That was the position of the Chamber of Thrift Banks (CTB), the industry association of the country’s thrift, savings and development banks.
CTB president Benjamin Yambao said that external and domestic pressures only make it imperative that thrift banks strengthen its capital base, and that one of the practical methods is through mergers.
The implementation of IAS 39 which dictates stronger equity or capital base is one international standard that the Philippine will be implementing soon.
"There is no escaping that. It is forthcoming," Yambao said.
Domestically, the increased entry of commercial banks in the consumer market raised alarms among the country’s 61 thrifts banks. The consumer market has always been the traditional market of the thrift and rural banks.
But the stagnating business climate has forced large corporations, corporates and multinationals to reduce its banking activities to almost nil. That situation forced commercial banks to look elsewhere for business and the retail market was the next most profitable alternative.
Then there is the stiff competition within sector to meed the demands of a maturing banking public.
And deep inside the bowels of the sector, its bad assets remain malignant.
Real and other properties owned or acquiried (ROPOA) stood at a whopping P34 billion last year or higher than the P28 billion in 2003.
Yambao defended that the real ratio of ROPOA to deposits, assets and loan portfolio actually improved. But it is the top 20 thrift banks that had been carrying the industry.
Banking regulators said that in the past years, there had been a large number of thrift banks that reverted to rural bank status due to their inability to meet the capital requirements.
At one time, there were over a hundred thrift, savings and development banks.