Entry of foreign banks to benefit Pinoy consumers

CEBU, Philippines – A local banker believes that local lenders have a competitive advantage over foreign banks although their entry into the Philippine market may trigger stiffer competition.

"Foreign banks can come in and bring new technology but the fact remains that a lot of selling in savings banks is still person to person. The sales person still has to connect to the customers," said Eugene Acevedo, chairman of thrift lender City Savings Bank, in an interview with The FREEMAN.

"The foreign banks will have a slight difficult time to do that but they'll find a way. The local banks will have to run much faster," added Acevedo, who was senior executive vice president of Aboitiz-led Union Bank.

Acevedo said the competition brought by the liberalization of the country's banking sector will be generally good for the Filipino consumers.

"What we need to do on our part is to make sure we stay very competitive compared to foreign banks," the bank executive noted.

He said that local players must be competitive in the areas of branch expansion and direct selling of bank products and services, noting that foreign banks will have limited branches.

Full Entry

The Philippine government has allowed full entry of foreign banks into the country starting in July 2014 after Republic Act 10641 was signed into law.

The law now allows more foreign banks, which should be publicly listed in their home country, to operate in the Philippines by acquiring up to 100 percent of the voting stock of an existing bank, investing in up to 100 percent of voting stock of a new banking unit incorporated under Philippine law, or establishing a branch with full banking authority.

Several foreign lenders had already sought the approval of the Bangko Sentral ng Pilipinas to operate in the Philippines.

For its part, the Cebu Bankers Club had not received any report yet of a foreign bank mulling to set up shop in Cebu, its president said last month.

Maximo Eleccion, however, had said that local banks were bracing up and positioning themselves in the market, following the amendment of the foreign banks law. (FREEMAN)