RP could be SEA regional treasury center -- HSBC

The Philippines could be the sub-regional treasury center of operations for the Southeast Asian economies, according to one of Asia's biggest financial institutions.

According to Nolan S. Adarve, vice president for sales of HSBC's Philippines Global Payments and Cash Management, Manila could be a sub-regional treasury center in the face of competition from the well-founded and stable economies of Hong Kong and Singapore which are the established regional treasury centers in the Asia Pacific region.

"While establishing Manila as a regional headquarters or regional treasury center is not an impossibility, the more likely outlook based on the growing competency of Manila's banking system, is that Manila may be chosen as a sub-regional center covering a few developing Southeast Asian economies," Adarve said, in a report which appeared in the Cash and Treasury Management in Asia Guide released by HSBC recently.

He added that cash managers have seen the advantages of heightened competition between banks which allows them more leverage. Philippine banks are experiencing a huge downpour of notices for cash management business.

"The tender normally requires a comperehensive proposal covering the specifics of cash management facilities, treasury services, electronic banking, integration capability and, of course, pricing," the report said.

Adarve added: "The tender process is generally favored by more independent multinationals or required as part of a regional tender."

However, local corporations have also been seizing this opportunity to develop a more structured and competitive approach when establishing a banking partnership.

Cash management in the Philippines, according to the HSBC study, are better served not only through measures introduced by the Bangko Sentral ng Pilipinas (BSP) but by initiatives undertaken by the banks themselves.

Foreign banks are fully implementing services that they offer globally and have developed customized solutions to address the requirements of Philippine corporations, adding greater value to their undertakings. "For local banks, tie-ups with international banks are now commonplace."

The HSBC vice president pointed out that there are now 27 regional clearing units and nine participating cities outside Metro Manila. Thus the trend of collecting services, especially to high-volume transactions, is to outsource the process to banks.

"Checks are collected on behalf of corporations, and banks send regular reports for reconciliation purposes.

Electronic payments and electronic banking is another feature of the Philippine banking system which has made it more competitive in the regional level.

Cost and efficiency are two factors normally considered by corporations in the region when deciding on financial institutions and the type of electronic payments and systems including pricing.

Banks have, and should, capitalize on their ability to integrate bulk payment instructions through their electronic banking system if they are to be competitive locally, and regionally.

Local and foreign corporations are looking at financial institutions that can totally integrate their financial requirements more than just be an extension of the cashering functions of the corporations.

"Integration implies faster reconciliation of receivables and more timely payments. More importantly, and bank's must be able to forecast its client's cash requirements. In this way, a bank's role continues to evolve in the quest to become, or remain, its client's foremost partner in financial management," Adarve stressed.