Cross-selling means allowing the subsidiary of a bank to sell its products inside the bank’s premises and tap its other resources. The same arrangement is referred to as bancassurance by insurance companies.
SCBP chief executive officer Annemarie Durbin told newsmen that bancassurance is a common business practice in most countries especially progressive Asian countries.
"I was disappointed with the news. Bancassurance is one of Standard Chartered Bank’s strengths in countries where we operate," Durbin lamented.
In fact, the foreign bank chief executive revealed that they have been having talks with life and non-life insurance companies for bancassurance.
The proposed circular of the Bangko Sentral ng Pilipinas (BSP) on cross-selling allows only subsidiaries of commercial and expanded commercial banks (universal banks) to sell their products within the banks’ premises. The bank must control at least 51 percent of a company for it to be recognized as a subsidiary.
The country’s banking law allows affiliates (15- to 20-percent) to sell their products through the affiliate bank. However, the BSP decided to allow only subsidiaries "for the meantime."
The SCBP wants the affiliates to be included since all the foreign banks could not be included in the cross-selling scheme. It would be too expensive to acquire 51 percent of an insurer, and the likelihood of an insurer selling out to a bank is remote.
Earlier, the American Chamber of Commerce (Amcham) expressed concern over the proposed circular, saying it would not set a level playing field between some local banks over foreign banks.
For example, Ayala Life Insurance can sell its life insurance policies through the Bank of the Philippine Islands (BPI) branch network. Both are allied with the Ayala Group of Companies.
The BSP circular does not include thrift and rural banks initially for easier monitoring.There are more than 30 KBs and EKBs. – Ted Torres