Bank Mandiri in talks to enter Philippine market

By Melissa Luz T. Lopez, Senior Reporter

AN INDONESIAN BANK is currently in talks with the Philippine government as they look to open a branch here, which comes ahead of a bilateral deal between the central banks of these two countries.
Officials from the state-run PR Bank Mandiri Tbk have been in talks with the Department of Finance and the Bangko Sentral ng Pilipinas (BSP) as they explore the possibility of setting up shop in Manila, a senior official said.
However, no formal application has been filed with the BSP as of this writing.
Bank Mandiri is the largest bank in Indonesia in terms of assets. The Indonesian lender has been quoted in news reports to have said it is expanding its presence in Singapore, Malaysia and Hong Kong ahead of a long-term goal to be one of the largest banks in Asia by 2020.
If realized, this would be the first Indonesian lender to set up operations in the Philippines, which comes alongside discussions between the BSP and Indonesian regulator Otoritas Jasa Keuangan (OJK) that will facilitate a smoother system for foreign banks to enter the other country.
Formal discussions between these nations started early 2017, which come ahead of the ASEAN Banking Integration Framework (ABIF) eyed in full swing by 2020.
It also springs from Republic Act 10641 signed by then-President Benigno S.C. Aquino III, which lifted the limit that allowed only 10 foreign-owned banks to operate in the Philippines at any given time. So far, 12 foreign lenders have secured the central bank’s approval to set up their branches here since the law was passed in 2014.
The Industrial and Commercial Bank of China Ltd. is the newest player which won the BSP’s nod to do business in the Philippines, which happens to be the biggest lender in the mainland.
Malaysia’s CIMB Bank received regulatory approval to operate a full branch here late last year.
Five Taiwanese banks have also opened branches in the Philippines over the last three years: Cathay United Bank, Yuanta Commercial Bank Co. Ltd., First Commercial Bank, Hua Nan Commercial Bank Ltd., and the Chang Hwa Commercial Bank, Ltd.
South Korea’s Industrial Bank of Korea, Shinhan Bank, and Woori Bank also started their businesses here, as well as the Japan-based Sumitomo Mitsui Banking Corp. and the Singapore-based United Overseas Bank Ltd.
BSP Deputy Governor Chuchi G. Fonacier, who heads the Financial Supervision Sector, has said that other foreign banks have expressed their intent to open banking units in the country but have yet to submit requirements.
A strong middle class market and a young population make the Philippines more attractive to foreign players looking for new clients and for new sources of growth, Ms. Fonacier has said. She added that foreign banks are likely following their corporate clients to sites where they expect increased trade and investment volumes.