More cooperation, less competition — Yuanta

Yuanta Savings Bank Philippines fosters cooperation, instead of competition, among banks in the country to respond to the increasingly challenging market, the bank’s president and CEO Regina Saga said.

The rallying point: Mergers, consolidation and acquisition to increase access to capital, better technological resources and provide a wider choice of services for clients.

“I think, as a foreign bank, it’s hard for us to compete with local banks because they’re already just too big. Competition is good. But if we have too many [players], then all of these smaller banks get marginalized, and they become problematic for regulators.”

Smaller companies have limited access to finance when a small number of institutions dominate the market, hampering economic diversity and entrepreneurship.

By disincentivizing innovation and minor competition, the banking-industry oligopoly has been hurting, instead of helping, the economy.

The suboptimal lending practices see banks offering lower interest rates and greater fees, which result in less advantageous terms for businesses, consumers and the economy.

Aim is inclusion

The Bangko Sentral ng Pilipinas (BSP) has been advocating for MCAs as a way for banks to scale their reach and services, significantly shrinking the number of the unbanked and underbanked.

Aside from the strength in combined product portfolios, mergers will allow banks to innovate more effectively and bring about outsize investment in digital-banking tech, like mobile apps and online financial-planning tools needed to bank younger clients.

While concerns about potential job cuts arise from acquisition and consolidation, the overall growth and stability of mergers will open up new roles, such as in tech support and customer care.

Yuanta Savings Bank offers traditional products and services (deposits, loans, remittance, foreign exchange) on both corporate and retail banking for its lending and deposit operation.

The mid-tier thrift bank serves the growing Taiwanese market in Metro Manila and nearby provinces.

The existing parent company, Yuanta Financial Holdings Group, is one of best managed bank in Taiwan.

Laws have been passed and measures taken by regulators to liberalize the entry and scope of operations of foreign banks.

Long-standing problems

But the country’s still-relatively-tough banking policies (such as strict licensing and capital requirements, ownership restrictions and regulatory compliance) have kept within bounds the number of foreign banks onshore.

This, in addition to the Philippines’ perennial problems that have been deterring foreign investment and limiting the benefits diversified banking options could offer, despite the country’s expanding economy, youthful population and financial-inclusion policies.

“I find the tax system here kind of complicated. BIR audits; you always get a discrepancy notice and the amount is huge. Lawyers talk to the BIR and it takes a long time [to get everything dusted],” Saga said.

Safety tax, red tape, traffic. You name it.

“We cannot visit all the clients in one day. You don’t get a lot of things done in one day.”

Too much bureaucracy can be disabling.