The Bangko Sentral ng Piipinas (BSP) stressed
the need for Philippine banks to shape up amid intense competition from the
entry of foreign banks into the country and economic integration in the region.
BSP Governor Amando Tetangco Jr. said banks
operating in the country need to beef up and strengthen their operations to
survive intense competition from regional banks.
“In an increasingly integrated regional setup,
there is wisdom for further beefing up, given current size of our banks and the
system as a whole,” he said.
Tetangco also cited the entry of more foreign
banks into the Philippines after President Aquino signed RA 10641 in July last
year amending the foreign banks law by removing the limit of foreign banks in
the country.
Foreign banks under the new law have also been
allowed to own as much as 100 percent of any local bank, removing the previous
cap of 60 percent.
“As we’ve liberalized entry of foreign banks,
we can expect more competition. Our local banks will have to review their
business models to see where they can continue to have comparative advantage,”
he said.
The BSP has so far allowed six foreign banks to
set up shop in the Philippines. These include Shinhan Bank of South Korea,
Sumitomo Mitsui of Japan, Cathay United Bank of Taiwan, the Industrial Bank of
Korea, Yuanta Bank of Taiwan, and United Overseas Bank Limited (UOB) of
Singapore.
He explained Philippine banks need to improve
on how they do business such as being smart in choosing their target markets
and products as well as leveraging off technology.
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