Member Article

The September 2014 issue of the International Financial Law Review (IFLR) included an international briefing article by then SyCipLaw senior associate and now partner Jose Florante M. Pamfilo entitled "Foreign banks gain full entry."

The Philippines recently enacted a law that allows the full entry of foreign banks into the Philippines. Under this new law, Republic Act (RA) No 10641, foreign banks may operate in the Philippine banking system through any one of the following modes of entry: (i) by acquiring, purchasing or owning up to 100% of the voting stock of an existing bank; (ii) by investing in up to 100% of the voting stock of a new banking subsidiary incorporated under the laws of the Philippines; or (iii) by establishing branches with full banking authority.

RA No 10641 amends RA No 7721, the Foreign Banks Liberalisation Act. Previously, foreign banks were limited to one of the following modes of entry: (i) acquiring, purchasing or owning up to 60% of the voting stock of an existing bank; (ii) investing in up to 60% of the voting stock of a new banking subsidiary incorporated under the laws of the Philippines; or (iii) establishing branches with full banking authority. The third mode was available only for a period of five years from the effectivity of RA No 7721 or until May 1999, during which period a maximum of 10 foreign banks could be allowed to establish branches in the Philippines. Meanwhile, the General Banking Law of 2000 expanded the first mode and allowed foreign banks to acquire up to 100% of one already existing bank, but only for a period of seven years from the effectivity of the General Banking Law or until June 2007...