The Bangko Sentral ng Pilipinas (BSP) has issued proposed guidelines for the streamlined procedures for banks’ merger, consolidation and acquisition (MCA) applications.

The guidelines will apply to MCA applications which are non-notifiable or are exempted from compulsory notification based on Philippine Competition Commission (PCC) rules. These banks should also not have existing financial assistance from the Philippine Deposit Insurance Corp. (PDIC), according to the BSP.

The draft guidelines were issued on Friday, March 4, for public consultation and for the information and guidance of banks. Comments and recommendations from the banking sector should be submitted to the BSP before March 11.

Last October 2021, five financial regulators have signed a memorandum of agreement to ease MCA requirements and procedures as anti-red tape prevention, and to reduce the over-regulation that discourage MCAs.

The BSP, PDIC, PCC, the Securities and Exchange Commission (SEC) and the Cooperative Development Authority (CDA) agreed to simplify and trim procedures from 58 documentary requirements to just 30. The five regulators also agreed to cut the processing time of MCA proposals to 55 business days versus 160 days currently being implemented.

Based on the proposed guidelines, each regulator will undertake independent evaluation of the MCA application as per the schedules and timeframe.

The PCC, for example, is in charge of reviewing if the proposed MCA transaction is non-notifiable. If found that an applicant bank must file notification forms, the 55-business day processing will not apply.

The BSP, PDIC, SEC or CDA will then proceed with the processing of the MCA application in accordance with their respective policies, rules, and regulations. The BSP will determine the viability assessment of the business plan, and compliancecwith banking laws and BSP regulations, will PDIC will also assess for compliance with its charter and and regulatory issuances.

The SEC likewise will determine compliance with the Revised Corporation Code and applicable rules and regulations while the CDA will also review if an applicant bank is adhering with the Philippine Cooperative Code of 2008.

It was BSP banking co-regulator, PDIC, that initiated the multi-agency project. The MOA is the first of its kind among financial regulators to harmonize the requirements and synchronize the timelines in the processing of MCA proposals of banks.

The proposed implementing guidelines on the procedures for MCA applications will subsequently be issued via a joint circular by the partner-agencies.

Regulators will have a harmonized list of requirements for MCA proposals of banks.

The BSP defines a bank acquisition as transactions between banks involving the purchase of assets and assumption of liabilities. Consolidation is the union of two or more banks into a single new bank to be called the consolidated bank, while merger is the absorption of one or more banks by another existing bank. In an MCA, the absorbing bank continues its existence while the life or lives of the other banks are terminated.