RA NO.

7721
AN ACT LIBERALIZING THE ENTRY AND SCOPE OF
OPERATIONS OF
FOREIGN BANKS IN THE PHILIPPINES AND FOR OTHER
PURPOSES.

SECTION 1. DECLARATION OF POLICY

The State shall develop a self-reliant and independent national economy effectively
controlled by Filipinos and encourage, promote, and maintain a stable, competitive,
efficient, and dynamic banking and financial system that will stimulate economic growth,
attract foreign investments, provide a wider variety of financial services to Philippine
enterprises, households and individuals, strengthen linkages with global financial centers,
enhance the country's competitiveness in the international market and serve as a
channel for the flow of funds and investments into the economy to promote
industrialization.
Pursuant to this policy, the Philippine banking and financial system is hereby liberalized
to create a more competitive environment and encourage greater foreign participation
through increase in ownership in domestic banks by foreign banks and the entry of new
foreign bank branches. In allowing increased foreign participation in the financial system,
it shall be the policy of the State that the financial system shall remain effectively
controlled by Filipinos.

SEC. 2. MODES OF ENTRY

The Monetary Board may authorize foreign banks modes of entry: (i) by
acquiring, purchasing or owning up to sixty percent (60%) of the voting stock
of an existing bank; (ii) by investing in up to sixty percent (60%) of the voting
stock of a new banking subsidiary incorporated banking authority: Provided,
That a foreign bank may avail itself of only one (1) mode of entry: Provided,
further, That a foreign bank or a Philippine corporation may own up to a sixty
percent (60%) of the voting stock of only one (1) domestic bank or new
banking subsidiary

SEC. 3. GUIDELINES FOR APPROVAL

In approving entry applications of foreign banks, the Monetary Board shall: (i)
ensure geographic representation and complementation; (ii) consider strategic
trade and investment relationships between the Philippines and the country of
incorporation of the foreign bank; (iii) study the demonstrated capacity, global
reputation for financial innovations and stability in a competitive environment
of the applicant; (iv) see to it that reciprocity rights are enjoyed by Philippine
banks in the applicant's country; and (v) consider willingness to fully share
their technology. Only those among the top one hundred fifty (150) foreign
banks in the world or the top five (5) banks in their country of origin as of the
date of application shall be allowed entry in accordance with Section 2 (ii) and
(iii) hereof.

In the exercise of this authority, the Monetary Board shall adopt such measures as may be
necessary to: (i) ensure that at all times the control of seventy percent (70%) of the resources or
assets of the entire banking system is held by domestic banks which are at least majority-owned by
Filipinos; (ii) prevent a dominant market position by one bank or the concentration of economic
power in one or more financial institutions, or in corporations, participations, partnerships, groups
or individuals with related interests; and (iii) secure the listing in the Philippine Stock Exchange of
the shares of stocks of banking corporations established under Section 2(i) and (ii) of this Act:
Provided, That said banking corporations shall establish stock option plans for their officers and
employees as the resources or assets of these corporations may allow in the best business
judgment of their respective boards of directors, pursuant to the Corporation Code of the
Philippines .To qualify to establish a branch or a subsidiary, the foreign bank applicantmust be
widely-owned and publicly-listed in its country of origin, unless the foreign bank applicant is owned
by the government of its country of origin.

SEC. 4. CAPITAL REQUIREMENTS

(i) For Locally Incorporated Subsidiaries. The minimum capital required for locally incorporated
subsidiaries of foreign banks shall be equal to that prescribed by the Monetary Board for domestic
banks of the same category. (ii) For Foreign Bank Branches. Foreign banks seeking entry
pursuant to Section 2 (iii) of this Act shall permanently assign capital of not less than the U.S. dollar
equivalent of Two hundred ten million pesos (P210,000,000.00) at the exchange rate on the date of
the effectivity of this Act, as ascertained by the Monetary Board. The permanently assigned capital
shall be inwardly remitted and converted into Philippine currency. The foreign bank shall be entitled
to three (3) branches.
The foreign bank may open three (3) additional branches in locations designated by the Monetary
Board by inwardly remitting and converting into Philippine currency as permanently assigned
capital, the U.S. dollar equivalent of Thirty-five million pesos (P35,000,000.00) per additional
branch at the exchange rate on the date of the effectivity of this Act, as ascertained by the
Monetary Board. The total number of branches for each new foreign bank entrant shall not exceed
six (6).

For purposes of meeting the prescribed capital ratios, the term "capital" shall
include permanently assigned capital plus "net due to head office, branches and
subsidiaries and offices outside the Philippines" in the ratio prescribed by law or
as may be prescribed by the Monetary Board: Provided, That in all cases, the
permanently assigned capital and fifteen percent (15%) of "net due to" required
to comply with prescribed capital ratios shall be inwardly remitted and converted
to Philippine currency: Provided, further, That amounts invested in productive
enterprises or utilized by Philippine companies for export activities, shall not be
subject to conversion into Philippine currency: Provided, finally, That the Monetary
Board shall monitor the effective use of the "net due to" funds.Whenever there
results "net due from head office" outside the Philippines, this shall be deducted
from the capital accounts for purposes of determining the required capital ratios.

SEC. 5. HEAD OFFICE GUARANTEE

The head office of foreign bank branches shall
guarantee prompt payment of all liabilities of its
Philippine branches.

SEC. 6. ENTRANTS UNDER SECTION 2(III)

Foreign banks shall be allowed entry under Section 2 (iii) within
five (5) years from the effectivity of this Act. During this period,
six (6) new foreign banks shall be allowed entry under Section
2(iii) upon the approval of the Monetary Board. An additional four
(4) foreign banks may be allowed entry on recommendation of
the Monetary Board, subject to compliance with Sections 2, 3, 4,
and 5 of this Act, upon approval of the President as the national
interest may require.

SEC. 7. BOARD OF DIRECTORS

Non-Filipino citizens may become members of
the Board of Directors of a bank to the extent of
the foreign participation in the equity of said
bank.

SEC. 8. EQUAL TREATMENT

Foreign banks authorized to operate under Section 2 of this Act,
shall perform the same functions, enjoy the same privileges, and
be subject to the same limitations imposed upon a Philippine
bank of the same category. These limits include, among others,
the single borrower's limit and capital to risk asset ratio as well as
the capitalization required for expanded commercial banking
activities under the General Banking Act and other related laws of
the Philippines. The basis for computing the ratio shall be the
capital of the foreign bank branch in the Philippines.The foreign
banks shall guarantee the observance of the rights of their
employees under the Constitution.

Any right, privilege or incentive granted to foreign banks

or their subsidiaries or affiliates under this Act, shall be
equally enjoyed by and extended under the same
conditions to Philippine banks. Philippine corporations
whose shares of stocks are listed in the Philippine Stock
Exchange or are of long standing for at least ten (10)
years shall have the right to acquire, purchase or own
up to sixty percent (60%) of the voting stock of a
domestic bank.

SEC. 9. DEVELOPMENT LOANS INCENTIVES

Loans extended by a foreign bank's majority-owned subsidiary
incorporated under the laws of the Philippines and/or a Philippine
bank sixty percent (60%) of the voting stock of which is held by a
foreign bank, to finance educational institutions, cooperatives,
hospitals and other medical services, socialized or low-cost
housing, and to local government units without national
government guarantee, shall be included for purposes of
determining compliance with the provisions of Presidential Decree
No. 717, as amended.

SEC. 10. TRANSITORY PROVISIONS

Foreign banks operating through branches in the Philippines upon the effectivity of this
Act, shall be eligible for theprivilege of establishing up to six (6) additional branches
under the same terms and conditions required by Section 4 (ii) hereof: Provided, That
for any branch additional to what is existing at the time of the effectivity of this Act, the
prescribed permanently assigned capital shall be complied with immediately: Provided,
further, That a foreign bank may open three (3) branches in the location of its choice
and the next three (3) branches in locations designated by the Monetary Board to insure
balanced economic development in all the regions.The existing Philippine branches of
foreign banks shall be given one-and-a-half (1 1/2) years from the effectivity of this Act
to comply with the minimum capital requirements as prescribed under Section 4 (ii) of
this Act.

SEC. 11. SEPARABILITY CLAUSE

If any provision of this Act is declared

unconstitutional, the same shall not affect
the validity of the other provisions not
affected thereby.

SEC. 12. APPLICABILITY OF OTHER

BANKING LAWS
The provisions of Republic Act No. 337, as amended,
otherwise known as the General Banking Act, insofar as
they are applicable and not in conflict with any provision
of this Act, shall apply to banks authorized pursuant to
this Act.

SEC. 13.DELEGATION OF RULE-MAKING

POWERS AND COMPLIANCE REPORTS.
The Monetary Board is hereby authorized to issue such rules and
regulations as may be needed to implement the provisions of this
Act after consultation with the chairpersons of the Banks
Committee of the House of Representatives and the Senate of the
Philippines. On or before May 30 of each year, the Monetary
Board shall file a written report to Congress and its respective
Banks Committees, on the developments in the implementation
of this Act.

SEC. 14. AMENDMENT AND REPEAL OF

INCONSISTENT LAWS.
Sections 11, 12,12-A, 12-B, 13, 14-A, 21-B, and 68 of Republic Act
No. 337, as amended, otherwise known as the General Banking
Act: Sections 4 and 5 of Republic Act No. 7353, otherwise known
as the Rural Banks Act; Sections 4 and 14 of Republic Act No.
3779, as amended, otherwise known as the Savings and Loan
Association Act; and Section 4 of Republic Act No. 4093, as
amended, otherwise known as the Private Development Banks
Act insofar as they are inconsistent with this Act, are hereby
repealed or modified accordingly

SEC. 15. EFFECTIVITY CLAUSE

This Act shall take effect fifteen (15) days

after its publication in the Official Gazette
or in two (2) national newspapers of general
circulation.

REPUBLIC
ACT NO. 10641

AN ACT ALLOWING THE FULL ENTRY OF FOREIGN BANKS IN THE PHILIPPINES, AMENDING
FOR THE PURPOSE REPUBLIC ACT NO. 7721

SECTION 1
Section 2 of Republic Act No. 7721 is hereby amended to read as
follows:SEC. 2.Modes of Entry. The Monetary Board may
authorize foreign banks to operate in the Philippine banking
system through any one of the following modes of entry: (i) by
acquiring, purchasing or owning up to one hundred percent
(100%) of the voting stock of an existing bank; (ii) by investing in
up to one hundred percent (100%) of the voting stockof a new
banking subsidiary incorporated under the laws of the Philippines;
or (iii) by establishing branches with full banking authority.

SEC. 2
Section 3 of Republic Act No. 7721 is hereby amended to read as follows:
SEC. 3.Guidelines for Approval. In approving entry applications of foreign banks, the Monetary
Board shall: (i) ensure geographic representation and complementation; (ii) consider strategic trade
and investment relationships between the Philippines and the country of incorporation of the
foreign bank; (iii) study the demonstrated capacity, global reputation for financial innovations and
stability in a competitive environment of the applicant; (iv) see to it that reciprocity rights are
enjoyed by Philippine banks in the applicants country; and (v) consider willingness to fully share
their technology.
Only established, reputable and financially sound foreign banks shall be allowed entry in
accordance with Section 2 of this Act. The foreign bank applicant must be widely-owned and
publicly-listed in its country of origin, unless the foreign bank applicant is owned and controlled by
the government of its country of origin.
In the exercise of this authority, the Monetary Board shall adopt such measures as may be
necessary to ensure that the control of at least sixty percent(60%) of the resources or assets of the
entire banking system is held by domestic banks which are majority-owned by Filipinos.

SEC. 3
Section 4 of Republic Act No. 7721 is hereby amended to read as follows:
SEC. 4.Capital Requirements. (i)For Locally Incorporated Subsidiaries The minimum
capital required for locally incorporated subsidiaries of foreign banks shall be equal to that
prescribed by the Monetary Board for domestic banks of the same category.
(ii)For Foreign Bank Branches Foreign banks that shall be authorized to establish branches
pursuant to Section 2(hi) of this Act shah permanently assign capital of an amount not less
than the minimum capital required for domestic banks of the same category. The
permanently assigned capital shall be inwardly remitted and converted into Philippine
currency.
The foreign bank branch may open up to five (5) sub-branches as may be approved by the
Monetary Board. Locally incorporated subsidiaries of foreign banks pursuant to Section 2(h) of
this Act shall have the same branching privileges as domestic banks of the same category.

SEC. 4
Section 6 of Republic Act No. 7721 is hereby repealed.

SEC. 5
Section 8 of Republic Act No. 7721 is hereby amended to read as follows:
SEC. 8.Equal Treatment.Foreign banks authorized to operate under Section
2 of this Act, shall perform the same functions, enjoy the same privileges, and
be subject to the same limitations imposed upon a Philippine bank of the same
category. The single borrowers limit of a foreign bank branch shall be aligned
with that of a domestic bank.
The foreign banks shall guarantee the observance of the rights of their
employees under the Constitution.
Any right, privilege or incentive granted to foreign banks or their subsidiaries
or affiliates under this Act, shall be equally enjoyed by and extended under the
same conditions to Philippine banks.

SEC. 6
A new provision in Section 9 is hereby inserted in the same Act, in lieu of the original
provisions of Section 9 repealed by Section 11 of Republic Act No. 10000. Section 9 shall
now read as follows:
SEC. 9.Participation in Foreclosure Proceedings.Foreign banks which are authorized
to do banking business in the Philippines through any of the modes of entry under
Section 2 hereof shall be allowed to bid and take part in foreclosure sales of real
property mortgaged to them, as well as to avail of enforcement and other proceedings,
and accordingly take possession of the mortgaged property, for a period not exceeding
five (5) years from actual possession:Provided,That in no event shall title to the
property be transferred to such foreign bank. In case said bank is the winning bidder, it
shall, during the said five (5)-year period, transfer its rights to a qualified Philippine
national, without prejudice to a borrowers rights under applicable laws. Should the
bank fail to transfer such property within the five (5)-year period, it shall be penalized
one half (1/2) of one percent (1%) per annum of the price at which the property was
foreclosed until it is able to transfer the property to a qualified Philippine national.

SEC. 7.TRANSITORY PROVISIONS.

Foreign banks which are already authorized to do banking business in the
Philippines through any of the modes of entry under Section 2 hereof may
apply to change their original mode of entry.
Foreign banks operating through branches in the Philippines upon the
effectivity of this Act shall retain their original privilege upon entry to establish
a limited number of sub-branches. However, the previous restriction on the
locations of such additional branches is hereby lifted.
The existing Philippine branches of foreign banks shall comply within one (1)
year from the effectivity of this Act with the minimum capital requirements as
prescribed under Section 4(ii) of this Act, unless otherwise extended by the
Monetary Board.

SEC. 8
Section 12 of Republic Act No. 7721 is hereby amended to read as follows:
SEC. 12.Applicability of Other Banking Laws. The provisions of Republic Act
No. 7653, otherwise known as the New Central Bank Act and the provisions of
Republic Act No. 8791, otherwise known as The General Banking Law of 2000,
insofar as they are applicable and not in conflict with any provision of this Act,
shall apply to banks authorized pursuant to this Act.

SEC. 9
Section 13 of Republic Act No. 7721 is hereby amended to read as follows:
SEC. 13.Rule-Making Powers of the Monetary Board of the Bangko Sentral ng
Pilipinas and Compliance Reports. The Monetary Board is hereby authorized
to issue such rules and regulations as may be needed to implement the
provisions of this Act. On or before May 30 of each year, the Monetary Board
shall file a written report to Congress and its respective Banks Committees, on
the developments in the implementation of this Act. The implementing rules
and regulations of this Act shall be published in at least two (2) newspapers of
general circulation.

SEC. 10

Repealing Clause.All laws, decrees,

executive orders, proclamations, rules and
regulations and other issuances or parts
thereof insofar as they are inconsistent with
the provisions of this Act are hereby
repealed or modified accordingly.

SEC. 11.EFFECTIVITY.
This Act shall take effect fifteen (15) days after
its publication in theOfficial Gazetteor in at least
two (2) national newspapers of general
circulation.