The Department of Finance (DOF) said Monday it is supporting the Bangsamoro government’s proposed acquisition of the Development Bank of the Philippines’ (DBP) shares in Al-Amanah Islamic Investment Bank of the Philippines (AAIIBP) to promote financial inclusion and accelerate socio-economic development in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM).
“Through this, we are taking bold steps to build a strong and vibrant Islamic banking system that caters to the specific needs of the people of BARMM,” Finance Secretary Ralph Recto said.
“This will support the Bangsamoro government’s efforts to provide vital social and infrastructure projects to fast-track the region’s progress. The road to peace, inclusive growth, and prosperity in the region becomes even brighter,” he said.
The proposed transfer of shares was approved by the Intergovernmental Fiscal Policy Board (IFPB) co-chaired by Recto and Bangsamoro Government Minister of Finance, Budget and Management Ubaida Pacasem during its 7th meeting on Sept. 3, 2024.
The approval was subject to the terms and conditions as may be agreed by both parties, in accordance with existing laws, rules and regulations.
Under the Bangsamoro Organic Law (BOL), the IFPB will determine the participation of the Bangsamoro government in the AAIIBP.
The AAIIBP is the first Islamic bank in the Philippines. By its charter, it is recognized as a universal bank with an authorized capital stock of P1 billion consisting of 10 million common shares and a network of nine branches.
In 2008, the AIIBP became a subsidiary of DBP, owning 99.9 percent of its capital stock. By owning the shares of the AAIIBP, the BARMM effectively saves on the total minimum capitalization required of around P6.0 billion in setting up a universal bank.
The Bangsamoro government’s planned acquisition of DBP’s shares in the AAIIBP aligns with Section 3 of Republic Act No. 6848 or the AAIIBP Charter, which mandates the Islamic Bank to support socio-economic development in the BARMM.
This will be achieved by performing banking, financing and investment operations as well as by engaging in agricultural, commercial, and industrial ventures based on Islamic banking principles.
Part of the AAIIBP’s powers is to act as an official government depository bank of government-owned- or controlled corporations (GOCCs) especially those operating in the BARMM.
The mandates align with the BARMM’s Islamic Finance Roadmap, making the transfer of DBP’s shares in the AAIIBP an ideal and strategic move.
By having significant control of AAIIBP, the BARMM government will be able to facilitate the financing of government policy priorities and projects that other banks would normally not perform.
It can also increase competition in the market by introducing new financial services that are innovative and competitive.
The DBP also supported the transfer of the shares to the Bangsamoro Government and assured the IFPB of the AAIIBP employees’ capacity to operate an Islamic bank.
To complete the transfer, the Bangsamoro Government and the DBP are now securing necessary approvals from the Bangsamoro Transition Authority (BTA) – Parliament, the Bangko Sentral ng Pilipinas (BSP), and the Governance Commission for GOCCs (GCG).
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