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MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is mulling over allowing thrift banks to take over troubled rural lenders.
"We are looking at ways to further strengthen countryside financial institutions or CFIs. One option is to enhance the SPRB by enlarging the pool of possible third party investors to include non-rural banks," BSP Gov. Amando M. Tetangco Jr. said.
"Details and other possible alternatives are still being discussed," he said.
Under the Special Program for Rural Banks, regulators provided incentives to encourage rural banks to take over their peers that are saddled by huge portfolios of non-performing loans.
The average bad loan ratio of rural banks stood at 10.39 percent as of the first quarter of 2011, which is the latest available data from the BSP. This figure is way above the single-digit ratio for commercial lenders.
The ratio for rural banks in Luzon is highest at 11.91 percent, followed by Visayas at 10.74 percent. In contrast, the ratio for Mindanao is way lower at 5.46 percent.
Deputy Gov. Nestor A. Espenilla Jr. said the Monetary Board is evaluating the proposal to allow thrift banks, or even commercial lenders to acquire rural banks.
"This is all part of the plan to strengthen countryside financial institutions and the role they play in rural finance," he said.
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