MANILA, Philippines - The recent approval of the Bangko Sentral ng Pilipinas (BSP) of the new corporate profile of erstwhile dormant Pilipinas Savings Bank, has formally signified the serious intent of the Ayala Group of Companies to expand into microfinance and mobile banking.
The BSP recently approved the sale and transfer by Bank of the Philippine Islands (BPI) of its shares of stock in Pilipinas Savings Bank Inc., resulting in the ownership structure of the new bank as 40 percent each for BPI and Globe Telecom Inc., and 20 percent for Ayala Corp.
The plan is to transform Pilipinas Savings Bank into the country’s first mobile microfinance bank.
The new bank has likewise applied with the BSP for a change of name and the application for an electronic banking license for the bank. It will have an authorized capitalization of P500 million and a subscribed capitalization of P350 million.
The new bank’s president will be Teresita Tan, who is presently the executive vice president of BPI.
The former Pilipinas Savings Bank will extend wholesale microfinance loans to microfinance institutions (MFIs) and offer other microfinance products, and will use mobile technology to deliver financial services and expand its retail client base. MFIs are rural banks, non-government organizations (NGOs) and cooperatives practicing microlending.
BPI is presently extending wholesale microfinance lending through its foundation while Globe provides a number of MFIs with its G-Cash product, an SMS-based technology, for money transfers and loan collections.
However, rural banks not only practice micro-lending but utilize mobile banking not just through GCash but also other providers.
“We are concerned that the new bank would compete directly with rural banks and their existing client base using mobile banking,” members of the Rural Bankers Association of the Philippines (RBAP), the trade organization of the country’s rural banking system said.
Instead, rural bankers are proposing that the new bank including Globe increase collaboration.
The new bank will have limited capabilities in terms of retail banking activities, since it will have very few branches thus limiting its ability to provide loans and accept deposits.
The rural banks said that they can provide the loans, deposits and other banking transactions through thousands of branches other distribution centers or channels, with the help of mobile banking and other forms of technology.
“We propose better and beneficial partnerships with the new bank, rather than competition,” they added.