already authorized may apply to change their original mode of entry under the transitory provisions of the Act.
The previous restrictions on the locations of additional branches of foreign bank branches have been lifted, allowing for more flexible branch expansion.
The New Central Bank Act (Republic Act No. 7653) and The General Banking Law of 2000 (Republic Act No. 8791), insofar as they are applicable and not in conflict with RA 10641, apply to banks authorized under this Act.