By Melissa Luz T. Lopez,
AT LEAST two global banks are looking to establish their presence in the Philippines, the central bank chief said, amid growing interest as more foreign players look to cash in on the country’s growth story.
Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla, Jr. said two foreign banks are in talks to set up representative offices here, on top of eight other lenders who want to put up branches in Manila.
Representative offices allow foreign banks to set up liaison desks for Philippine-based clients to their branches in their home country, enabling them to promote their financial products and services as they lure potential clients to transact with their branches located abroad.
These bank offices cannot take deposits, hand out loans, or offer foreign exchange.
Mr. Espenilla said the two banks considering to put up such offices come from outside Asia, showing broad interest among foreign firms towards the Philippines. He added that such applications also pose as a litmus test as the global lenders assess opportunities here.
“Representative offices are mainly focused on marketing. That’s important because representative offices are also useful in drawing in investments into the country,” the BSP chief told reporters in an ambush interview Friday. “If they see a really good market demand, it may progress into a branch application.”
There are 10 global banks with representative offices in the Philippines, according to central bank data.
The BSP evaluates applications to open representative offices by looking at the foreign bank’s liquidity and solvency positions; net worth and resources base; financial and credit standing in the global banking community; and its exposure in the Philippines, including the outstanding commercial and financial ties between Manila and the applicant bank’s home country.
Mr. Espenilla also said that there are live inquiries from eight Asian banks considering to set up branches in the Philippines. If these push through, the lenders would add to the 10 foreign players which have entered the country since the passage of Republic Act (RA) 10641 in 2014.
RA 10641 opened the Philippines to more foreign banks as it lifted the previous limit which allowed only 10 offshore lenders to do business in the country at a time, which meant that a new player could only set up shop here when one of the 10 accredited players pulled out.
Five of the new foreign bank branches that have set up shop here are from Taiwan: Cathay United Bank, Yuanta Commercial Bank Co. Ltd., First Commercial Bank, Hua Nan Commercial Bank Ltd., and the Chang Hwa Commercial Bank, Ltd.
Other banks that have launched operations here are the Japan-based Sumitomo Mitsui Banking Corp.; South Korea’s Industrial Bank of Korea, Shinhan Bank, and Woori Bank; and the Singapore-based United Overseas Bank Ltd.