By Genivi Factao
The Asian Development Bank (ADB) said on Monday that Philippine banks lag behind other Asean-based banks in penetrating the regional banking market.
ADB economist James Villafuerte said while the Philippines is globally integrated, as shown by the presence of such banks as the Bank of America and Citibank, its homegrown lenders are mostly stay-at-home entities, unwilling or unable to make foreign forays of their own. More foreign banks are coming in than local going out, he said.
“As for Asean integration, we’re not much integrated. We don’t have big banks that can go to other countries, but there are Asean banks which are coming in, which is good for us also. There should be enough liquidity and the cost of borrowing should [still] be low. It is because the global liquidity and regional liquidity are quite ample,” the ADB official told the BusinessMirror.
In a research note entitled “Enhancing Access to Financial Services through a More Competitive Financial System,” a component study of the Advancing Philippine Competitiveness among the six Asean member-states (AMSs), only Philippine and Vietnamese banks did not have a presence in other AMSs.
It reiterated the Philippines lags behind other AMSs both in attracting banks into the country and in penetrating other banking markets in the region.
The ADB acknowledged the Philippines was able to attract three banks, one each from Malaysia, Singapore and Thailand.
However, other AMSs were able to attract far more banks from other AMSs than the Philippines. For instance, two banks each from Malaysia and Thailand and three banks from Singapore established their presence in Vietnam.
Four Malaysian banks also established a presence in other AMSs. Among them, Maybank appears to be the most aggressive in extending its presence in other AMSs.
Villafuerte said the combined average assets of banks of Malaysia, Singapore and Thailand is more than the combined average sizes of the rest of the member countries.
“Philippines ranked 7th in terms of the ratio of banking assets to GDP and 6th in terms of banking assets per capita. The Philippines’ deposits per capita was equivalent only to one-third of Thailand’s and one percent of Singapore’s,” he said at the forum on “Future of Asean Integrated Banking System : Prospects and Outlook.”
Given that banks headquartered in ASEAN countries remain rather small on an international scale, market access preference should be given to ASEAN banks over other banks to develop a large globally competitive ASEAN banks over time, Villafuerte said.
It will help the lenders develop a customer base large enough to support their growth and allow them to take the lead in ASEAN finance in the future.
These banks would also be able to obtain a foothold in global banking through mergers and the acquisition of smaller banks.
“As full financial integration is too ambitious, it would be best to target a partial integration over the time period and improve from there. This will be supported by a regulatory harmonization and a strengthened policy coordination,” Villafuerte said.