Citibank scouts for thrift bank

Moving to tap the consumer banking market, Citibank is shopping around for a thrift bank to position itself in the last segment left standing by the slump in the banking sector.

Banking sources told reporters over the weekend that Citibank has began investigating the country’s thrift banks in the hope of finding one that would fit snugly into its existing business.

Although Citibank has not gone into negotiations with any of the banks, sources said it has already short-listed at least three thrift banks that is eyeing seriously.

The prevailing pessimism of banks compounded by the thin demand for loans have squeezed the revenue stream of most commercial banks and they have been trying to diversify their portfolio to include consumer banking.

Although no less risky than corporate lending, bankers said consumer banking at least showed some sign of growth.

As a strategic move, sources said Citibank wanted to buy into one of the local thrift banks that if plans to use as its primary vehicle in a bid to gain a stronger foothold in consumer banking.

According to the sources, Citibank is scouting for a thrift bank that already has a license to handle foreign currency deposit units (FCDUs), with the accompanying bank qualifications.

However, sources said Citibank wants a thrift bank based in Metro Manila where their primary market has already been established.

Citibank’s main business in the Philippines is credit cards where it ranks first.

However, other foreign banks have surpassed it in consumer banking.

At least one other bank, American Express, has already brought a thrift bank, Omni Savings Bank.

AmEx managed to secure Bangko Sentral ng Pilipinas (BSP) approval for its acquisition and sources said Citibank is following the same route in order to jumpstart its consumer banking business.

At present, there are 104 thrift banks in the country with 38 having FCDU license.

The BSP has also just lifted the moratorium on the issuance of trust and FCDU licenses to thrift banks and the Monetary Board is preparing a circular allowing thrift banks to secure trust licenses.

The BSP stopped the issuance of new trust and FCDU licenses in July 1999 when it rationalized the licensing of banks. The decision of the MB to lift the moratorium would allow banks to get the license if they meet the minimum capitalization requirement of P650 million. – Des Ferriols