More foreign banks to set up liaison offices in Philippines

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) said more foreign banks are putting up representative offices in the Philippines amid the country’s sound macroeconomic fundamentals.

BSP Governor Nestor Espenilla Jr. said two more foreign banks have submitted applications with the BSP to set up representative offices in the country.

“There were submissions for representative offices. These offices are mainly focused on marketing and are useful in drawing in investments into the country,” he said.

Representative offices are liaison offices of foreign banks dealing directly with the public by promoting and giving information about the services offered by the foreign bank.

However, the offices are not allowed to transact banking business such as acceptance of deposits, issuance of letters of credit and foreign exchange trading.

The BSP chief explained some foreign banks initially test the Philippine market by putting up representative offices that would later be transformed into a branch.

“They usually start with the light presence and involved in marketing only. But if they see a really good market demand, it may progress into a branch application,” he added.

There are currently 10 foreign representative offices operating in the Philippines including Ogaki Kyoritsu Bank Ltd., Wells Fargo Bank, Korea Development Bank, Bank of Singapore Ltd., DBS Bank Ltd., Japan Bank for International Cooperation, Rothschild (Singapore) Ltd., The Bank of New York Mellon, Korea Eximbank and UBS AG.

For one, state-run Bank of Taiwan announced it is establishing a representative office in the Philippines after getting an approval from the Financial Supervisory Commission.

Meanwhile, Espenilla said eight Asian banks have expressed interest in entering the Philippines under Republic Act 10641 or An Act Allowing the Full Entry of Foreign Banks in the Philippines signed by former president Benigno Aquino III removing the limit on foreign banks in the country.

The BSP has so far approved the entry of 10 foreign banks since the law was passed in July 2014.

These include Taiwan’s Hua Nan Commercial Bank Ltd., Cathay United Bank, Yuanta Bank, First Commercial Bank, and Chang Hwa Bank Commercial Bank Ltd., Korea’s Shinhan Bank, the Industrial Bank of Korea, and Woori Bank, Sumitomo Mitsui of Japan, and United Overseas Bank Ltd. of Singapore.