Towards inclusive growth

I have probably met enough bankers and bank presidents in my lifetime to be able to say authoritatively that I have a pretty good picture of what to expect of them.

But then this picture was pretty much shattered when I met Tony Moncupa, president and CEO of East West Bank.

He doesn’t need the title, nor the expensive suits, to convince others that he is good at what he is doing. He has enough life experience to wow others.

We have one thing in common – we both hail from Bataan, that is why it was easier to break the ice. He is from Dinalupihan, where as a college student, he ran for councilor but unfortunately lost. He finished his grade school at Dinalupihan Elementary School and his mom still lives in Dinalupihan. Tony was an average student and he is not ashamed to say it. He wasn’t even good in math. A late bloomer.

He has a farm there which he intends to be his retirement activity. Tony thinks investing in a vacation home, say in Tagaytay, would be a waste since he will not be able to use it often anyway. And so apart from his house in Parañaque, which he says is located in a modest subdivision, he has a condo unit which serves as a halfway house.

He moved to Quezon City during his high school years and entered the seminary because he wanted to become a priest. He got kicked out after his first year because he was too “pilyo” for his own good (nothing serious though) and the priests advised his parents that he could probably re-enter the seminary in college. And so he went to another school.

In college, he did not pass the entrance exams of the leading schools and so he first went to another school then transferred to De La Salle University in Manila where he later finished accountancy and economics. His mathematical maturity, according him, came rather late in life. He would later earn a masters in Business Administration from the University of Chicago which, ironically, is strong on capitalism.

It was in DLSU that  Tony was politically awakened. There was a rally and he decided to listen to what the speakers were saying. He ended up joining the rally which was later dispersed. He wanted to go full-time in the movement but decided to finish college first. While in college, he devoured the writings of Mao Zedong and Karl Marx, according to one account.

Tony would later be detained for two years for alleged rebellion and affiliation with the national democratic movement. He was just 23 when he was arrested together with his mentor Horacio “Boy” Morales, who was considered one of the highest ranking members of the NDF at that time.

After his release, he rejoined the movement.

But there was one event that led Tony to leave the movement. His brother was arrested for possessing subversive materials that belonged to Tony. He felt it was unfair and felt guilty that he has not been able to help his family financially. And so when one of his comrades who was working with Union Bank at that time asked him to join the bank, he said yes.

Fast forward to today. He is now the president and CEO of EastWest Banking Corp. and has been since January 2007 (Tony says he was chosen through a head hunter hired by the Gotianuns) after having joined other banks like the International Exchange Bank. Tony also serves on the board of trustees of the Philippine Rural Reconstruction Movement (PRRM) and is the head of PDP-Laban’s policy think tank.

Senate President Aquilino “Koko” Pimentel III, president of PDP-Laban, is openly batting for Moncupa to be the next Bangko Sentral ng Pilipinas (BSP) governor after Amando Tetangco’s term expires in July. Pimentel says Moncupa will bring a “bold and innovative leadership” to the BSP, citing the latter’s unquestionable integrity and character.

Our four-hour conversation over dinner (he prefers alimasag over crabs, by the way) offered me glimpses into this man’s political beliefs which continue to influence his management style. From time to time though, we would talk about Bataan politics. He still has his offers to run for public office in the province and he is not closing his doors.

And so from the extreme left (as a political activist), did he actually go to the extreme right when he joined the banking sector?

He doesn’t believe so. After all, Tony says that even socialist countries have their banks. But there was a time when even his former comrades questioned his shift to banking and this is what he has to say to this: “Banking is not dictated by the political system, rather it is a neutral activity. Even the socialist countries have banking.”

He also told his comrades that the problem why socialism doesn’t work is because they do not have an economic program. “I have told them, without an economic program, it is just shared poverty. We need to expand the pie. If we care for the masses, communism is just a means. We became communists because we want to help the people. What’s so different with banking? It is also one way of helping people.” Tony describes himself as a social reformer, and this time he is doing it through banking.

According to him, “every action we take is a function our our values, of what we believe in. That is what drives us.”

Under his watch, EastWest Bank has grown leaps and bounds. It has focused on consumer lending, being a retail bank. At the moment, around 68 percent of the bank’s loan portfolio is consumer loans (and that includes credit cards, housing and car loans) which according to some is very good during good times but highly risky during bad times. Tony doesn’t think it is that risky but nevertheless, he is thinking of bringing it down to less than 50 percent. But that doesn’t mean he will go more for the corporates. He would rather go after businesses which are democratized like small and medium enterprises (SMEs).

With 445 branches, including rural banks, Tony believes that this is already a good number and that is enough for now. “We need to watch developments in technology - internet and mobile banking,” he said.

Beginning last year, the bank’s aggressive expansion has started to pay off and EastWest reported a hefty bottomline of P3.4 billion, 70 percent more than the previous year. Deposits grew by 30 percent.

In terms of assets, it is a close fight among EastWest, Citibank and UCPB for the 11th, 12th and 13th slots.

The liberalization in the entry of foreign banks has not threatened EastWest because retail banking is dominated by local banks, Moncupa said.

Now what changes can we expect in our country’s monetary and banking policies if he is chosen to become the next BSP governor?

Expect him to push for an amendment in the Central Bank Act that would expand BSP’s mandate from a single one, which is to maintain price stability, to include maximizing employment, just like in the US.

He believes government should push out more money toward borrowers in the private sector to help push growth.

Moncupa also describes the Bank Secrecy Law as one of the most stringent in the world. He thinks there is a way of protecting privacy, but at the same time help fight money laundering for instance.

He is also pushing for an amendment of the Agri-Agra Law which mandates banks to set aside 15 percent of their loan portfolio for agri lending and 10 percent for the agrarian reform sector. Banks which fail to comply are penalized at a rate of 0.5 percent of loanable funds.

Compliance among banks has been low at 13.5 percent in terms of loans to the agri sector and a dismal 0.99 percent for the agrarian sector simply because in the case of the latter, there are no qualified borrowers.

I haven’t had the chance to talk to the other “candidates” so I couldn’t say if he is the best. But what I can say is that it would be interesting to find out what he can do if given the chance to serve. Using monetary policy to foster a more inclusive growth could be his cup of tea.

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