Bank ser­vices im­prove in Philip­pines

The Pak Banker - - Company& -

MANILA: Ac­ces­si­bil­ity of bank ser­vices fur­ther im­proved as the num­ber of bank branches in the coun­try con­tin­ued to grow in the first half of the year, the Bangko Sen­tral Pilip­inas re­ported.

Data from the BSP showed that there were 24,192 bank head of­fices and branches in the coun­try as of end-June, up from 22,915 as of the same pe­riod last year.

The num­ber of play­ers in the lo­cal bank­ing in­dus­try ac­tu­ally de­clined, but the cen­tral bank said this was more than off­set by the move of ex­ist­ing banks to branch out.

The BSP, which is ad­vo­cat­ing merg­ers and ac­qui­si­tions in the bank­ing sec­tor, said the de­cline in the num­ber of in­dus­try play­ers and the in­crease in the ac­tual num­ber of bank of­fices was a wel­come devel­op­ment.

Reg­u­la­tors said the coun­try has too many play­ers in the bank­ing sec­tor and it would be wise to trim their num­ber. The BSP said that in the case of the Philip­pines, the ideal sit­u­a­tion was to fur­ther re­duce the num­ber of play­ers and make ex­ist­ing banks big­ger and more fi­nan­cially sta­ble.

Data from the BSP showed that bank op­er­a­tors in the coun­try fell slightly to 7,365 in June this year from 7,376 in the same pe­riod a year ago.

On the con­trary, bank branches (ex­clud­ing head of­fices) grew from 15,539 to 16,827, re­sult­ing in the rise in the to­tal num­ber of bank of­fices.

The BSP said there was still much room for con­sol­i­da­tion in the coun­try's bank­ing sec­tor, en­cour­ag­ing com­mer­cial banks to ac­quire some of the ru­ral banks.

Un­like the com­mer­cial bank­ing sec­tor, the ru­ral bank­ing sec­tor has wit­nessed clo- sures over the past two years. Reg­u­la­tors said two of the most com­mon prob­lems en­coun­tered by ru­ral banks were the lack of cap­i­tal and mis­man­age­ment.

The BSP be­lieves the ac­qui­si­tion of ru­ral banks and other smaller banks is a vi­able in­vest­ment op­tion for com­mer­cial banks.

In Novem­ber, the cen­tral bank is­sued a cir­cu­lar tight­en­ing the re­quire­ments for putting up ru­ral banks. More­over, the BSP has put up a P5-bil­lion fund that may be tapped by com­mer­cial banks that are ac­quir­ing ru­ral banks.

For reg­u­la­tors, hav­ing trou­bled ru­ral banks acquired by big­ger banks is much bet­ter than al­low­ing the for­mer to close down. This is be­cause clo­sures are costly for the govern­ment, as these en­tail pay­ment of de­posit in­surance cov­er­age by the Philip­pine De­posit In­surance Corp. - PB News

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