October 23, 2017, 3:55 pm
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S&P fears for PHI Banks

STANDARD & Poor’s believes that banks in the Philippines are not prepared for the tougher competition that will come with the planned integration of Southeast Asian economies. 
 
In one of its latest publications, S&P said Philippines banks in the country, although profitable and stable, have a much smaller business scale compared with their counterparts in the region. 
 
The credit-rating firm said that Philippine banks will find it difficult to preserve market share with the free entry of foreign competition that will result from the regional integration. 
 
“We believe banks [in the Philippines] will have to walk a thin line to preserve market share while pursuing profitable expansion as Asean 2015 draws closer,” S&P said in the report titled “The Philippines’ Banking System: The Good, the Bad and the Ambivalent.” 
 
The 10 members of the Association of Southeast Asian Nations (Asean) have agreed to integrate their economies with the aim of boosting economic activities, job creation and incomes. 
 
The target is to realize the integration by 2015, although policymakers in the region have agreed that the process could be extended through 2020. 
 
S&P said that even the biggest banks in the Philippines are small compared with the likes of CIMB and Maybank of Malaysia or DBS and United Overseas Bank of Singapore. 
 
One of the challenges facing Philippine banks is overcrowding. Since there are too many players in the country’s banking sector, industry members could not scale up their businesses. 
 
Although the number of banks in the country has been on a decline over the last few years, it remained big compared with regional standards. 
 
“We believe greater scale is essential for banks to deal with the more intense incoming competition. Even the largest domestic banks are relatively small compared with banks in Singapore and Malaysia,” S&P said. 
As of September 2013, there were 676 banks in the Philippines. Thirty-six were universal and commercial banks, 71 were thrift banks, and 569 were rural banks. 
 
Another problem confronting Philippine banks is the heavy concentration of credit to the corporate sector. This makes the stability of banks highly dependent on the performance of big borrowers. 
 
S&P noted that as of the end of last year, 82.7 percent of loan portfolio of banks was accounted for by credit extended to corporate entities and that consumer loans accounted for a much smaller portion. Out of the loans to the corporate sector, a substantial chunk was accounted for by large conglomerates. 
 
“The Philippine banking system is heavily skewed toward corporate lending. Systemic risks also are heightened because the conglomerates account for a sizable share of bank capital,” S&P said. In fact, many of these conglomerates are also in the banking sector, It noted, nonetheless, that default by a conglomerate was highly unlikely at this point. 
 
Meantime, S&P said that pending Asean integration, banks in the Philippines are expected to continue reaping the benefits of a growing economy. 
 
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Senate President Franklin M. Drilon has affirmed his complete support for the full and immediate prosecution of all individuals involved in the P10-billion pork barrel scam, regardless of political affiliation.
 
“I fully support the full prosecution of all individuals involved in the pork barrel scam. The quest for justice must spare no one no matter their affiliation, and even the administration lawmakers and allies of the President must be covered by the investigation and its eventual prosecution,” stressed Drilon.
 
He said the pursuit of delivering justice “should be blind to political colors.”
 
However, the Senate chief cautioned against turning the process of finding out the truth into unlimited opportunities for mudslinging, witch hunts and smear campaigns, which “serve only to further the personal and political causes of some individuals.”
 
The Senate President called for an “atmosphere of sobriety” on the process of ferreting out the whole truth and enforcing the law on the controversy.
 
“In the face of controversy, what is important is we remain rational and circumspect while we search for the truth, and until we have put the perpetrators in jail. A sober approach on this controversy is of paramount importance, in order for this process to be successful,” emphasized Drilon, a former justice secretary.
 
“I understand that this issue provides a lot of opportunities for political attacks. But we should not muddle the issue by embarking on witch hunts and black propaganda and ruin the sincere efforts to find the truth and render justice,” he added.
 
“When anyone becomes a target of propaganda attacks, it is their reputation - their very integrity- that is wrongly put at stake,” he pointed out. 
 
Drilon said he wants that all involved in the scam face the full brunt of the law, as long as there is enough evidence to support the charges.
 
“All charges must be supported by compelling and undeniable evidence, and they must be laid out and presented to the court and to the public” said Drilon.
 
He however said that those who will be charged should be given adequate opportunities to defend themselves, while those proven innocent should be freed of the charges.
 
“It is only through our courts and the country’s justice system that we can achieve the genuine truth and justice rightfully demanded by our people. I invite everyone to help us in this just cause,” he concluded. 
 
The process has taken too long as it is. If only charges had been filed in court months ago, maybe the accused would by now be already answering in court the charges against them instead of trying to muddle the fact by throwing accusations of politically motivated vendettas to the winds.
 
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Here’s something to think about for those who will demonstrate during next week’s visit of Barack Obama:. When people in the United States were asked this question: “Do you have a favorable or unfavorable view of the American people?”
 
86% of Filipinos had a more favorable view than even Americans had. Only 84% of Americans had a favorable view of their fellow Americans, 84% of people from Ghana and 80% of South Koreans and Israelis. The Pew Research Center is a nonpartisan American think tank based in Washington, D.C., that provides information on social issues, public opinion, and demographic trends shaping the United States and the world. It conducts public opinion polling, demographic research, media content analysis and other empirical social science research. It does not take policy positions.
 
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