Banks: SC sides with banks on PEACe bond tax. The Supreme Court
yesterday ordered the Bureau of Treasury to release the 20% final
withholding tax previously imposed on the Poverty Eradication and
Alleviation Certificates (PEACe) bonds that matured last 18 October 2011.
The PEACe bonds are zero-coupon debt sold by the government in 2001
and was originally exempted from taxes. Subsequently, in 2004, a ruling by
the Bureau of Internal Revenue (BIR) declared government securities
should be subject to taxes. As such, banks were ordered to keep in escrow
an amount equivalent to the contested 20% withholding tax in 2011, while
the issue was being settled. The BIR is reportedly looking to file a motion
for consideration. We believe the impact to banks earnings would be
negligible.
Banks: Several foreign banks keen to enter the Philippines. At least
seven Asian banks have expressed interest to establish a presence in the
Philippines as the domestic economy strengthens and opportunities
abound with only one in five households having a bank account. Among
those reportedly interested are Taiwan’s Cathay United Bank and Taiwan
Cooperative Bank, and South Korea’s Shinhan International Bank, Woori
Bank, and Busan Bank. These are major banks in their home markets and
are likely looking for growth outside their country. In February, Sumitomo
Mitsui Banking Corp of Japan was given approval to set up a local branch.
-Maybank ATR-
