BDO Unibank, the most dominant lender in the country, has managed to establish only one other presence within the Asean, a performance dwarfed by Malaysian rival Maybank, for example, which has eight, the Manila-based Asian Development Bank said.
Singapore’s United Overseas Bank, not exactly the island-state’s largest, has seven banking units within the 10-nation group of sovereigns, the ADB said.
Even Bangkok Bank has seven banking units across Southeast Asia, while the Oversea-Chinese Banking Corp., or OCBC, has six. CIMB Bank also of Malaysia has five, while Jakarta’s Bank Mandiri has two.
These numbers, the ADB said, highlight Manila’s lack of banking presence in any of its rivals’ territories and a reflection of what needs to be done to give more meaning to the process of integration that has enveloped the trade side of the program but remains sorely absent in the financial sphere.
According to the ADB, Philippine banks can ramp up their penetration of the banking market in the Asean by facilitating, for example, the investments and trade of Philippine companies expanding in the region.
ADB senior economist Thiam Hee Ng said there had been a little integration in the Asean banking sector and that so-called nonregional banks have larger footprints in Asean than regional Asean banks.
Singapore and Malaysian regional banks, for example, are some of the more active among the Asean member-states.
He said to be able to increase penetration in Asean banking, Philippine banks must provide good service and make sure that its banks are stable.
The key for any regional banks to open up ramped up presence in the Asean is to facilitate the investment needs of their natural markets.
“Look at where the Philippines has investments overseas. Philippine banks can be there to provide support to Philippine exporters and Filipino investors. Generally that’s the strategy of Japanese banks. When they come in or expand, what they are trying to do is support their domestic clients,” the ADB official told the BusinessMirror.
He acknowledged the Philippine banking system is strong but relatively small in asset size compared to banks in Thailand, Malaysia or Singapore, for example.
But “size is not everything. They have to focus more on their strength which is coming out with new products, and markets. It’s also about supporting Philippine companies that want to go abroad, and that would be their strengths,” Ng explained.
He said the Philippines is unique in having very diverse banks because of the many different financial institutions that can be found within its territory. Its operating environment is also quite open and the region’s most vibrant democracy has a competitive banking market.
The country’s three biggest banks—BDO Unibank Inc., Metro Bank & Trust Co. and Bank of the Philippine Islands—may be dominant players in the Philippines but are not as dominant as the top 3 banks in other countries.
Ng said the nonregional or ex-Asean banks have larger footprints in the region. He said Standard Chartered Bank has the largest presence with10 banks in the region; ANZ Bank, nine; Mitsubishi UFG has eight; Sumitomo Mitsui Banking Corp. has eight also and so does Mizuho even as HSBC has seven and Citi has six banks.
He also said central banks in the region have maintained a very prudent monetary-policy stance.
“The financial conditions were stable. Interest rates are in low levels. Generally, they are comparable. The Philippines is not different from Malaysia or Thailand,” he said.