THE country’s lenders look more and more toward the provinces for new markets and increasingly less in the urban centers as competition from foreign banks heat up, analysts at Maybank ATR said
“Branch expansion is happening in provincial areas where the potential for new markets is greatest. It’s also a logical response to more foreign entrants in the country who will likely be focused in Metro Manila,” analysts Katherine Tan and Arabelle Maghirang said.
The Bangko Sentral ng Pilipinas has since encouraged the establishment of branches in the unbanked areas, to which some banks have responded by starting microfinancing ventures, led by Rizal Commercial Banking Corp. and Bank of the Philippine Islands.
BDO Unibank Inc. has completed the acquisition of the rural lender, One Network Bank, touted as one of the biggest in Mindanao with 98 branches.
It was noted the full entry of foreign banks encourages competition, efficiency and innovation among banks in preparation also for the Asean economic community.
In fact the BSP has welcomed the entry of several foreign banks that include Sumitomo Mitsui Financial Group of Japan, Industrial Bank of Korea and Shinhan International Bank of South Korea.
Sumitomo, the second-largest bank in Japan by assets has total asset of $1.529 trillion and book value of $89 billion.
Shinhan, a leading financial institution in South Korea has $309-billion assets and $28-billion book value.
Cathay United Bank, one of the largest banks in Taiwan has $220-billion assets and a book value of $14 billion. Government-run Industrial Bank of Korea, the leader in small and medium enterprise lending has an asset size of $201 billion and $14-billion book value.
The latest foreign entrant was Yuanta Commercial Bank, following in the footsteps of Cathay.
Yuanta, a subsidiary of the largest financial holding company in Taiwan, has total asset of $41 billion and $6-billion book value.
Yuanta Bank took into account that Taiwan and the Philippines are becoming closely tied in terms of cash flow and logistics.
“In recent years, Taiwan-backed enterprises have continued to increase their investment in the Philippines. Through the establishment of a bank subsidiary, not only will Yuanta be able to service Taiwanese businesses in the Philippines, it will surely create a win-win situation for the bank and its customers,” Yuanta official said.
TongYang Savings Bank will become a subsidiary of Yuanta Bank, and will be re-named as Yuanta Savings Bank (Philippines), according to Tong Yang Bank Chief Compliance Officer Michael Samson.
“Looking ahead, Yuanta Bank will continue to actively seek suitable overseas markets to fulfill its mandate of being “deeply rooted in Taiwan while actively expanding out to the Asia-Pacific region,” Yuanta executives said.