UBP eyes remittance business

Despite its unsuccessful bid to acquire the Philipppine National Bank (PNB), the Union Bank of the Philippines (Union Bank) will pursue its aggressive bid to capture a slice of the overseas Filipino workers (OFWs) remittance business.

Along with the Avenue Asia Group, they made a bid for PNB through a public bidding which was perceived as biased in favor of the Lucio Tan Group (LTG). Since it partnered with the government to save PNB, taipan Lucio Tan was granted the right to first refusal for the former government financial institution (GFI).

The Union Bank-Avenue Asia alliance won the opening salvo but due to the right to first refusal, the LTG made another bid which topped the Union Bank-Avenue Asia alliance.

The remittance business of PNB is the most attractive segment of their business which has attracted many financial institutions to attempt a takeover. PNB recorded the largest number of remittance business last year. Overall, the remittance business reached a record $8.6 billion last year, and it is forecast to record another all-time high of over $9 billion. In end May this year, remittances expanded to $4 billion, or almost 20 percent better than the $3.3 billion recorded in the same period in 2004.

There are an estimated eight million legitimate OFWs working or residing in some spot of the globe as of end 2004, based on government reports. Reports from the World Bank indicate that the Philippines is the third largest sources of OFW earnings after China and Mexico.

"That is a lot of business, and we will still get a piece of the action," Victor B. Valdepeñas, Union Bank president and chief operating officer said. Valdepeñas admitted that Union Bank was is serious talks with an electronic money transfer company.

"It is bigger and they have a better platform than the present international money transfer agents operating in the Philippines," he said.

The bank president claims that the Bangko Sentral ng Pilipinas (BSP) gave the green light to go on with the talks.

However, bank officials are still unhappy with what has been revealed by their prospective partner.

"We are a bank known for being electronic savvy with superior platforms. We want to know how to they operate and if these can be compatible," they said.

Meanwhile, Valdepeñas said that the bank was ahead of its full year income target based on its first six-month performance.

It recorded a net income of P1.5 billion, or 36.4 percent higher than the P1.1 billion in the same period last year.

The key drivers were gains from consumer finance, cash management services, capital markets businesses and asset recovery resulting in grew growth of 40.5 percent to P4.5 billion.

In 2004, the Aboitiz-led expanded commercial bank achieved a record net profit of P2.28 billion up 12.2 percent over the previous year. –Ted Torres