Thursday, 21 January 2010

Fewer bank franchises, more branches a good sign–BSP

Jun Vallecera
Business Mirror
http://www.businessmirror.com.ph/home/economy/21164-fewer-bank-franchises-more-branches-a-good-signbsp.html

THE number of bank franchises has steadily dropped from 2000, when the universe of bank names totaled more or less 950, to 795 as of latest count by the Bangko Sentral ng Pilipinas (BSP).

The decimation, BSP Deputy Governor Nestor Espenilla Jr. said on Wednesday, was due to continued consolidation and mergers.

While it is easy to conclude the system is under some threat, Espenilla said this was not the case if the yardstick used is the proliferation of bank branches that have grown by leaps and bounds—from around 6,000 in all in 2000—to more than 7,100 at present.

“As far as the consuming public is concerned, there are more bank branches now than before. The bank closures notwithstanding, bank service availability based on the number of branches continues to grow,” Espenilla said.

Thirty-eight of their number or 4.8 percent are classified as either regular commercial banks, or expanded license or so-called universal banks; 73 or 9.2 percent were thrift banks.

A total 684 or 86 percent are rural or cooperative banks.

Espenilla would not say how many rural banks were ordered closed last year but unofficial estimates place their number at more or less 30.

He said this number was irrelevant if taken from a broader universe of 645 rural banks, of which 50 were the big-name banks in the business and the rest are so many small rural lenders.

Like their big-brother counterparts, the only number not growing among rural banks was their head-office count—also a result of continued consolidation and mergers. But their asset base, capital, deposits and branches are on the up and up, Espenilla said.

“To us, the growth in the number of bank offices serving the public is more important,” Espenilla reiterated.

He also noted the number of delivery channels through which the services are delivered keeps growing as well.

For instance, there had been a relentless growth in the number of automated teller machines (ATMs) of more or less 3,680 in 2000 to 8,207 as of the moment.

So-called nontraditional bank service-delivery channels have also expanded because in addition to the proliferation of ATMs, so-called electronic wallets have become more common in recent years.

Forty-nine local banks offer the service while two foreign banks offer it as well.

Internet banking is offered by 19 locals and 17 foreign banks while phone/PC-based or non-mobile banking services are now offered by 14 locals and five foreign banks.

Mobile cell-phone or laptop-computer bank services are now available in 14 local banks and seven foreign banks, while cash and remittance-card services are available from 14 local and seven foreign banks.

Espenilla said the proliferation in number and type of bank service available to the public really took off after 2005 when the BSP liberalized its bank branching rules.

The overall system is not only very liquid but its capital adequacy or ability to remain afloat despite financial reverses is well above the regulatory 10 percent set by the BSP, he said.

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