BSP opens cross-selling to thrift banks

The Bangko Sentral ng Pilipinas has issued a regulation allowing banks to engage in cross-selling, a move aimed at making financial instruments accessible to more Filipinos.

Cross-selling refers to the sale of financial products of other companies within a bank’s premises. Products covered include credit cards, life and non-life insurance, and cash and debit products.

In a statement, the BSP said its policymaking Monetary Board has approved the proposal and the guidelines allowing not only universal and commercial banks, but also thrift and rural banks to engage in cross-selling.

Under the guidelines approved by the Monetary Board, products that a bank may cross-sell are those offered by related entities, or firms that belong to the same conglomerate or banking group.

A bank must also have a Camels rating of at least 3 to be eligible to engage in cross-selling. Camels is a measure of a bank’s overall soundness and stands for capital, assets, management, earnings, liquidity and sensitivity to risks.

“The Monetary Board has liberalized the framework for the cross-selling of financial products by banks. This reform initiative makes available to consumers a broader array of financial products using the existing branch network of the banking system,” BSP Governor Amando Tetangco Jr. said in a statement.

The BSP said that allowing even thrift and rural banks to engage in cross-selling would make financial products accessible to more clients especially since the smaller banks have a wider presence in non-urban areas.

Better accessibility of financial products is expected to help make the average Filipino familiar with basic financial products.

Data from the BSP showed that the number of banking industry members totaled 696 by the end of 2012. The total number of branches stood at 8,714. Of the industry players, there are 37 universal and commercial banks, 70 thrift banks and 589 rural banks.

Of the 8,714 branches, 5,108 are owned by universal and commercial banks, 1,549 are owned by thrift banks and 2,057 are owned by rural banks.

The move of the BSP to allow cross-selling comes with the push for banks to further expand their presence, especially in remote areas, so that people in the countryside may avail themselves of financial products and services.

The BSP said that 37 percent of municipalities in the country still have no bank operating in their localities. Many banks are aggressive in branching, but their expansion is focused mostly on urban areas.