Business Skinning Left, pagematch: , sectionmatch: 1

Business ( Leaderboard Top ), pagematch: , sectionmatch: 1    

US bank M&A activity boon to RP outsourcing firms, service workers

The fresh wave of bank mergers and acquisitions (M&A) in the US would drive the surviving entities to offshore more non-core, back office jobs in the months ahead, thus further benefiting the Philippines’ booming technology-enabled service industries, labor leader and former senator Ernesto Herrera said.


"American banks are resorting to M&A to capture recurring cost-savings and build more value for shareholders. They will definitely exploit combinations to substantially reduce headcount and move more call-center and other service jobs to lower-cost locations such as the Philippines," Herrera pointed out.


Herrera noted that US-based providers of financial and telecommunication services now dominate the clientele of Philippine business process outsourcing contractors.


"Banks, insurers and other financial service providers have large customer bases that require intensive care and account management," he added.


Independent specialists have demonstrated they are able to handle certain labor-intensive business processes, such as customer care and bill collection, more cost-effectively, according to Herrera, who is also the general secretary of the Trade Union Congress of the Philippines (TUCP).


Herrera made the statement not long after two large American banks declared a merger that would create one of the top 10 US banks.


The unification of Regions Financial Corp., a Fortune 500 company, and AmSouth Bancorporation, both based in Birmingham, Alabama, would produce a bank holding entity with $140 billion in assets, $100 billion in deposits and 2,000 branches.


In May, another Fortune 500 company, Wachovia Corp., the fourth largest US bank holding firm, acquired Oakland, California-based Golden West Financial Corp., the second largest US savings and thrift after Washington Mutual Inc.


With the acquisition, Charlotte, North Carolina-based Wachovia would emerge with $669 billion in assets, $390 billion in deposits and 3,400 branches.


Herrera said rising interest rates would likely spur more consolidation among US banks in the months ahead.


"A growing number of US banks simply need greater scale as their margins are being squeezed by rising rates that have dampened demand for loans, mainly home mortgages. Thus, the enormous pressure to merge," he said.


The Federal Reserve on Thursday raised its federal funds rate — what US banks charge each other for overnight loans — to 5.25 percent from five percent. It was the 17th straight quarter-point increase since June 2004. The higher rate means banks would charge more for loans.

Business ( Article MRec ), pagematch: 1, sectionmatch: 1
  • Follow Us:
Business Skinning Right, pagematch: , sectionmatch: 1