The Market Monitor Minding the Nation's Business
By Jerry Maglunog
Regardless of the type of bank, the trend is to create units that will engage in the industrial sector to realize gains from the country’s fast-growing economy.
“The bottom line is to widen the area where they do business. Unibanking, as it is, has many aspects,” Jesus Arranza, former president of the Federation of Philippine Industries, said.
Three banks notably increased their equity to capture a bigger market in insurance, infrastructure and wider banking services.On insurance, the move of Banco de Oro (BDO) when it bought Generali is to strengthen its insurance business.
Generali became the third insurance arm of the Philippines’ biggest bank in assets. The purchase of the insurance firm is a sure additional source of income for the bank, as it is one of the best-performing in the insurance business.
On the day it was fully bought, Generali had just increased by over 40 percent its premium sales, the most by any business in that category. According to Nestor Tan, BDO president and chief executive officer, the purchase of the insurance firm will strengthen the business of the bank, as it will give additional service to their clients.
If BDO raised equity for insurance, the Aboitiz Equity Ventures (AEV) raised $400 million to buy cement-maker Lafarge. AEV is the mother unit of the Union Bank of the Philippines, the ninth-biggest bank in assets. Those who are following the recent activities of AEV will realize that the business has just bidded on some of the biggest infrastructure projects listed under the public-private partnership (PPP) program of the government.
The Aboitizes became the second conglomerate to increase equity in cement after San Miguel Corp. announced that additional $600-million equity will be poured in the cement business. Both SMC and Aboitiz have numerous projects under the PPP program.
The Rizal Commercial Banking Corp. (RCBC) is the only bank that increased equity not to diversify to other businesses, but to intensify its operation to appease clients. A key offering in the corporate business area is RCBC’s retail employee savings plan that it launched recently.
The plan pools together employee contributions for collective investment and reinvestment in RCBC’s Rizal Peso Money Market Fund and is designed to make investing in Rizal Unit Investment Trust Funds affordable and convenient for company employees.
This product encourages employees to increase their personal savings by regularly setting aside funds from their monthly payroll to augment their retirement needs.
In addition, with the growing number of sophisticated investors looking for further diversification, RCBC Trust is set this year to provide its high-net-worth individual customers and big corporate accounts a facility to invest in offshore equities via direct investment in global equities listed in selected exchanges or via a global equity feeder fund.