Banks shifting from SDAs to trust funds

MANILA, Philippines - Local banks are targeting to shift at least 30 percent of their total investable fund from high-yielding special deposit accounts (SDAs) being freed up to the market by the Bangko Sentral ng Pilipinas (BSP) to unit investment trust funds (UITFs), an industry official said.

BDO Unibank Inc. senior vice president and BDO Private Bank head of wealth advisory and trust group Rafael Ayuste said some of the SDAs could also migrate to other instruments such as time deposits.

As of end-July, the banking sector’s SDA funds stood at P1.8 trillion.

Ayuste noted that there have been a gradual movement in the trust industry, particularly due to the migration of SDAs to UITFs and other financial instruments.

As of end-June, the trust industry manages P 2.939 trillion in funds, down from P3.193 trillion as of end-March. As of end-2012, there are P3.16 trillion trust accounts in the country, up 12 percent from P2.82 trillion in 2011.

“We expect trust funds to go down to over P2 trillion by the end of the year because of SDAs,” Ayuste said.

By the end of November, the next Bangko Sentral ng Pilipinas (BSP) deadline for the SDA phase-out, he said they expect another P1 trillion to move to trust funds, including exchange trust funds (ETFs).

Bulk of the total trust industry is cornered by the country’s three biggest banks as of end-2012. About 25.82 percent of the market is captured by the country’s largest lender, BDO Unibank Inc., with P816.9 billion; followed by Bank of Philippine Islands with 23.48 percent or P712.87 billion; and 13.29 percent to Metropolitan Bank & Trust Co. at P420.4 billion.

Ayuste, who is also the president of the Trust Officers Association of the Philippines (TOAP), said he is also confident some of the SDA funds in the market would be channeled to the stock market.

“Despite some volatilities brought about by global scenario such as the US shutdown, we are still optimistic of the market. Seeing it hitting 8,000 will not be an impossibility,” he said.

UITF, commonly described by the industry as “hassle-free,” is one of the well-known investment funds nowadays. Through UITF, a client’s money is pooled together with the money of other people.