Reports
Discussion Papers
No.651 Rural Bank Mergers/Consolidations in the Philippines: A Preliminary Study
March 2017
ABSTRACT
The
central
bank
of
the
Philippines
(Bangko
Sentral
ng
Pilipinas,
BSP)
has
encouraged
the
country's
rural
banks
to
merger/consolidate
for
strengthening
their
financial
soundness
and
competiveness,
and
extending
branch
networks
with
providing
some
incentive
measures
mainly
financial
supports.
Overviewing
the
cases
realized
from
January
2000
to
December
2016,
we
found
(1)
the
rural
banks
which
are
considered
to
have
expansive
business
strategies
spend
about
a
decade
to
repeat
bilateral
mergers,
unlike
BSP's
intention
to
realize
"at
least
five
rural
banks"
in
one
merger
case,
(2)
most
of
the
mergers
are
bilateral
and
one-off
cases,
where
surviving
banks
seem
to
increase
some
assets
and
branch(es).
In
order
to
further
promote
mergers/consolidations
in
the
sector,
BSP
may
need
to
consider
modifying
the
incentive
measures
to
answer
actual
cases,
and/or
allying
them
more
closely
to
the
on-going
capital
increase
requirements.
Keywords: mergers,
consolidations,
rural
banks,
the
banking
sector,
the
Philippines
JEL
classification: E42,
E52,
G38
PDF available at http://hdl.handle.net/2344/00048858
Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.