Taiwan’s Cathay United Bank latest foreign entrant in Philippines

MANILA, Philippines - Another foreign bank given the green light by the Bangko Sentral ng Pilipinas (BSP) to operate in the Philippines as part of the second wave of bank liberalization program has started commercial operations early this month.

BSP Deputy Governor Nestor Espenilla Jr. issued Circular Letter 2015 – 064 informing banks and non-bank financial institutions that Taiwan-based Cathay United Bank Co. Ltd Manila Branch has started operations last Oct. 2.

Last April 8, the BSP approved the application of Cathay United Bank to establish a branch with a commercial bank license in the Philippines.

The Taiwanese bank was registered with the Securities and Exchange Commission (SEC) last May 28 and was granted the corresponding Certificate of Authority to Operate by the BSP last Sept. 24.

Cathay United Bank is a wholly-owned subsidiary of Cathay Financial Holding Co. and is the largest financial holding company in Taiwan. The bank has presence in Cambodia, China, Hong Kong, Singapore, Malaysia, Vietnam, Thailand, Myanmar, Lao PDR, and Indonesia.

President Aquino signed RA 10641 in July last year amending the foreign banks law by removing the limit of foreign banks in the country earlier set at only 10.

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.

Aside from Cathay United Bank, the BSP has also allowed five more foreign banks to set up shop in the Philippines. These include Sumitomo Mitsui of Japan, Shinhan Bank of South Korea, the Industrial Bank of Korea, Yuanta Bank of Taiwan, and United Overseas Bank Limited (UOB) of Singapore.

Espenilla earlier said there is more room to accommodate the entry of foreign banks in the country.

He pointed out foreign banks operating in the Philippines currently account for only 11 percent of the total assets of the country’s banking industry compared to the 40 percent ceiling.

“Theoretically, it is still four-fold but you should remember that assets of Philippine banks are not sitting in place. Philippine banks are growing really fast,” he added.

The Philippine banking industry remains attractive to foreign players due to its 100-million population and a low credit penetration.

Foreign banks were allowed to set up shop in the Philippines in the first wave of liberalization through RA 7221 passed in 2003.

Foreign banks in the Philippines include Citibank NA, the Hongkong and Shanghai Banking Corp., Maybank Philippines, Bank of Tokyo-Mitsubishi UFJ Ltd., Standard Chartered Bank, ANZ Banking Group Ltd., JP Morgan Chase Bank NA, Mizuho Bank Ltd., ING Bank NV, CTBC Bank Philippines, Deutsche Bank AG, Mega International Commercial Bank Co. Ltd., Bank of China Limited, Bangkok Bank Public Co. Ltd., Korea Exchange Bank, and Bank of America NA.