OFW BANK Incubator: Minimum Capital Requirements & Stockholdings Structure For An OFW Commercial Bank

In relation to our collective efforts to set up an OFW BANK, please check the following guidelines set by the Bangko Sentral ng Pilipinas (BSP) on establishing of new banks and its branches, there are certain minimum requirements that must be met. Listed below are the minimum requirements in summary form, these are copied from the BSP official website (www.bsp.gov.ph).

1. REQUIRED MINIMUM CAPITAL
    TYPE OF BANK                                         REQUIRED CAPITAL (In Pesos)

    a. UNIVERSAL BANKS                                                                                4.95 Billion
    b. COMMERCIAL BANKS                                                                              2.4 Billion
    c. THRIFT BANKS
        - With Head Office w/in Metro Manila                                                      325 Million
        - With Head Office outside Metro Manila                                                    52 Million
    d. RURAL BANKS
        - Within Metro Manila                                                                               26 Million
        - Within the cities of Cebu and Davao                                                       13 Million
        - Within 1st, 2nd & 3rd class cities and 1st class municipalities                  6.5 Million
        - Within 4th, 5th & 6th class cities & 2nd, 3rd, 4th class municipalities      3.9 Million
        - Within 5th & 6th class municipalities                                                     2.6 Million

The OFW Bank that we envision is a Full Commercial Bank which minimum required capitalization is 2.4 Billion Pesos.

2. MINIMUM STOCK SUBSCRIPTION REQUIREMENTS
At least 25% of the total authorized capital stock shall be subscribed by the subscribers or owners of the proposed bank, and at least 25% of the subscribed stocks shall be paid up, provided that in no case shall the paid-up capital be less than the minimum required capital stated above.

In our case the total amount of paid-up capital should not be less than P2.4B it being a full commercial bank. The P2.4B is just the minimum, we can increase that whenever we see it fit and attuned to the needs of the market.

This amount does not include yet all the other necessary capital expenses to cover the cost of putting up our Head Office and necessary branches including the office furnitures & equipments, office supplies, communication platform, security, insurance and the necessary operating costs, which based on early estimates may reach a minimum of P600 Million. That amount brings up to at least P3B as our total initial capitalization which already includes the estimated operating and capital expenses. You may refer to the other articles in this site where some suggestions on how to setup the OFW Bank were laid out.

We need more suggestions and reactions from you. Initially, some ideas on how we can put up the P3B Fund for an OFW Bank were volunteered and these are discussed in another article in this site.

3. STOCKHOLDING LIMITS AND RESTRICTIONS TO FOREIGN OWNERSHIP
The stockholdings of an individual, family, corporate or business group in any bank shall be subject to the following limits:

Foreign Individuals & Corporations - Foreign individuals and non-bank corporations may own or control up to forty percent (40%) of the voting stock of a domestic bank provided that the aggregate foreign-voting stocks owned by the foreign individuals and non-bank corporations in a domestic bank does not exceed forty percent (40%) of the outstanding voting stock of the bank. The percentage of the voting stock in a bank shall be determined by the citizenship of the individual stockholders in that bank.

Filipino Individuals & Corporations - There shall be no aggregate ceiling on the ownership of Filipino individuals and corporations owning voting stocks in a domestic bank, meaning, a domestic bank can be 100% Filipino owned. A Filipino individual and a domestic non-bank corporation may each own up to forty percent (40%) of the voting stock of a domestic bank.

Citizenship of a Stockholder-Corporation - The citizenship of the corporation which is a stockholder of a domestic bank shall follow the citizenship of the controlling stockholders of the corporation, irrespective of the place of incorporation. The term "controlling stockholders" refers to individuals holding more than fifty percent (50%) of the voting stock of the corporation.

We should have no problem with this requirement because anyway we do not intend to enter into any partnership with foreign investors since the idea really is to make it OFW owned.

4. ALLOWED OWNERSHIP STRUCTURE FOR DIFFERENT TYPES OF BANK

COMMERCIAL BANKS - At least sixty percent (60%) of the voting stock of any commercial bank must be owned by Filipino citizens and/or Filipino corporations.

THRIFT BANKS - For thrift banks, at least forty percent (40%) of its voting stocks should be owned by Filipino citizens and/or Filipino corporations. I do not totally get the idea of this provision as it seems to give some exception to the 60/40 ownership limit. Maybe this explains why thrift banks or savings banks which are foreign-owned and controlled are now mushrooming in Metro Manila like for example the Citi Savings Bank, HSBC Savings Bank, GE Savings Bank, etc.

RURAL BANKS - Subject to the provisions of Section 4 of R.A. No. 7353, an Act providing for the creation, organization and operation of Rural banks, and for other purposes, all of the capital stock of any rural bank should be fully owned and held, directly or indirectly, by Filipino citizens or corporations, associations or cooperatives qualified under Philippine Laws to own and hold such capital stock.

Please refer to www.cda.gov.ph for the rules and regulations implementing certain provisions of the new Philippine Cooperative Law of 2008 (R.A. No. 9520), including the special provisions of the new Cooperative Law.

Let us continue to enjoin others to know about where we are heading and help them be part of this dream of having our own OFW Bank.

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