RP’s banking system still fragmented

The Philippine banking system remains fragmented, with no single bank considered too big too fail as those in the United States, a Bangko Sentral official said Friday.

“Leading agencies even say that the industry is fragmented because for the size of the economy, there are still too many universal and commercial banks at 38,” Bangko Sentral Deputy Gov. Nestor Espenilla said.

“I don’t think the industry is that concentrated too begin with, so the issue of ‘a bank too big to fail’ is not accurate here,” he added.

Chamber of Thrift Banks president Pascual Garcia, however, said the collapse of giant banks in the US only meant that a further consolidation of the banking industry was not necessarily good for the industry.

The number of banks and other financial institutions in the Philippines reached 23,028 in the third quarter of 2009, slightly up from 22,939 in the second quarter.

Financial institutions include the head offices and branches of banks, as well as head offices and branches of non-banks financial institutions.

Data from the Bangko Sentral showed that the number of banks and their branches increased to 7,914 offices as of September last year, up by 16 from 7,898 in June.

There were 797 banks as of September, down from 804 in June. These included 38 universal and commerical banks, with 4,406 branches; 73 thrift banks with 1,225 branches; and 686 rural banks with 1,486 branches.

There were also 6,583 non-banks, with a total of 8,531 branches as of September.

These include insurance companies, investment houses, finance companies, securities dealers/brokers, pawnshops, lending investors, non-stock savings and loan associations, mutual building and loan associations, venture capital companies and credit card companies.

Universal and commercial banks are heavily concentrated in Metro Manila while Calabarzon and Central Luzon have the most number of rural banks.

“There are some areas that do not have banking services such as the Autonomous Region in Muslim Mindanao,” said Espenilla.

The Philippine financial system as of December 2009 had total resources of P7.954 trillion, up from P7.412 trillion in 2008.

Universal and commercial banks had P5.694 trillion in resources; thrift banks, P556 billion; and rural banks P171 billion

Non-bank financial institutions had total resources P1.532 trillion. Roderick T. dela Cruz, Manila Standard Today