Procedures for Obtaining PDIC Consent on Mergers and Consolidations

September 1, 2009 PDIC BULLETIN NO. 35-09 TO : All PDIC Member Banks SUBJECT : Procedures for Obtaining PDIC Consent on Mergers and Consolidations The PDIC, under R.A. No. 3591 as amended, is mandated to establish, administer and regulate a deposit insurance system primarily aimed at providing protection to depositors to promote and maintain confidence and stability in the banking system. Under Section 21 (c) of R.A. 3591, as amended, no insured bank shall: (a) merge or consolidate with any bank or institution; or (b) assume liability or pay any deposits made in, or similar liabilities of any bank or institution; or (c) transfer assets to any bank or institution in consideration of the assumption of liabilities for any portion of the deposits made in such insured bank, without the prior written consent of PDIC. To better achieve its regulatory mandate and enhance PDIC's complementary role in promoting and maintaining the stability of the Philippine banking system, PDIC, on August 12, 2009, entered into a Memorandum of Agreement with the Bangko Sentral ng Pilipinas (BSP) to adopt a working arrangement between PDIC and BSP to standardize documentary requirements, and to share information relevant to the evaluation of the viability of banks/non-banks to be merged or consolidated. PDIC and BSP also agreed on the time frame to complete the evaluation, harmonize the parameters for determining the viability of the proposed merger/consolidation, and align post-monitoring requirements. In accordance with the Memorandum of Agreement, banks applying to merge or consolidate with another bank or institution shall submit a joint letter, duly signed by both presidents of the merging/consolidating entities, addressed to the PDIC President requesting for PDIC's written consent to the proposed merger/consolidation. Submission of the letter shall be made simultaneous with the filing of their counterpart application to BSP for merger/consolidation pursuant to BSP Memorandum No. M-2009-028. The letter-application for merger/consolidation addressed to the PDIC President shall include a separate and complete set of the documentary requirements enumerated in BSP Memorandum No. M-2009-028, for PDIC's separate evaluation. HSDIaC All merging/consolidating entities shall comply with all PDIC Regulatory Issuances, as well as with major banking laws and regulations. The merging/consolidating banks should ensure the safety of the depositing public. To this end, they shall inform all of their depositors of the merger/consolidation, and assure their depositors of the same degree of security of deposits they enjoyed before the merger/consolidation. The approval by PDIC of the proposed merger/consolidation shall be valid for a period of six (6) months reckoned from the date the applicants shall have fully obtained both PDIC and BSP's approvals. For the guidance and compliance of all concerned. JOSE C. NOGRALES President