[MANILA] The Philippine central bank has approved the gradual lifting of a 16-year-old moratorium on the granting of new bank licenses, further opening up an industry that has drawn interest from some of the world's largest lenders.
The ban will be fully lifted by Jan 1, 2018, the central bank said in a statement.
It has been imposed since 1999 to encourage the creation of larger and stronger financial institutions through local mergers and acquisitions.
The initial phase of the approval involves a two-year transition during which existing thrift banks can apply for a license to convert into a universal or commercial bank, it said.
"The initiative provides local businesses the avenue to explore opportunities in the banking sector amid the opening of the industry to foreign capital infusion," Bangko Sentral ng Pilipinas governor Amando Tetangco said on Wednesday.
"The two-year transition period also gives interested parties ample time to strategically position themselves in line with evolving policy reforms and regional integration efforts," he added.
A Philippine law passed in 2014 allowed more foreign banks to operate in the country, including taking full control of local lenders.
Following the legislation and with its rapidly growing economy, the Southeast Asian nation has attracted a number of foreign banks.
Japan's biggest bank Mitsubishi UFJ Financial Group recently bought a fifth of mid-sized Philippine lender Security Bank Corp for more than US$700 million, the biggest foreign financial sector equity investment in the Southeast Asian nation.
In 2014, Taiwan's Cathay Financial Holding Co Ltd acquired 20 per cent of the Philippines' Rizal Commercial Banking Corp for about US$400 million.
Last year the central bank also allowed foreign lenders in the Philippines to fully own local trust corporations.