Manila—(PHStocks)—Bangko Sentral ng Pilipinas (BSP)—The Bangko Sentral ng Pilipinas (BSP) and Bank Negara Malaysia (BNM) have agreed on the guidelines regarding the entry of Qualified ASEAN Banks (QABs) between the two countries. This is in line with strengthening intra-regional trade and investments under the ASEAN Banking Integration Framework (ABIF).
The guidelines are contained in the Heads of Agreement (HoA) signed by BSP Governor Amando M. Tetangco Jr. and Bank Negara Malaysia (BNM) Governor Zeti Akhtar Aziz in Kuala Lumpur on March 14.
The BSP-BNM HoA is one of the first bilateral agreements to be signed under ABIF and marks a milestone within the broader ASEAN community. While the HoA outlines market access and operational flexibilities that may be accorded to QABs from each jurisdiction into the other, these QABs shall operate under the prevailing laws and regulations in the Philippines and Malaysia, respectively.
Governor Tetangco said, “By signing this agreement, the BSP manifests its commitment to support greater regional financial integration and economic development through the ABIF.”
“Being among the first ASEAN economies to do so only further highlights the importance we place upon the ABIF as a regional initiative and as the future of our region,” he added.
A key provision of the HoA is that it allows up to three QABs from each jurisdiction to operate in the other country. These QABs will enter the host jurisdiction only in the form of a subsidiary of the parent bank in the home jurisdiction in line with the principle of reciprocity. As these QABs from Malaysia enter the Philippines, they will then be regulated under applicable BSP regulations and within the legal framework defined under Republic Act No. 10641.
QABs are strong and well-managed banks, headquartered in ASEAN and majority owned by ASEAN nationals. Banks that apply for QAB status must be endorsed by the home country regulator to and may be accepted by the host country regulator based on their bilateral agreement.
ABIF is designed to realize the vision of “One ASEAN Community”, using these QABs as the vehicle for maximizing the vast trade and investment potential of ASEAN.