Banks seen offering more financial products

MANILA, Philippines - Banks are expected to offer more financial products to their clients after the Bangko Sentral ng Pilipinas (BSP) relaxed its rules governing cross-selling between lenders and other financial institutions.

In a statement yesterday, the central bank said banks are now given the liberty “to market and sell” financial products of their “related parties under a banking group or a financial conglomerate.”

The new rule removes the necessity for a bank to have at least five percent equity on a particular company before it can engage on cross-selling activities.

Banks, BSP said, may now sell credit cards, auto, home and personal loans, cash and debit related products as well as life and non-life insurance of their sister companies.

Documentary requirements for each product that will be sold were also waived under the new guidelines. All lenders, from just being universal and commercial banks, are allowed to cross sell.

 â€œWe want to give banks and customers more flexibility,” BSP Deputy Governor Nestor Espenilla Jr. told reporters yesterday on the sidelines of the Rural Bankers Association 60th National Convention.

“With this, banks will serve as platform for their other companies to sell their products,” he added.

Some banks have been engaged on cross-selling activities. For instance, Ayala-led Bank of the Philippine Islands (BPI) is offering their clients insurance products through the BPI-PhilAm Life Assurance Corp.

The company is an offshoot of the acquisition of Philippine Life Insurance and General Insurance Corp. of the former Ayala Life Assurance Inc. in 2009.

Another example is the “bancassurance” partnership between Manufacturers Life Insurance Corp. and Sy-led China Banking Corp. in 2007. Manulife China Bank Life Assurance Corp. offers insurance products to bank customers.

BSP Governor Amando Tetangco Jr., in the statement, said that development makes a “broader array of financial products” available using the “existing branch network of the banking system.”

While product documentary requirements have been streamlined, the BSP chief said an “oversight mechanism” should be set up by banks in order to ensure that cross-selling practices are above-board.

 â€œBSP is cognizant of the need to sustain high standards of risk management. This is the reason why we limit the products to those without investment risk and allow only banks with CAMELS rating of at least three to perform cross-selling,” Tetangco explained.