SOME of the largest and most aggressive lenders in
the region looking to compensate for significantly slower loan demand in
their home turfs and elsewhere have started marketing their services
and products increasingly in Southeast Asia, the Philippines included.
Bangko Sentral ng
Pilipinas (BSP) Gov. Amando M. Tetangco Jr. acknowledged this
development in an e-mail, noting more and more of these lenders have
explored opportunities within the region as funding required by
borrowers in the euro zone and the US have since waned.
“With
the growth prospects outside of our region remaining weak, it should
not come as a surprise that the bigger banks in our region would look
for opportunities within the region. Indeed, we are seeing some regional
banks becoming interested in investing in our markets,” Tetangco said.
His
remarks came in the wake of commentaries by the Singaporean unit of the
global credit watcher Standard & Poor’s, noting that
export-dependent economies in the region make them “susceptible to any
external deterioration, especially the European debt crisis.”
Tetangco
said even such multinational bodies as the Bank for International
Settlements or BIS, have observed that banks in the region “have made up
for some of the slack in funding created by the deleveraging among
European banks.”
He
welcomed this development, noting the Philippines has sufficient
liquidity the participating foreign entities may tap to underwrite their
local projects and programs.
“There
is ample liquidity in our domestic market and as the government’s
infrastructure projects go full-swing in the next few quarters, we
should see some of that domestic liquidity getting channeled
accordingly. Bank profitability can correspondingly be expected to
remain healthy,” Tetangco said.
Some
P1.6 trillion or $33 billion in so-called special deposit accounts or
SDAs lie idle in the vaults of the Bangko Sentral waiting for more
productive undertakings as of latest.
These
are peso funds about a tenth the value of the entire economy doing
nothing more than generating practically risk-free interest earnings for
the banks and the shareholders for whom they work.
The
SDA funds are on top of another P3.1 trillion worth of loans the banks
have already deployed as loans as at end-May this year, funds that
helped make possible the broad economy to grow by 6.4 percent in the
first three months alone.
Bank
executives such as Pascual M. Garcia III of the Philippine Savings Bank
or Aurelio Montinola of the Bank of the Philippine Islands, have
expressed optimism bank lending should prove robust this year based on
double-digit loan growth figures colleagues reported in only the first
half thus far.
“The
BSP will continue to calibrate policy settings to help create a stable
macroeconomic environment that will improve business planning and
encourage long-term investments,” Tetangco said of what lies ahead.
He
earlier reduced the rates at which the BSP borrows from or lends to
banks to encourage lenders to pass on the reduced cost of money to lower
the interest on loans charged against homebuyer, for instance, or
against businesses.
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