What Are The 4 Foreign Banks That Will Enter the Philippines in 2015?
Last year, the Philippines eased rules that limit the entry of foreign lenders into the country. This move widens the variety of banking options, products and services available for businesses and customers alike. For one, foreign banks, especially those who have plenty of international branches abroad offer remittance options for overseas Filipino workers and their loved ones.
Majority of existing foreign banks in the Philippines are worldwide financial leaders and have expansive international reach. With the onset of the ASEAN regional integration, and the easing of banking policy, Asian banks are now making their move to set up branches in the Philippines.
So far, the Bangko Sentral ng Pilipinas (BSP) has approved four foreign banks under Republic Act (RA) 10641 or “An Act Allowing the Full Entry of Foreign Banks in the Philippines.” The BSP also said two more Asian banks have expressed interest to enter the Philippines and are pending approval.
Here’s a quick look at the banks who gained the central bank’s seal of approval to expand their operations in the country (in alphabetical order).
1. Cathay United Bank
Country of origin: Taiwan
Products and services offered: Deposits, Loans and Guarantees, International Banking, Trust and Stock Brokerage, Overseas Chinese Services, Credit Cards, Internet Banking, and more
Overseas branches: Cambodia, China, Hong Kong, Lao, Malaysia, Singapore, Vietnam; with representative offices in Indonesia, Myanmar, Thailand, United States
Cathay United Bank (CUB) is one of the largest commercial banks in Taiwan with $71 billion worth of assets. CUB is a wholly owned subsidiary of Cathay Financial Holding Company, the largest financial holding company in Taiwan. It is a full-service bank which caters to both consumers and businesses in its over 100 branches around Taiwan and other international locations. Prior to BSP’s approval, CUB has been operating a representative office in the Philippines for more than 20 years. Company executives said branch operations will begin in the third quarter of 2015.
2. Industrial Bank of Korea
Country of Origin: South Korea
Products and services offered: Corporate Banking, Private Banking, Retail Loans, Deposits, Remittances, Credit Cards, Phone, Internet Banking, Foreign Exchange
Overseas branches: China, Hong Kong, India, Japan, Myanmar, United Kingdom, United States, Vietnam
If you are someone looking for funding for your startup, you can consider the Industrial Bank of Korea (IBK). With more than $234 billion worth of assets, IBK primarily caters to small-and-medium-sized enterprises (SMEs), offering creative financial solutions, such as extending loans on collateral for intellectual properties. IBK now has over 1.1 million corporate clients scattered across 638 branches in South Korea, a subsidiary in China with 15 branches, and seven international branches, with three representative offices. IBK is a government-owned bank established in 1961.
3. Shinhan Bank
Country of origin: South Korea
Products and services offered: Retail Banking, Wealth Management, Corporate Banking, Treasury Services, Internal Asset and Liability Management, Trading of Securities and Derivatives, Investment Portfolio Management, International Bank Services, Merchant Banking Account, Deposits, Loans, Investment Options, Internet Banking, Remittance
Overseas branches: Cambodia, Canada, China, Germany, Hong Kong, India, Japan, Kazakhstan, Mexico, Myanmar, Poland, Singapore, United Kingdom, United States, Uzbekistan, and Vietnam
Shinhan Bank is the second largest commercial bank in South Korea in terms of assets. It is part of the Shinhan Financial Group, a company listed at the Korea Stock Exchange and the New York Stock Exchange. It was established in 1897 under the name Hanseong Bank, and was the first bank in South Korea. Since it reopened in 1982, it operates on more than 750 domestic branches, 100 depositary offices, 20 premises, and 8 overseas branches. Shinhan Bank is set to open its Manila branch by September. “The bank will apply localized business strategy based on its broad experience in Asian region, providing various financial services to both Korean and local corporations and the Korean community in the Philippines,” said a statement by Shinhan Bank chief executive officer Cho Yong Byoung.
4. Sumitomo Mitsui Banking Corp.
Country of origin: Japan
Products and services offered: Leasing, Securities, Credit Cards, Investment, Venture Capital, Deposits, Loans, Insurance, Wealth Management, Foreign Exchange, Remittance, M&A Advisory Services, Cash Management Settlement, Equity Underwriting Services, and more
Overseas branches: Australia, Belgium, Brazil, Canada, China, Czech, France, Germany, Hong Kong, India, Indonesia, Ireland, Italy, Korea, Malaysia, Myanmar, Netherlands, Qatar, Russia, Singapore, Spain, Taiwan, Vietnam, Thailand, UAE, United Kingdom, United States and Representative offices in Bahrain, Cambodia, Chile, Egypt, Iran, Mongolia, Colombia, Mexico, Peru, South Africa, Turkey
Sumitomo Mitsui Banking Corp. (SMBC) is the first foreign bank to gain the BSP’s approval in January under the revised Foreign banking law. From a representative office, it is scheduled to open its first branch in Makati, offering basic services such as deposits, loans, and foreign currency trading, as well as trade financing and cash management services. It is the second largest bank in Japan in asset size, $1,254 billion in total. SMBC has more than 400 branches in Japan with 70 international offices. SMBC operates as a subsidiary of Sumitomo Mitsui Financial Group, Inc.
Aside from the two upgrades and two new arrivals, there are six foreign universal banks, eight foreign commercial banks, 11 representative offices, and 3 offshore banking units currently operating in the Philippines according to the BSP.
Foreign banks in the Philippines (as of June 19, 2015)
|Universal Banks||● ANZ Banking Group
● Deutsche Bank
● ING Bank
● Mizuho Bank
● Standard Chartered Bank
● The Hongkong & Shanghai Banking Corporation (HSBC)
|Commercial Banks||● Bangkok Bank
● Bank of America
● Bank of China
● J.P. Morgan Chase Bank
● Korea Exchange Bank
● Mega International Commercial Bank
● The Bank of Tokyo-Mitsubishi UFJ
|Representative Offices||● Bank of Singapore
● Barclays Bank
● DBS Bank
● Japan Bank For International Cooperation
● Rothschild (Singapore)
● State Bank of India
● The Bank of New York Mellon
● The Export-Import Bank of Korea (Korea Eximbank)
● Wells Fargo Bank
● Korea Development Bank
|Off-shore Banking Units||● BNP Paribas
● J.P. Morgan International Finance
● Taiwan Cooperative Bank
New technology and ways of managing banking services can enter the country through the new banks. This will be a chance for local banks to absorb the new technologies — or quite literally force them to adapt quickly and introduce innovations, if they wish to keep their Filipino customers.
Local banks will have increased opportunities to partner with the new players. The linkages might make it possible for some local banks to establish presence in other ASEAN economies, and as a result expand their customers’ reach to other ASEAN countries.
The increased competition could help to improve banking services. If the new banks look to finance large local firms’ expansion and growth, that may prompt local players to step up their services to keep up with the competition.
However, Mr. Mendoza said that the effect will vary from person-to-person and to the type and scale of business. Low income consumers and SMEs in particular are practically an untapped market.
Presently there’s growing evidence that low income consumers and SMEs are not really benefitting from the benign economic and credit conditions right now. One hopes that some of the new players may begin to look to the country’s base of the economic pyramid (lower income consumers and smaller firms).
While local banks specialize in services that specifically cater to Filipinos’ financial habits, foreign banks will have a more universal approach, having the resources and experience dealing with international customers as well. You can play on to this strength depending on your financial needs.