PHL, Malaysia open banking industry under bilateral deal

LAPU-LAPU, CEBU – The Philippines and Malaysia on Thursday made it official to open their respective banking industries to each other.

The Bangko Sentral ng Pilipinas (BSP) and the Bank Negara Malaysia (BNM) formalized a bilateral agreement to allow the entry of Qualified ASEAN Banks (QABs) between the two countries.

“We celebrate today the signing of the declaration of the conclusion of negotiation (DCN) between the Bangko Sentral ng Pilipinas and the Bank Negara Malaysia (BNM),” BSP Governor Amando M. Tetangco, Jr. said during the signing ceremony here.

“The DCN Effectively lays down the rules for the entry of QABs between our two jurisdictions. Therefore, the DCN is an important step towards uncovering the synergies of cross-border finance between our jurisdictions as is passed by the ASEAN banking integration framework,” he added.

This development “creates a financial highway along which we expect increased traffic,” Tetangco noted.

According to the BSP, a key provision of the agreement allows up to three QABs from each jurisdiction to operate in the other country in the form of a subsidiary of the parent bank in the home jurisdiction.

The BSP defines QAB as “strong and well-managed banks, headquartered in ASEAN and majority owned by ASEAN nationals.”

QABs from Malaysia coming to the Philippines will be regulated under applicable BSP regulations and within the legal framework defined under Republic Act No. 10641.

Bank Negara Malaysia Governor Datuk Muhammad Ibrahim said the signing of the agreement will allow higher capital accumulation between the two countries.

“Today marks an important landmark in our journey towards a more cohesive ASEAN Economy Community ... an enormous potential to encourage higher capital accumulation and productivity to support the region’s growth,” he said. — VDS, GMA News