Universal Banks

Prepared By:
What are Universal Banks?
Banks that have the
authority to exercise, in
addition to the powers* of a
commercial bank, powers of
an investment house and the
power to invest in non-allied
enterprises
(Notes and cases on Banking Law and Negotiable Instruments Law Vol. II, Timoteo
Aquino,2010Edition)
What is Universal Banking?
Practice of offering clients
retail banking as well as
investment services
• Land Bank of the Philippines
• ANZ Banking Group Ltd.
• Deutsche Bank AG
• ING Bank N.V.
• Mizuho Bank, Ltd.-Manila Branch
• Standard Chartered Bank
• The Hongkong & Shanghai
Banking Corporation
• Asia United Bank Corporation
• Rizal Commercial Banking
Corporation
• Security Bank Corporation
• Union Bank of the Philippines
Universal Banks in the
Philippines*
• Al-Amanah Islamic Investment
Bank of the Philippines
• Development Bank of the
Philippines
• Bank of the Philippine Islands
• BDO Unibank, Inc.
• United Coconut Planters Bank
• China Banking Corporation
• East West Banking Corporation
• Metropolitan Bank and Trust
Company
• Philippine National Bank
• Philippine Trust Company
Powers of a Universal Bank
1. Powers of an investment house as
provided under existing laws;

2. Power to invest in non-allied

enterprises;
3. Power to own up to one hundred percent
(100%) of the equity in a thrift bank, a
rural bank, a financial allied enterprise, or
a non-financial allied enterprise;

4. In case of publicly listed universal

banks, power to own up to one hundred
percent (100%) of the voting stock of only
one other universal bank or commercial
bank.
• INVESTMENT • NON-ALLIED
HOUSE ENTERPRISE

Distinct Features of a
Universal Bank
 INVESTMENT HOUSE

- Any enterprise which engages or

purports to engage, whether regularly
or on an isolated basis, in underwriting
of securities* of another person or
enterprise, including securities of the
Government and its instrumentalities.
Rules in performing Investment House Functions
(pursuant to Circular No.271*)

1. The underwriting or equity securities and securities dealing

shall be subject to the pertinent laws and regulations of the
Securities and Exchange Commission.

2. If the investment house functions are performed directly by the

Universal Bank, such functions shall be undertaken by a separate
and distinct department or other similar unit in the bank.

3. It cannot perform functions of an investment house both

directly and indirectly. This means that if it already exercises the
functions of an investment house through a subsidiary, the
universal bank can no longer open a department or a unit within
the same bank to act as an investment house.
NON-ALLIED ENTERPRISE

- The broad category of Non-allied

undertakings in which a universal bank
may invest directly or through its
subsidiary shall require prior approval
of the Monetary Board.
Sec. 1381.1 of the Manual of Regulations for Banks
provides that no prior approval is necessary if investment
is to be made in any of the following broad categories:

a. Enterprise engaged in physically productive activities

in agriculture, mining and quarrying, manufacturing,
public utilities, construction, wholesale trade and
community and social services following the industrial
groupings in the Philippine Standard Industrial
Classification

b. Industrial park projects and/or industrial estate

developments
c. Financial and Commercial complex projects
(including land development and buildings
constructed thereon) arising from or in connection
with Government’s privatization program

d. Such other broad categories as the Monetary Board

may declare as appropriate.
 REQUIREMENTS FOR A
UNIVERSAL BANK AUTHORITY
Sec. 2.2 of Circular No. 271 (Series of
2001) requires a public offering for
universal banks, that is, an offer to sell
equity shares to the public stockholders*.
The required minimum public stock offering is
10% of the required minimum capital.

This Condition is supposed to be complied with

before one can be granted the license to operate
as a universal bank. However, the new licensee
is given a period of three years from the date the
license to operate as Universal Bank was
granted within which to list their shares with
the Philippine Stock Exchange.
As a bank whose shares of stocks are already listed in the
Philippine Stock Exchange at the time of the filing of the
application for authority shall be deemed to have
complied with the public offering requirement.

Likewise, the applicant may opt to have its shares listed

in the Philippine Stock Exchange directly instead of
passing through the process of public offering.

In either case, at least 10 % of the applicant bank’s

capital stock should be held by the public stock holders
before it can be granted the license for authority to
operate as a universal bank.
 UNIVERSAL BANKS
VIS-À-VIS
COMMERCIAL BANKS
 A Universal bank can exercise all the
powers and functions of a commercial
bank. In addition, a universal bank can
perform the functions of an investment
house as well as invest in non-allied
enterprises without prior approval of
the Monetary Board of the BSP, unlike a
Commercial Bank which needs prior
BSP approval.
(Notes and Cases on Banking and Allied Laws; Larry P. Ignacio, 2007 edition)
 UNIVERSAL BANKS COMMERCIAL BANKS
As to Equity Investments
 May invest in the equities of *allied  Can only invest in the equities of allied
(either financial or Non-Financial) and enterprises (either financial or Non-
*non-allied enterprises Financial)

 Total investment in equities of

allied/non-allied enterprises shall not  Total investment in equities of allied
exceed 50% of the total net-worth of enterprises shall not exceed 35% of the
the universal bank. net-worth of the bank.

 The equity investment in any one  The equity investment in any one
enterprise whether allied or non-allied enterprise shall not exceed 25% of the
shall not exceed 25% of the net-worth of the bank.
net-worth of the bank.
 OPERATIONS
OF
UNIVERSAL BANKS
*Universal and Commercial Banks represent the
largest single group, resource-wise, of financial
institutions in the country.

*They offer the widest variety of banking services

among financial institutions.

*In addition to the function of an ordinary

commercial bank, universal banks are also
authorized to engage in underwriting and other
functions of investment houses, and to invest in
equities of non-allied undertakings.
*Twenty one universal banks represent the
heart of the economy’s money intermediary
function.

*They hold 80% of all financial assets, with

the bulk of the assets being loans to
businesses.

*Loans as an aggregate portfolio are well

diversified. Funding is by domestic deposits.
Universal Banks commonly provide for the
following:

*Retail banking
*Consumer banking (92% of total loan portfolio)
*Commercial and SME Banking
*Corporate Banking
*Global Transaction Banking
*Private Banking (Wealth Management Group)
*Digital Banking
Source: www.rcbc.com
Retail banking

~Current account and savings account (CASA)

~Personal, auto and real estate loans
~Cross selling of loans to SME’s
~Credit cards
~Non-life insurance and other investment
products
~ATM’s
~Internet banking
Consumer banking (92% of total loan portfolio)

~Auto, housing, personal and salary loans

~credit card rewards/purchases converted to

installment basis
Commercial and SME Banking

~dedicated team of specialized account officers to

cater to its SME customers, latter being a vital
sector to the country’s growth and stability
Corporate Banking

~handling the banking requirements of

conglomerates, multinationals and
Ecozone-based companies

~servicing key customers engaged in

wholesale and retail trade, light
manufacturing and food processing
Global Transaction Banking

~caters to a broad range of customers,

from large local and multinational
corporations to Filipinos earning
their living overseas.

(ex. payment and savings services to

employees of shipping and
engineering companies based
abroad, remittance payouts)
Private Banking (Wealth Management Group)

~providing clients the access to investment

options in the global market such as offshore
mutual funds, and US and Japan equities
Digital Banking

~products include, debit cards and cash

cards, Gcash partnership that provided
additional services such fund transfers,
mobile access to funds and prepaid mobile
phone reloading facilities.
PRODUCTS
AND
SERVICES
DEPOSITS
*Checking Accounts
*Savings Accounts
*Time Deposits
~Regular Time Deposits
~Special Time Deposits
CASH CARDS
*Debit Cards
ELECTRONIC BANKING
CHANNELS
* ATM
*Bills Payment
*Internet/Mobile Banking
System
*POS System
REMITTANCE SERVICES

CREDIT CARDS

INVESTMENT BANKING
LOANS
*Commercial Loans
*Consumer Loans
*Special Lending Facilities
PAYMENT AND SETTLEMENT
SERVICES
*Check Clearing
*Domestic Letters of Credit
*Fund Transfers
*OFW Remittance
TREASURY AND GLOBAL
MARKETS
*Foreign Exchange
*RP Bonds
*LGU Bonds
*Local Treasury Bills
*Advisory Services
TRUST SERVICES
*Trusteeship
*Agency
CORPORATE CASH
MANAGEMENT
*Collection and Receivables Services Bills
Collection
*Disbursements
*Deposit Pick Up
*Government Payment
INVESTMENT BANKING

*Underwriting of Debt and Equity Securities for

distribution via Public Offering or private
placement
*Financial Advisory and Consultancy
*Mergers and Acquisitions
ANCILLARY SERVICES

*Day and Night Depositary Services

*Deposit Pick-Up and Delivery
*Foreign Currency Conversions
*Foreign Trade Information
*Research (Economic and Investment)
*Wealth Management
*Safety Deposit Box
THANK YOU! :D