Wednesday, December 28, 2011

News Update M&As made rural banks lean and meaner, says industry chief

The mergers and acquisitions (M&As) among rural banks made the industry more competitive and better equipped even against larger commercial banks that have forayed into the countryside. "Coupled with our drive to innovate and the entry of a younger generation of rural bankers, the industry will be able to match the other loan products and services of commercial banks in rural areas," Eric Pama, president of the Rural Bankers Association of the Philippines (RBAP), said Tuesday. Rural banks are now leaner and meaner, according to the RBAP chief. "After all the mergers and acquisitions that transpired in the rural banking sector over the last few months, rural banks as a whole are now more competitive than ever and even better equipped to compete with commercial banks that have expanded into the countryside — the erstwhile sole territory of rural banks," Pama noted. The association has envisioned that M&As would enhance its members’ capabilities in servicing the microfinance sorely needed by farmers, fisherfolk, and small enterprises. “Our members are upbeat about the strong performance generated by the industry and I believe that this has been partly due to the consolidation process” Among the new members of RBAP are the Bangko Rural ng Pasacao Inc., First Community Coop. Bank of Misamis Occidental, Banco Maximo Inc., Banco de Arevalo Inc., Finman Bank, Far Eastern Bank, North Pacific Banking Corp., New Covenant Bank, Vizcaya Bank Inc., Advantage Bank Corp., and Banco Cooperativa De Zamboanga. “The association has been infused with more professionalism and competitiveness with the entry of new members. I expect more vibrancy for the entire rural banking sector entering the New Year,” said Pama. RBAP data showed that more than 32 percent or P35 billion of rural banks’ loan portfolio went to the agriculture sector. "Loans to the agriculture sectors have been exceeding 30 percent of the total loan portfolio of rural banks for the past several years," said Pama, noting that 18 percent of the loan portfolio went to the agrarian reform sector. Higher loan portfolios ensure the availability of financial assistance to small and medium enterprises and micro-entrepreneurs nationwide. "Currently, more than 50 percent of rural banks’ total loans are invested in the agri-agra sector," Pama noted. — VS, GMA