The Bangko Sentral ng Pilipinas (BSP) is no longer amenable to a proposal to allow banks to sell products and services offered by their subsidiaries and affiliates.
According to BSP Gov. Rafael B. Buenaventura, the Urban Bank and Urbancorp Investment Inc. case has "strengthened my resolve not to allow it (the one-stop shop scheme)."
Based on the proposal, banks want to be allowed to sell a range of services to their clients that are being offered by their subsidiaries and affiliates.
For example, Buenaventura said, banks want to be able to sell through their bank branches products such as mutual funds, common trust funds, insurance, securities and other products.
He said the sad experience of Urbancorp and even Westmont Investment Corp. (Wincorp) shows that the local market "is not yet sophisticated enough to differentiate such products and their risks."
In the case of Urbancorp, investors relied on the fact that Urbancorp was a subsidiary of Urban Bank and that their placements will be backed by the bank.
Urban Bank did help Urbancorp which led to the bank's collapse.
The same was also the mistaken case with Wincorp which appeared to be an affiliate or subsidiary of the then Westmont Bank.
In the case of Wincorp, it turns out that it was not really a subsidiary or affiliate of Westmont as it had a different set of owners from Westmont but with a few common owners.
Wincorp investors are reportedly claiming that they were convinced to invest in Wincorp by some officials of Westmont.
Such charges are still being investigated by the authorities.
Buenaventura said the BSP must also tighten up on the use of a bank logo to back up its investment house subsidiary.
He said the use of the bank logo misleads investors into thinking that their investment will be backed up the banks' resources.