Philippines: BPI joins fray to capture remittance from Pinoys in Europe

May. 09, 2007


MAKATI CITY, Philippines –BEFORE sliding to third position in the Philippine banking industry, Ayala family-led Bank of the Philippine Islands set its eyes on the profitable remittance market that Philippine National Bank previously dominated.

But with its shareholder hobbled by regulations in the United States, where bulk of remittances from some eight million overseas Filipinos go through, BPI settled for the United Kingdom.

This was what BPI president Aurelio R. Montinola III told stockholders during their annual meeting last March.

Why London, when you can target the United States where there are more overseas Filipino workers? a shareholder echoed what would be expected questions from the banking industry.

Certainly, we would like to have a branch in the US, but regulatory agencies would not allow us because of our partner, DBS, is not fully engaged in bank operations, Montinola replied.

Singapore’s DBS Group, Southeast Asia’s biggest bank, owns 20 percent of BPI. The rest of the shares are owned by Philippine conglomerate Ayala Corp., which also has assets and investments in real estate and water utility.

At the BPI stockholders meeting, executives revealed that the move to put up a branch in London, one of the world’s financial centers, has been on the pipeline ever since the bank made inroads in the European remittance market.

According to its plans, BPI will shell out 20 million (or about P1.9 billion) to have a full service branch in London to beef up its remittance center currently based in Italy.

Montinola said in March BPI expects to establish a UK-registered corporation in about six months, although the Financial Services Authority of London has already given BPI its British license to operate a bank last April 26.

We are in the stage of finalizing our systems now. We are in one location and we need a second location [for technical purposes]. We expect that we would be in the pre-operation stage by about September or October this year and then, for next year, a full operation,” he told reporters after the stockholders meeting.

The whole point is to grow from remittance transactions to overseas banking relationships, he added.

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