Thrift banks mull mergers to survive competition

A number of thrift banks have been exploring the possibility of merging with one another to survive the stiff competition in the local banking industry, a Chamber of Thrift Banks (CTB) official told The STAR.

"There are ongoing discussions (for thrift banks), especially those undercapitalized ones to merge or look for a strategic partner," CTB incoming president Francisco Magsajo said.

He said the CTB, has in fact, been encouraging smaller thrift banks to consolidate. "We are coordinating with each other," he added.

CTB is an umbrella organization of all thrift banks, savings and loans association, and private development banks.

Magsajo, president of RCBC Savings Bank, said that as a matter of policy, they are initiating moves for CTB member banks to merge or consolidate.

He also noted that most of the family-owned thrift banks are having a hard time merging with other banks. "There is some level of resistance, especially family-run banks," he said.

According to Magsajo, some of the thrift banks have also applied for the conversion of their franchise into a rural bank. So far, there are more than 10 thrift banks which have pending requests with the Bangko Sentral ng Pilipinas (BSP) for a downgrade of their business license to rural bank.

He said the CTB is working out ways to strengthen the thrift banks’ position in the local banking industry by way of encouraging mergers and capital infusions.

Aside from this, the CTB will adopt various measures to cushion its members from the possible impact of the prevailing high interest rates and peso depreciation.

Outgoing CTB president Reynato Sarmiento said the CTB members have participated in the adoption of measures that would allow them to have alternatives in case of need.

Sarmiento said they have asked the BSP to reactivate the special liquidity window from which banks can withdraw when needed. "We have also supported the cap on lending rates of banks to mitigate the adverse impact of the rising interest rates on their operations," he said.