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March 05, 2024

Rural banks merge amid BSP initiatives

Two rural banks, Banco Santiago de Libon Inc. and Municipal Rural Bank of Libmanan (Cam Sur) Inc., merged last month, following initiatives by the Bangko Sentral ng Pilipinas (BSP) to improve risk management in small banks. The merger, effective December 31, saw Banco Santiago de Libon absorbing all assets and liabilities of Municipal Rural Bank of Libmanan. The Securities and Exchange Commission (SEC) approved the merger on December 7, 2023, including supplementary plans executed throughout the year.

In a similar move last October, Camalig Bank Inc. and Municipal Rural Bank of Nabua (Camarines Sur) Inc. merged, with Camalig Bank emerging as the surviving entity. Notably, in 2023, the BSP’s Monetary Board ordered the closure of seven problematic small banks, emphasizing the need for sector strengthening.

To bolster the industry, the BSP introduced the Rural Bank Strengthening Program (RBSP), focusing on enhancing operations, capacity, and competitiveness. The regulator increased the minimum capital requirements for rural banks, setting it at P50 million for those with a head office and up to five branches, P120 million for those with six to 10 branches, and P200 million for small banks with more than 10 branches, as part of the new capital structure.

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