Ever since the Asian financial crisis of 1997, measures have been put in place to

ensure that such a crisis would not affect the country in a big way. To further improve
the capacity of banks to face adverse shocks, and to reinforce the institutional
framework to deal with problem banks in the face of the Asian crisis, the BSP adopted a
programme of reforms, which included: a further increase in the minimum capital
requirements; stricter requirements for granting new bank licences, as well as for setting
up new branches; higher qualification requirements for bank directors and senior
officers;

tighter regulations on insider loans; stringent rules on the restructuring of

loans, and redefinition of non-performing loans to align with the international standards;
After all these were put into place. Because of the way the country;s central bank has
put these standards into play. This creates significant barriers that would limit or make it
difficult for new competitors to enter into the Banking Industry in the Philippines,
considering all the capital needed to compete with Banco De Oro, the biggest chain of
private banks in the country. It would be an insurmountable task at hand. However, with
the ASEAN countries planning on a regional economic integration by the year 2015,
these barriers may be lowered with foreign banks looking to make a mark in the
Philippines.

In a decisive step toward ASEAN banking integration, central bank

governors from around the region came together in early April 2011 to endorse the
ASEAN Banking Integration Framework (ABIF). This framework is part of the ASEAN
Economic Community Blueprint, which promises to bring economic benefits and
financial stability to individual countries and the region through multilateral liberalisation
by 2015. The banking sector will particularly need to stay ahead of the game to facilitate
investors and to support their moves throughout the region.

Singaporean and

Malaysian banks and telecoms, for instance, have invested heavily in the region and
seem to be slightly ahead of other competitors in better preparing themselves for the
AEC. This is where BDO lacks, it has made its impact in the country and is dominating
the market in the private bank sector as of now, There is no threat of a new entrant to
but with the AEC upon us, and regional financial integration approaching, the threat of
new entry will be quite high, with other major banks in the neighbouring countries,
positioning themselves already for this.