MANILA - At least seven Asian banks are looking to begin lending or open offices in the Philippines, lured by juicy prospects in the region's second-fastest growing economy as their domestic markets languish, leading central bank officials told Reuters.
The surge in interest comes as steps adopted last year by the Philippines to remove caps on foreign banks take effect. In a country where only one household in five has a bank account, Manila is keen to develop a comparatively small lending sector, worth P10 trillion ($227 billion) in assets, into an engine to drive an economy it expects to boom 7-8 percent this year.
Banking industry insiders said among those looking to open branches or expand presence are Taiwan's Cathay United Bank and Taiwan Cooperative Bank, alongside South Korea's Shinhan International Bank, Woori Bank and Busan Bank. Central bankers declined to identify contenders by name, but said at least seven have expressed interest.
"Foreign banks are coming in. We have approved one and there are more in the pipeline...Around seven," Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco said in an interview.
A unit of Japan's Sumitomo Mitsui Financial Group Inc. last month won approval to open a Manila branch, the first foreign bank to do so under new provisions.
Passed last July and now implemented, the new law allows foreign banks to take full control of local lenders, and scraps a previous limit of 10 full bank branching licences for foreign lenders.
While growth potential is reeling in regional banks, global lenders with business stretched across many markets are less inclined to dive in. Some, like Standard Chartered, are looking to exit the Philippine retail business amid pressure from investors to focus on fewer, key markets.
The lenders who have registered interest in doing business in the Philippines are "major banks" in home markets, said Nestor Espenilla, BSP deputy governor and head of banking supervision.
"They are looking for growth offshore, so that can happen here," Espenilla said, referring to possible acquisitions.
An executive at Taiwan's Cathay United Bank, speaking on condition of anonymity, said the lender had informed the BSP that it wants to upgrade its Philippine representative office into a branch. Meanwhile, Taiwan Cooperative Bank is working on plans to start business at its Philippine branch, according to a bank executive who asked not be named.
South Korea's Woori Bank plans to enter the Philippines this year, said a bank official who declined to be named. Shinhan Bank has created a task force to study the Philippine market, said an official, while a Busan Bank official said nothing has been finalized on entering the Philippines.