EXECUTIVE SUMMARY
Banco de Oro Unibank, Inc. also known as Banco de Oro and BDO, is the
second largest bank in the Philippines in terms of assets and is owned by the SM Group
of Companies, the group company of SM in terms of industry leading, retail
merchandising, shopping mall operations, banking and corporate governance. Its
Industry is for Finance and Insurance and its products are its Financial Services
(Appendix Illustration 1.1). Its main Headquarters is situated in 12 ABD Avenue Ortigas
Center Mandaluyong City Philippines. As a universal bank, BDO provides a wide range
of corporate, commercial, retail and investment banking services in the Philippines.
These services include traditional loan and deposit products, as well as treasury, trust,
cash management, insurance, and credit card services. BDO’s principal market are
currently a select niche in the corporate, market and the middle market banking
segment, consisting of mid-sized corporations, the small and medium-sized enterprise
market and retail/consumer market.
After a thorough research primed, the external analysis of BDO shows a figure of
3.15, which confirms that the firm’s strategies effectively take advantage of existing
opportunities and minimize the potential adverse effects of external threats. The internal
analysis on the other hand, shows a figure of 3.67, which dictates that BDO has been
busy striving to be the best for its service not only to its investors and customers, but
also to its internal system that made them recognized and bagged awards a lot of times
and have been coined as the “transformational year”- it emerged as a bigger, better,
and stronger entity after the merger.
With the competitive advantages and market leadership records consolidated
into the merger entity, the researcher strongly recommends after comprehensive
consideration with the Grand Strategy Matrix (GSM), to pursue among these strategies;
Horizontal integration, Market development and Product development as these
strategies would lay of a claim to a solid foundation and dynamic synergy upon which to
build even more vigorous growth in the future.
I. COMPANY PROFILE
BDO had its humble beginnings on January 2, 1968 as it started as a Thrift bank called Acme Savings Bank, having only two branches in Metro Manila. In November of 1976, Acme was acquired by the Sy group, the group of companies currently owned by retail magnate Henry Sy, and renamed Banco de Oro Savings and Mortgage Bank. In December of 1994, BDO became a commercial Bank, and to reflect its new status, BDO is renamed Banco de Oro Commercial Bank, and in September of 1996, BDO became a universal bank, which led to the bank’s name changed to its current, Banco de Oro Universal Bank. BDO is one of the many banks owned by a Chinese-Filipino in the Philippines, including one of its competitors Metrobank and Chinabank. In its quest to explore and strengthen through vision, innovation and value, in 1997, BDO involved in an insurance service by establishing a subsidiary called BDO Insurance Broker, making it a, “bancassurance” firm. In 1999, it expanded its insurance through partnership with Assicurazoni Generali s.p.a., one of the world’s largest insurance firms, and Jerneh Asia Berhad, a member of Malaysia’s Kuok Group. In March of 2000, BDO partnered up with its insurance affiliates, which are Generali Pilipinas Life Assurance Company and Generali Pilipinas Insurance Company. On June 15, 2001, BDO merged with Dao Heng Bank’s Philippine subsidiary. The merger boosted the number of BDO’s branches from 108 branches before the merger to 120 after the merger. It became one of its competitive advantage as it expanded through its branches, and as it reached out to its increasing number of depositors, it further expanded when in April 2005, United Overseas Bank sold 66 out of its Philippine subsidiary’s 67 branches to BDO, and as it set to rationalize its operation from retail to wholesale banking, BDO, on March 22, 2006, after all United Overseas Bank completed its integration into BDO network, it increased the number of its BDO branches to 220. On August 5, 2005, Banco de Oro and an SM subsidiary, SM investments, bought 24.76% of the shares of
Equitable PCI bank, the Philippines’ third-largest bank, and 10% of an Equitable PCI affiliate, Equitable CardNetwork, one of the Philippines’ largest credit card issuers, from the Go Family that founded the bank. On January 6, 2006, Banco de Oro, with the SM Group of Companies, submitted to Equitable PCI a merger offer with Banco de Oro as the surviving entity. Under the proposal, Banco de Oro will swap 1.6 of its shares for every 1 Equitable PCI share and as a second option, Banco de Oro also offered to base the swap ratio on the book values of both banks to be assessed by an independent accounting firm using International Accounting Standards (IAS). To effect the merger, Banco de Oro needs consent of Equitable PCI shareholders representing 67% of Equitable PCI. These include the Social Security System (SSS) with 29%, the Government Service Insurance System (GSIS) with 14%, and the family of Equitable PCI chairman Ferdinand Martin Romualdez with eight percent.
On December 27, 2006 both Banco de Oro Universal Bank and Equitable bank agreed to merge producing the Banco de Oro-Equitable PCI bank. As of February 2007, it became known as Banco de Oro Unibank, Inc. As estimated before the merger, their assets as of June 2007 reached about to P608 billion, making them the country’s second biggest bank. Just next to Metrobank with P669.1 billion and the current third biggest bank in the Philippines with P592.6 billion. Now BDO has branches in key business and commercial centers in Metro Manila, Northern and Southern Luzon, Metro Cebu, Iloilo-Bacolod and Mindanao. From 220 branches prior to merger, to the current total of 703 combined branches nationwide, the service have grown accustomed to and more. Now that the personnel force has doubled – with a total count of close to 16,000 employees by year-end 2007.
II. RESEARCH DESIGN AND METHODOLOGY
The data requirement of this paper includes recent surveys, projections and operational highlights. It also requires information regarding recent trends regarding the industry under study. For comparative purposes, background of some major competitors in the industry is also needed, especially in the financial and operations aspect. It is also necessary to have enough internal information about Banco De Oro, the objective of this paper.
The information required in this paper was obtained primarily through the use of Banco De Oro 2007 annual report. Authorized personnel were asked for a copy of financial highlights and other relevant information. The information regarding competitors was obtained through the use of internet. Certain internal information regarding the company under study was obtained through personal interview with Ma. Teresita M. del Mundo, branch manager, BDO Arranque Manila. Extensive research was made through the use of the internet to look for relevant figures, statistics and projections.
This paper is limited only to Banco de Oro which operates solely in the Philippines. Among the different sectors of this industry, this paper focuses on the banking institutions. The focus of this paper is on the company’s performance and position in the banking and finance industry vis a vis its competitors.
The annual report for the most recent year (2008) was not yet available when this study was used. It is assumed therefore that the financial statements for the year 2008 were the same as that of the year 2007, which is the most recently available financial statement. The researcher made this assumption with consideration of the global financial crisis but conservative enough for undesirable events this year that affected the company’s financial standing. This annual report was used as a basis for comparison and projections. It is also assumed that there will be no dividend payments in the years within the time frame of the
projections. The projections also assume that no tax holidays or special tax treatments and changes in tax rates will occur in the future.
III. VISION/MISSION STATEMENTS
A. Statement of the Current Vision and Mission Statements
CORPORATE VISION MISSION STATEMENT
“To be the preferred bank in every market we serve by:
Consistently providing innovative products and flawless delivery of services; Proactively re-inventing ourselves to meet market demands;
Creating shareholder value through superior returns; Cultivating in our people a sense of pride and ownership; and, Striving to be always better than what we are today…tomorrow”
B. Critiquing the Current Vision-Mission Statements
Vision-Mission is a short, concise, and inspiring statement of what the organization intends to become and to achieve at some point in the future and what they will do to achieve it. For some beliefs, these statements are just a waste of time, since they do believe that these statements are just used for nothing but being published in the annual report and displayed in reception areas. But as negated by Warren Bennis, a noted writer on leadership says: “To choose a direction, an executive must have developed a mental image of the possible and desirable future state of the organization. This Image, which we call vision, may be vague as a dream or as precise as a goal or mission”. Mission on the other hand, makes the leader’s view concrete of the direction and purpose of the organization. It is a vital element in any attempt to motivate employees and to give them a sense of priorities.
Nine essential Components of a mission statement.
1. Customers Yes It is not clearly stated but by saying that they want to be the “preferred bank in every market we serve”, it is assumed that since they are a banking institution, their customers are customers who are willing to deposit their money, or make transactions to their company in every means. Therefore, they were able to determine who they will serve and where to focus their efforts on, without making confusion as to whom they will serve.
2. Products or Services
Yes “Consistently providing innovative products and flawless delivery of services” – They were very clear as to what they are going to offer their market/customers, and that is quality service and innovative products. It is very concise, but the whole thought is there. By means of innovation, and giving a variety of service depending on with their customers, makes them attain this statement they have made. Although they did not tell that they offer financial services, as a banking institution, people should already consider it. And for me, its concise statement made it strong and powerful and invulnerable to critiques and creates a mission to clearly
3. Markets Yes “Proactively re-inventing ourselves to meet market demands” - Again they were able to address the demands of the market through this statement. They were very clear that they will re-invent to be competitive for its global success and growth. Although they were not able to clearly state that they are into financial sector, their mission to re-invent to meet market
demands is more than enough for them to say that they are willing to extend themselves to possibilities, to cater new trends in the market to satisfy their customers/clients.
4. Technology No They have not stated into what means they will be able to serve their customers. Although they have addressed the above mentioned concerns, technology was not mentioned in the company’s mission statement, and makes it vulnerable as to how the business will expand through its resources, how its assets are in terms of technology, updated. And what are their plans to further cultivate for the demands in the market with their existing technology and how ones resources through technology will be maintained as to the manner of purpose and usage.
5.Concern for Survival, Growth and Profitability
Yes “Creating shareholder value through superior returns”
Since BDO is more acquainted of maximizing their shareholder’s wealth than simply maximizing profit, they have clearly stated their intentions to their shareholders. They are confident in assuring their shareholders, and potential investors that their investment to their company will become profitable through its optimization. In its quest to innovate, it simply implies that their great concerns are their shareholders, that is why they convert their efforts through the quality of their services and products they offer to their customers into opportunities for greater rewards.
6. Philosophy Yes “Cultivating in our people a sense of pride and ownership”
BDO has shared to its shareholders that sense of belongingness that they are safe in the arms of their company. That the
company will cater the needs of its people, and will re-invent, innovate, and explore, to cope with the demands in the market to satisfy their wants and needs for themselves. In this statement, they want to let their employees, shareholders, customers and others that concerns them, feel free as if it’s their own. The reason they want them to make them feel its their own is that generally, we take good care of our personal belongings, and BDO wants that belief to be brought to its company. That feeling that the people working in their company, and the people patronizing their products and services will rise above and beyond excellence, propelled by deep sense of pride in being part of a dynamic team
7. Self Concept
Yes With commitment to serve that shows through the quality of service and products they offer, they have considered this component, in being out professionalism in carrying out each and every task, and respect for one another, their competitive advantage rely on to their people. Their commitment that BDO has instilled on them and collaboratively continuously communicating with their customers in creating financial solutions to match their needs makes it advantageous to them that their customers patronize their products and services.
8. Concern for Public image
No Although they have engaged themselves to activities that addresses the environmental concerns and other social and community issues of which are not stated in their mission, it is much better if they have considered it since they are already doing it. They should have stated their commitment to fulfill its
social, ethical, environmental and economic responsibilities, considering this statement would further enhance and expand their market through means of development program for sectors they affect. Eliminating this statement would mean that BDO is only acquainted to its positive image in terms of prioritizing people because they are gaining profit from them, and might stereotype the company’s image that it’s concerns are only for profiteering resources.
9. Concern for Employees
Yes They clearly stated that they are committed to the growth of their employees and development that will nurture into becoming better individuals. If BDO is striving to be its best, in working as a team, professionalism and performance, they are bringing with them their employees as altogether grow as one person, one institution, and one corporation. They are treated as shareholders that as to what services their employees has to offer and offered it is properly compensated with the benefits and rewards that are ready and waiting for them.
Generally speaking, BDO has a positive impact as it includes their concern to their employees, customers and investors. There are lapses in statements in terms of technology and concern for public image; however, it remains clear in its direction and quest for innovation and growth. It strengths for being concise in its statement, makes it more memorable as it includes engaging words. It simplicity has already describe of its bright future with its clear intention to improve along with the people they are working with. But in terms of its achievements, it has not articulated in its statements their recognitions in the field of public service and activities aiming in the development of our country. Being socially aware and socially responsible could be a key strength to influencing their employees and possibly attracting more investors since they benefit
in two ways, one is through their savings, interest and other transactions that would give them profit, second is through the development programs BDO has instilled in the country.
C. Recommendation of Revised Vision and Mission statements
“To be the preferred bank in every market we serve by:
Consistently providing innovative products and flawless delivery of services; Advancing towards the future of banking through technological innovation
Proactively re-inventing ourselves to meet market demands; Creating shareholder value through superior returns;
Living in the virtue of honesty by abiding with the highest ethical standards Cultivating in our people a sense of pride and ownership; and, Striving to be always better than what we are today…tomorrow”
D. Recommend more effective ways of communicating the vision and mission statement
One of the most critical and yet hardest to corporate challenges is through communicating vision and mission statements effectively. Corporations are beginning to realize the value of binding the employees to the company and involving them more in corporate affairs and encouraging them to share company goals. Communication needs to go beyond transmitting information. Beyond putting the vision mission statements of one’s company in the front hallways or in annual reports. It must be more than that. It must be instilled in the hearts of its employees and transform employees behavior that will definitely result to excellence and deep sense of belongingness in terms that they know that they can put their hearts in to what
they are doing, in earning for a living. This can make your employees work as a team, and will lead to a contribution to an overall success.
In line with other audiences such as shareholders and investors, they should be demonstrated with its corporate vision mission, setting out stories, finding and creating examples of leaders embodying these in their actions, let them understand its traits and importance. Creating dialogue with anyone involved in the corporation, from its employees to its shareholders, getting feedbacks on how they experience culture and values in practice, and then aligning in them the vision mission of the corporation would help them understand it clearly. Moreover, it is necessary to align and be guided accordingly by the vision mission statements in decision making. Be consistent in the company’s behavior, words and deeds, and bridge that gap between employees to employees, employees to top management, the corporation to its customer and collectively support the vision mission to the reality.
III. EXTERNAL ANALYSIS A. General Environment
1. Socio-cultural, demographic and environmental forces.
Philippine society is a unique blend of diversity and homogeneity. The country is culturally strongly Euro-American. Western Rule have left an indelible imprint on the Philippines,
serving as a means for the introduction of Western culture and as the catalyst for the emergence of a sense of Philippine political and cultural unity. The country has experienced some cultural trends such as; health food/diet craze, working women, children as consumers early in life and youth as young investors which has paved a way to the integration of more people to the banking industry. These eventually result to the affection of cultural enterprise, industry development, household behavior, poverty reduction, voice and participation and other Globalizing forces that drive one’s own identity. The population density of the Philippines is high, but the distribution of the population is uneven. Parts of Metro Manila have a population density that is more than 100 times that of some outlying areas such as the mountainous area of northern Luzon. The country’s birth rate remains significantly higher than the world average although there were efforts to slow the overall growth rate in mid-20’s. It had limited success in part because reductions in the birth rate have been offset to some degree by reductions in the death rate. The problem that the banking sector faces due to this over population lies in the fact that almost 7.4% of the population was unemployed. This meant that an estimated 7.4M Filipinos were not producing any income and were of no help for the banking system. As for banking and gender, we have seen a great increase in men and women approaching banks for their services such as savings, loans and even insurance due to the growing instability of our economy and the fact that more and more people, not just women, are being driven to work due to the economic crisis the country and the world is facing. Many former stay at home husbands or wives have opted to getting a jobs in order to help sustain their family’s interests and needs.
2. Technology
The developments in information collection, storage, processing and transmission and distribution technology have influenced all aspects of banking activity. And was regard as the main driving forces for the changes in banking industry. It has been influencing the competition and the degree of contestability in banking.
Due to the development of technology, bank’s superiority in information is deteriorated. Entry barrier have been declining, new competitor have emerged. Some financial products and services have become more transparent and commodities, customer show willing to unbundled the demand for financial products and services, all these lead to a more competitive market environment. Due to lowered entry and exist and deconstruction, for some sub-financial markets, contestability in banking is also raised. On the other hand, it has also raised the influence on the Economy of scale since Competitive pressure force banks to lower their cost. Bank seeks to get economy of scale in bank procession instead of being a big bank. Bank seeks to secure the optimal business structure, and secure the competitive imperative of economy of scale. There are other options to get economy of scale, including joint venture and confederation of financial firms. Small firms also can get economy of scale by outsourcing, i.e. buy in economy of scale. It has also impacted on the way banking and financial services are delivered. A wide range of alternative delivery mechanism becomes available, Internet, ATM and other means of computerizations and these Reduces the dependence on the branch network as a core delivery mechanism. With the development of technology, the financial systems are substantially over-supplied with delivery system through a duplication of network, bank has to change their delivery strategy and rationalize their branch network strategy. Financial service could not provide the level of service it does without the support of advanced information processing and telecommunication technologies. The creation of a new supply channel has substantially reduced the cost of financial transactions.
3. Economic Environment
In 2008, our world experienced high oil prices, which led to drastic high food prices due to the extremely loose monetary policies and low interest rates of the U.S. Federal Reserve, as well as using food crop products such as corn ethanol and biodiesel as an alternative to
petroleum) and global inflation; a substantial credit crisis leading to the drastic bankruptcy of large and well established investment banks as well as commercial banks in various, diverse nations around the world; increased unemployment; and signs of contemporaneous economic downturns in major economies of the world, a global recession.
The National Economic and Development Authority (NEDA) and the Board of Investments were created in the late 20th century to help both public and private sectors in planning further economic development. Much of the initial capital investment of many private rural banks was provided by the government, and private development banks have likewise received government assistance. Many commercial and thrift banks have been established since the mid-1990s in response to increased liberalization, privatization, and the lifting of a ban on foreign banks. The Philippine Stock Exchange, though still relatively small, has been growing rapidly since weathering the Asian economic crisis at the end of the 20th century. But nowadays, government is establishing banks in order to tailor economic activities to their wider cultural and spiritual values, so that the operational activity is more directly valuable to the poor themselves. Proposals of interest will be those that analyze recent Bank projects’ record of success, or offer other ways of supporting the ability of the poor to reflect their culture in development processes as it is facilitated by bank activities. Economy speaks out for the poor as they seek help to those who are willing to take stock and draw on their values and strengths in setting priorities and decision-making on project.
4. Political, legal and governmental aspects.
Over a period of time, the banking industry of the Philippines has seen a transformation with the reforms being carried out by both the banking regulator and the government. The
reform process has resulted in improved banking industry, with industry income touching new heights in 2008. Moreover, the Philippine banking industry has been undergoing consolidation that will further strengthen its position as new entities will increase the competition level. Moreover, banks will be geared up in facing the inconsiderate economic outlook, which increases the likelihood of a sharp increase in unemployment or corporate bankruptcies.
The importance and benefits of a strong regulatory system with an open and well-regulated financial sector fuels economic growth and a strong financial sector offers stability, making the economy more resilient in the face of external and domestic shocks. In the Philippines, the Bangko Sentral considers the sound supervisory and regulatory environment, as well as the implementation of a broad set of financial reforms, as factors that have helped to foster sustainability and growth in the banking industry. Year-end 2002 figures revealed a steady growth in deposits, the resumption of lending activities, capitalization and bottom line figures.
The important relationship between banks and political, legal and governmental welfare has led researchers and international institutions to develop policy recommendations concerning bank regulation and supervision. According to the National Bureau of Economic Research, the International Monetary Fund, World Bank, and other international agencies have developed extensive checklists of "best practice" recommendations that they urge all countries to adopt. Most influentially, the Basel Committee on Bank Supervision recently revised and extended the 1988 Basel Capital Accord. The first support of these new recommendations develops more extensive procedures for computing minimum bank capital requirements. The second support focuses on enhancing official supervisory practices and ensuring that supervisory agencies have the power to scrutinize and discipline banks. The third pillar envisions greater market discipline of banks through policies that force banks to disclose accurate, transparent information. (NBER Reporter research summary)
Companies are subject to government imposed taxes such as income tax, donor’s tax, estate tax, withholding tax and other percentage taxes which at its normal tax rate is 35 % from July 1, 2005 to December 31, 2008.The amendment for next year will be effective on January 1, 2009 for the 30% Normal tax rate applicable to Domestic Corporation together with the resident and nonresident foreign corporation limited to the sources within the Philippines.
B. Industry and Competitor Analysis PORTER’S FIVE FORCES
1. Threat of New Entrants LOW
2. Rivalry among competitors INTENSE
3. Threat of substitutes MEDIUM
4. Bargaining powers of suppliers LOW
5. Bargaining power of buyers MEDIUM
1. Threat of New Entrants
New potential competitors are always a threat to any industry, other possible threats include; changing demographics/shifting demands, emergence of cheaper technologies and regulatory requirements. In keeping with the aspect of Economies of scale, threat of new entries would be low since minimum size of operations for banks to keep it profitable is quite high. The threat of new entrants according to Capital Requirements and Access to distribution channels is low since setting up a new business such as a bank needs a lot of capital investment not to
mention the technology required to compete with rivals such as ATM machines and access to distribution channels can be monopolized by other competitors. Brand loyalty of customers also shows a low threat to existing banking firms due to the fact that most banking institutions prioritize customer service among other things. As for Government Policy the threat of a new entrant is also low since there are several legal aspects that cannot be attained easily by new businesses especially in the banking sector. With regards to Scarcity of important resources such as qualified and expert staffing, the playing field is tilted to known banking operations rather than to new banking operations due also to the fact that they control distribution channels and have a higher brand loyalty making them the preferred choice of would be job-seekers. Also, High switching costs for customers such as long term contracts hinders the threat of any new banking institution since it poses great inconvenience for customers.
2. Rivalry among competitors
BDO has been very aggressive and competitive in its field as it offers its best quality service to its depositors, bringing in customers who patronize their products, as it also expands to its quest to explore and strengthen through vision, innovation and value. It has always been a challenge to different companies, what their rival competing firms has to offer. These factors such as to enhance quality, add features, provide services, extending warranties, and increasing advertisements, are one of the primary reasons why BDO has been very aggressive, a threat to all banking firms:
LIST OF OTHER PARTICIPATING BANKS IN THE PHILIPPINES (PSE INC.) 1. AsiaTrust Development Bank, Inc.
2. Banco Filipino Savings and Mortgage Bank 3. Bank of the Philippine Islands (BPI)
5.Chinatrust (Phils.) Commercial Bank Corporation 6.Citystate Savings Bank, Inc.
7.Export and Industry Bank, Inc.
8. Metropolitan Bank and Trust company 9. Philippine Bank of Communication 10. Philippine National Bank
11. Philippine Savings Bank 12. Philippines Trust Company
13. Rizal Commercial Banking Corporation 14. Security Bank Corporation
15. Union Bank of the Philippines, Inc.
As for rivalry among competitors especially to differentiation of product, the threat is intense since all banking institutions offer the same product which is financial services, whatever it may be; leasing, loaning, savings.etc. With respect to strategies, threat is also intense due to the fact that almost all banking institutions have their own perks and advantages that lure customers in their own way. Whether it’s BDO’s long banking hours, BPI’s Tele-Banking or Metrobank’s convenient credit policy. There is also Low market growth rates in the banking industry meaning that a banking firm can only truly grow with the loss or assimilation of other banking firms as was the case for Banco De Oro Unibank which is comprised of Banco De Oro and Equitable-PCI Bank.
3. Threat of substitutes
In banking institutions, competitive pressures arising from substitute products/services increase as the relative price of substitute/services declines and as consumers’ switch cost decrease. The scale of competitive pressure derived from development of substitute products from competitors is generally evidenced by rivals’ plans for expanding production capacity, as well as their sales and profit growth numbers. BDO, with its keen reading of international
financial trends, it enable themselves to access unique opportunities for increased value for their customers. The threat of substitutes as far as customer brand loyalty is concerned is medium since brand changing in banks is rare. Only poor account management and bad customer relations lead to shifting in banks since banking institutions in our country operate primarily in similar standards set by the government. Every banking establishment keeps a close relationship with their customers so I believe that in this aspect, the threat for substitute is low. As for relative pricing of performance of substitutes, the threat is medium since banking institutions’ rates have only slight discrepancies. It’s only a matter of which bank rate you can afford. Current trends also show that there is a low threat of substitution since it will be unwise to move your savings to another savings institution provided that it is able to stay afloat during this economic crisis.
4. Bargaining of power of Suppliers
With BDO merging to with another organization, they have expanded their networks through branches and means and squeeze out important cost savings for themselves. With these they have managed themselves very well, making them agile in their means, with its quick ability to apply power of information to respond to their customers’ needs amid shifting market conditions. With its, merging two organizations, with their distinct character and cultures, into one cohesive and solid team presented great challenges and complex priorities for Human Resource Management. In order to solidify their team faced with the increased expectations following the merger, they have made corporate culture enhancement programs to ensure that the bank faces the client with a common set of servicing philosophies. Other than that, the speed availability of services of next generation components have widely denomination of
initiatives focused on the harmonization of the benefits and compensation packages of officers and staffs, the resolution of issues between unions, and the administration of the required training and development programs to adequately support the changes in structure, system, and services.
5. Bargaining Power of Buyers
Bargaining power represents a major force affecting the intensity of competition in an industry. With BDO’s inventive mindset, they view banking as a continuous creative process, challenging them to always find ways to better serve their customers. They have special services that gains customer loyalty compared to its rivals, in which they have offered a variety of products and services to their customers. Through Generali pilipinas and BDO insurance Broker, Inc. the bank achieved record expansion in the insurance business in 2007. It grew by 26% in terms of total gross premiums while BDO insurance broker, Inc. sailed to a 156% increase in commission income due to the growth in bancassurance operations and the merger with Equitable Banking Corporation insurance Brokers, Inc. With its list of achievements in the corporate world, customers are attracted by it being the best performing fund manager for the 5th consecutive year. This has achieved the highest growth in assets under management of P274 Billion, representing vigorous 60% increase from the previous year. In consideration with our economy facing a volatile global financial environment, BDO focused on the successful integration of the treasury operations of the merged entity. The combined team, with the years of experience and expertise in the multi fixed-income, foreign exchange, and derivatives in the markets, sought to make adjustments in their strategy to compensate for expected downturn in the US and world economy, and volatility it brings. Gradually, to gain increasing bargaining power, it shifted its portfolio to place more emphasis on spread income and less dependency on trading gains. While more challenges appear on the horizon, particularly the forecast of a US
recession and the newly implemented SEC rules on over-the-counter market trading of securities, BDO remains upbeat on its prospects. Increased volatilities and widened spreads can lead to opportunities.
6. Summary of Porter’s Five Forces of Competition
To sum it up, The threat of new entrants in the banking industry can be considered low since there are many steep requirements that are needed to be meant such as a high capital investment, a share in distribution channels, government policies and of course the presumption of an economy of scale. For the rivalry between competitors, we can clearly see that there are intense threats present since banking institutions use similar strategies, there is low growth rate for companies and not much differentiation between services leaving the choice up to the consumers. Medium was the level of threat given to the threat of substitutes since there is a slight conformity between the prices of the services rendered by banks and this business usually centers itself in customer care and relationship. The threat of substitution is possible but seldom happens. I believe that a clear explanation of why the bargaining power of suppliers is low is the word service. This is why there are plenty of substitutes so banks can accommodate anyone from any social class. As for the bargaining power of buyers it can be classified as medium since banking operations have been always aimed to serve people.
COMPETITOR ANALYSIS
1.) Profile of Competitors
Collectively, the Philippine banking industry posted a Compound Annual Growth Rate (CAGR) hike of 8.46% in asset base between 2004 and 2007 of which, Industry deposits in the country grew at a CAGR of 9.82% from 2004 to 2007. The deposit mobilization is concentrated
with universal and commercial banks which some of its key players are Metropolitan Bank and Trust, Bank of the Philippine Islands, Land Bank of the Philippines and Banco de Oro UniBank Inc. which account for the majority of the Philippine banking industry deposit. Financial Intermediation was the largest shareholder of the loan disbursal by banks during 2004-2007. Bancassurance will account for 65% of the total sales of insurance products by 2011. Increasing at a CAGR of 69.78%, micro financing in the Philippines is expected to reach 56.5 Billion Pesos. Increasing mobile penetration will expand the mobile banking user base to more than 11 Million by 2011.
Metropolitan bank and Trust (Metrobank)
Metrobank, as the largest Philippine bank, is always trying to stave off competition to stay as the country's largest bank. It is largest in terms of its assets with P669.1 billion ($14.5 billion) (P46=$1) as of June 2007 and is also the largest Philippine bank in terms of overseas presence. It has a total of 8,721 employees. It has a diverse offering of financial services, from regular banking to insurance.
Metropolitan Bank & Trust Company (MBT) was incorporated on September 5, 1962 by a group of Filipino businessmen principally to provide financial services to the Filipino-Chinese community. Metrobank eventually expanded its business to provide a broad range of banking and collateral services to all sectors of the Philippine economy. As of August 21, 1981, Metrobank was granted a universal banking license by the Bangko Sentral ng Pilipinas (BSP). This license allowed Metrobank to engage in non-allied undertakings, which include automobile manufacturing, travel services and real estate, as well as finance-related businesses such as insurance, savings and retail banking, credit card services and leasing.
Metrobank offers commercial and investment banking services. Its principal business activities involve borrowing and lending, trade finance, remittances, treasury, investment banking, credit card and savings banking. It is also a major participant in the foreign exchange market in the Philippines, and is accredited by the BSP as a government securities dealer. The company's customer base covers a cross section of the top Philippine corporate market, but has always been particularly strong in the middle market corporate sector of the economy, a significant portion of which consists of Filipino-Chinese businesses. Metrobank provides investment banking services through First Metro Investment Corporation and retail banking through Philippine Savings Bank.
Metrobank subsidiaries and affiliates include;
Domestic subsidiaries and affiliates
• First Metro Investment Corporation
• First Metro Securities Brokerage Corporation
• First Metro Travelex
• MBTC Technology
• Metrobank Card Corporation
• Orix Metro Leasing and Finance Corporation
• Philippine AXA Life Insurance Corporation
• Philippine Charter Insurance Corporation
• Philippine Savings Bank
• SMBC Metro Investment Corporation
• Toyota Cubao
• Toyota Financial Services Philippines Corporation
• Toyota Motor Philippines Corporation
International subsidiaries and affiliates
• First Metro International Investment Corporation Ltd HK
• MBTC Exchange Service GmbH - Vienna
• MB Remittance Center HK
• Metro Remittance Center SA - Spain
• Metro Remittance (Italia) SpA
• Metro Remittance Singapore Pte Ltd
• Metro Remittance (UK) Limited
Ownership
• George S.K. Ty : 18.26%
• Philippine Depository and Trust Corporation: 17.96% (11.47% Filipino, 6.49% foreign)
• Federal Homes: 7.53%
• Philippine Securities Corporation: 7.5%
• Mary Vy Ty: 6.43%
• Metrobank directors: 3.75%
• Metrobank officers: 0.003%
• Public stock: 37.57%
It continues on its expansion thrusts as it expects to end the year with a total of 552 domestic branches and an automated teller machine (ATM) network reaching 800. The bank will intensify the promotion of its electronic banking services to retail customers, including
self-service channels like phone and Internet banking. While deposit taking is still the key business of branch banking, the bank steadily expanded its other retail businesses like housing and car loans, bancassurance and credit cards. It likewise concluded its roll-out of its sales effectiveness program that helped re-engineer all branches into sales-driven brick-and-mortar outlets.
At the start of the last quarter of 2008, Metrobank’s funding was boosted by a 7.6 percent growth in deposits to P541.4 billion. Cost of deposits was almost flat despite rising interest rates, as low cost deposits grew by 10.9 percent, accounting for 45 percent of the total deposit base. The increase in ATM coverage, meanwhile, has led to a corresponding increase in usage. Metrobank registered 85.4 million ATM transactions, with over 30 percent from use of Metrobank ATMs by local and international non-Metrobank cardholders. It boasts of its current record of above average 99 percent service availability, among the highest within the Bancnet consortium. BancNet is one of the country’s three major ATM service providers.
Bank of the Philippine Island (BPI)
BPI is the oldest bank in the Philippines still in operation and holds the record as the largest bank in terms of market capitalization in the Philippines (P136 billion = US$3.24 billion as of March 2008), and has consistently been the most profitable bank in the Philippines. It is owned by the Ayala Corporation, the largest conglomerate in the Philippines, and is based in Makati City's Central Business District, on the corner of Ayala Avenue and Paseo de Roxas, across from the Philippine headquarters of HSBC. BPI is also the oldest bank in Southeast Asia and has a long and distinguished history that spans over a century.
It has either influenced or has been influenced by many nations, including parts of the former Spanish Empire, especially Mexico, and the United States. While it is considered by many as an old institution, BPI is trying, with moderate success, to promote itself as a dynamic institution that caters to its various clients, which hail from various sectors of Philippine society.
The Group's principal activities are corporate banking, consumer banking, investment banking, asset management, corporate finance, securities distribution and insurance services. The Group derives its revenue from three operating business segments namely, Consumer Banking, Investment Banking and Corporate Banking. Their total sale in 2007 is P46, 019,000,000, with a total of 11,925 employees. Consumer Banking covers deposit taking and servicing, consumer lending such as home mortgages, auto loans and credit care finance as well as the remittance business. It includes the entire transaction processing and service delivery infrastructure consisting a network of branches, ATMs and point-of-sale terminals as well as phone and Internet-based banking platforms. Investment Banking provides services covering corporate finance, securities distribution, asset management, trust fiduciary services as well as proprietary trading and investment activities. Corporate Banking consists of the entire lending, leasing, trade and cash management services.
BPI also pioneered rural banking in the Philippines, as its countryside banking operations preceded that of many other banks' rural banking operations by many years. Today, it maintains a large rural branch network, with some branches dating bank to the Spanish or American colonial periods. Its branch network of 830 branches is by far the largest branch network of any bank in the Philippines.
The bank has received several awards from various financial magazines, such as “Euro money” and the Far Eastern Economic Review. Its most recent award was for the best retail bank in the Philippines in 2005.
Bank of the Philippine Island subsidiaries and affiliates includes:
• 1851 Club Inc. AF Holdings & Mgt. Corp. • AF Merchants Inc. AF Money Brokers Inc. • Ayala Life Assurance Inc. Ayala Plans Inc.
• BPI Bancassurance Inc. BPI Capital Corp.
• BPI Computer Systems Corp. BPI Direct Savings Bank Inc. • BPI Family Savings Bank BPI Forex Corp.
• BPI Foundation, Inc. BPI International Finance Ltd. • BPI Investment Mgt. Inc. BPI Leasing Corp.
• BPI Operations Mgt. Corp. BPI Paseo de Roxas Condominium • BPI Rental Corp BPI Securities Corp.
• BPI/MS Insurance Corp. CityTrust Realty Corp • CityTrust Securities Corp. Far East Bank Speed • FCP Credit Corp. FEB Insurance Brokers, Inc • FEB Management, Inc. FEB Savings Bank
• FEB Stock Brokers Inc. Filinvest Algo Financial Corp. • First FarEast Development Corp. Greentop Condominium Corp. • Santiago Land & Dev't Corp. Shenton Corp
• Zodiac Realty Corp
Ownership
• PCD Nominee Corporation: 35.55% (30.17% Filipino, 5.38% non-Filipino) • Ayala Corporation: 23.28%
• Ayala DBS Holdings¹: 21.43%
• Roman Catholic Archdiocese of Manila²: 8.51% • BPI directors and officers: 0.08%
• Public stock: 11.15%
Bank of the Philippine Island is known for its firsts in:
• BPI is the first bank in the Philippines, and in Southeast Asia. • BPI is the first bank to issue the Philippine peso
• BPI financed the first rail system, telephone system, electric power utility, and steamship service in the Philippines
• BPI established the Philippines' first ATM system, with its ATMs being called Express Tellers. The system eventually evolved into the Expressnet ATM consortium, which has seven members • Expressnet is also known for its Express Payment System (EPS), which was at first the debit card system of the BPI Express Teller ATM card.
• BPI pioneered the concept of the banking kiosk in the Philippines, with its kiosks being called Express Banking Centers or EBCs or by its older name, the Convenience Banking Center. EBCs can be found in malls, supermarkets, plazas and other locations and operate beyond normal Philippine banking hours, which are from 9.00 to 15.00 on weekdays.
• The first local bank in the Philippines to introduce 24 hour branch banking called BPI Express. • BPI is the first bank in the Philippines to make use of a call center and telephone banking, known as BPI Express Phone
• Launched BPI Express Mobile - Mobile Banking facility which enables accountholders to inquire about their deposit, credit card, auto and housing loan and BPI Prepaid Card balances, transfer funds between enrolled deposit accounts, pay bills to over 200 merchants, reload Globe Telecom and Touch Mobile prepaid mobile phones and BPI Prepaid Cards BPI Express Cash, and transfer money to and from Globe GCash wallet.
• Launched BPI Express Credit Gold Mastercard with Paysafe System, the country's first EMV (Europay, MasterCard, Visa) compliant chip card.
• The first airline co-brand chip credit card issued in the Philippines - BPI WorldPerks MasterCard with its partner Northwest Airlines.
• The first local bank in the country to offer most number of third currencies in its products and services - Savings Accounts and Time Deposit Accounts (As of March 2007)
Legend: 4= Major Strength; 3= Minor Strength; 2= Minor Weakness; 1= Major Weakness
Banco De Oro Metrobank BPI
Critical Success
Factor
Weight Rating Weighted Score Rating Weighted Score Rating Weighted Score 1. Financial Position 0.10 3 0.30 4 0.40 3 0.30 2. Technology 0.07 4 0.28 3 0.21 3 0.21 3. Customer Service 0.185 4 0.74 4 0.74 2 0.37 4. Strategic Locations 0.175 4 0.70 4 0.70 3 0.525 5. Customer Loyalty 0.05 3 0.15 3 0.15 3 0.15 6. Organization Structure 0.06 4 0.24 4 0.24 4 0.24 7. Management 0.08 4 0.32 4 0.32 4 0.32 8. Human Capital 0.05 4 0.20 4 0.20 3 0.15 9. Innovation 0.08 4 0.32 3 0.24 3 0.24 10. Market Share 0.15 3 0.45 4 0.60 3 0.45 Total 1.00 3.70 3.80 2.955
In the Banking industry, the determined critical success factors are financial position, technology, customer service, strategic locations, customer loyalty, organizational structure, management, human capital, innovation, and market share. The highest weight is given to customer service simply because the customers are the bread and butter of any banking institution. Following the merger last May, there has been a tremendous surge of numbers in the organization of BDO- 15,000 people, 700 branches, and 1,200 ATMs. With these, there is an increase in customer numbers and with higher expectations to fulfill. That’s why BDO was given the highest rating together with Metrobank as far as customer service is concerned. With an
increase in numbers of personnel, the company now tends to a higher number of customers. Banks needs to cater to time-conscious depositors without sacrificing their services. Considering the extent of competition in the banking industry, one should not only put a branch in any location but in a strategic location. That’s why strategic location is the second factor given the highest weight. Putting up branches in strategic locations like mall and urban areas will give an advantage over its competitors. Metrobank and BDO were given the highest rating for their branches were located strategically. Almost anywhere you can see their branches. Their ATM machines are highly accessible. The next factor is market share. Being the market leader in an industry is a certain advantage. Comparing the net assets of the Big three in the banking industry, Metrobank shadows over the rest. BDO being the second largest is trailing behind while BPI follow suit. The next factor with a given weight of 10% is financial position. The Big three in the industry are Metrobank, BDO and BPI having a net assets of P669,100,000, P60,540,628, 136,000,000 respectively. Having the same weight at 8%, the next factors are management and innovation. Everyone was given the highest rating in management due to their sheer expertise in managing their own respective organizations. Being in an industry that adheres in servicing the customers with utmost importance, innovation is needed. With new age at hand, industries should adhere and cater to time-conscious consumers with fast and state of the art technology. Early preparation for business growth and capacity required to put the necessary adjustments in place and move towards a smooth implementation. The next factor is Organizational Structure. Having the mall magnate, Henry Sy, as the Chairman Emeritus and Teresita Sy-Coson, as the Chairperson, we can say that BDO has a good organizational structure. The last two factors are Customer Loyalty and Human Capital. Merging two organizations, with their distinct characters and cultures, into one cohesive and solid team presented great challenges and complex priorities for Human Resource Management. BDO considers human resource integration and organizational development a continuing primary trust. With such a huge manpower, they provide training and development programs to
adequately support the changes in structure, systems, and services. Everyone was given a rating of 3 in the customer loyalty.
3.) Summary and Conclusion
The Philippine economy is buoyant but it is projected to have a slowdown due to threatening crisis. Although GDP and GNP increased drastically in the past years due to the appreciation of peso against the US dollar and a huge surge of OFW remittances, the Philippine economy will feel the domino effect of the crisis in the upcoming months. Mass layoffs, decrease in consumer spending, withdrawal of investments and deposits. With the decrease in spending of households, the industry will take a sudden turn. With every country feeling the effect of the sudden turn of events, very few businessmen will invest in our country to conduct business. In this matter, capital sources will drastically decrease. A strong peso, increase in remittances, and slight improvement of GDP-GNP will give the economy a shield to lessen the impact of the ‘tsunami’ crisis. The improving technological conditions brought about a change in the lifestyles of Filipinos. As a result, this brings an increase in production which provides for a higher capital and higher borrowings. While bottom line numbers may not be as impressive, the industry is clearly building for the future, putting a lot of emphasis on asset quality, governance and transparency, and sound business strategies with clear accountabilities.
EXTERNAL FACTOR EVALUATION MATRIX (EFE)
Weight Rating Weighted Score
Opportunities:
Trade and industry expansion that will generate a desired multiplier effect on incomes. 0.10 4 0.40 Inflation is expected to depreciate 0.08 3 0.24 Upturn in Investments elevating it to become the largest trust business in the country.
0.10 4 0.60
Benign inflation and an improved fiscal position served as key factors that held interest rates at their lowest levels.
Record-High
Remittances through extensive distribution networks coupled with robust market base and overseas networks 0.10 3 0.30 Building business’ confidence through increased government spending, increased volatilities and widened spreads by means of expansion. 0.07 2 0.14 Rapid Technological Advancement to meet heightened demands in the market and administrative centers. 0.06 2 0.12 Threats: Projected Increase in Inflation due to US recession. 0.07 2 0.14
Market Volatility and Shifting Investors
0.07 3 0.21
Global Financial Crisis
0.15 4 0.60
Confidence Over the Country’s Solid Fundamentals
0.05 2 0.10
Viruses and various forms of damaging software
0.05 2 0.10
The External Factor Evaluation Matrix (EFE) is concerned solely with external factors. These factors are ones that are subjected to the will of social, economic, political, and legal forces. The firm’s strategies effectively take advantage of existing opportunities and minimize the potential adverse effects of external threats. The opportunities and threats here are the critical success factors in the external environment that can help position the industry to be profitable. The chief opportunities identified include the favorable economic environment that fosters mergers and acquisitions. Furthermore, the banking industry themselves have a unique window of opportunity to merge or acquire other banking institutions which in turn promotes globalization. The weight given to each factor implies the relative importance of each factor. The range of weight is from 0.0 which is ‘not important’ and 1.0 which is ‘very important.’ A rating of 1 is given for poor response and a rating of 4 for superior response. Responsiveness to threats is measured by the degree to which the company minimizes the incurrence or impact of threats. Responsiveness to opportunities is measured by the degree to which company efforts take advantage of opportunities.
Among seven opportunities, the improvement in investments was given the highest rating. BDO was given the highest responsiveness rate. A big sudden upturn in investment gave BDO the second largest bank in the Philippines. With the recent growth of the economy and increase in tax impositions, there was a huge pour of investments coming from foreign businessmen giving thousands of jobs which in turn provide an increase in consumer spending and investments. It augmented the purchasing power of the consumers, furthering the economy’s consumption-led growth and boosting the deposits, investments and capital borrowings. With this at hand, banks fight for market leadership through formalization of unique strategies, innovation of services, improved banking and intermediation activities, and expansion. In recent years, the Philippines experienced its strongest economy and its best performance yet. With an ever increasing remittances from overseas Filipino workers, an improved financial condition after suffering its record high of almost 12% in inflation due to
weekly oil price hike and food shortage, and industry expansion which brought forth globalization. They were given equal weight with the industry expansion having a superior response and record high remittances and low inflation environment having the same ratings of three. With good economic environment, it is a proper time for expansion and globalization. The industry should learn to expand whether domestically or internationally. The move of expansion will reflect both challenges and the rewards of that process. The power of synergy will serve to reinforce the potential for sustainable growth. The opportunity with the lowest weights are the increased in government spending and rapid technological advancement. This enabled the government to channel more resources to productive spending, the first time it has done so in recent years. With the technological wars at hand, the industry should adhere to such changes for business growth, BDO supports Branch Banking’ conversion, relocation, and opening requirements. Further, it conducted a series of retooling and team-building activities to reinforce the staff’s capability to rise to heightened demand and expectations for IT support in the bank.
Compared to opportunities, there are only four threats for BDO with Global Financial Crisis as the biggest threat and with the highest weight as well. With the stable economy, there is a projection of a shift in economic conditions. Investors believed that the crisis will bring a big swing in market conditions and withdrawal of investments. Investor confidence will decline amidst the country’s solid fundamentals. Having an economy and market so volatile, depositors and investors alike will think about of spending and depositing. Less borrowing, less spending, high projection of inflation, bankruptcy of trust funds and other lending institutions will cripple the industry without a strong foundation. Faced with this type of environment, the bank doubled its efforts to build on the contemporary strengths and enhanced its risk management system to meet the demands of the bank. Credit policies, procedures and guidelines were the first to be harmonized. A common set of approval authorities and processes, including the risk rating system and a credit committee approval process, were rolled out. BDO management has closely monitored and directly managed the bank’s Non Performing Loans (NPL) and past-due
accounts, ensuring the implementation of appropriate strategies to maximize collection and recovery of assets. Taking this approach fine-tuned the bank’s recovery efforts, thus making progress in terms of a more proactive strategy and improved NPL levels over time. These efforts suggest the company’s attempt to eliminate if not, lessen the impact of the threats mentioned, thus giving it a rate of four.
IV. INTERNAL ANALYSIS
For BDO, the commitment towards the building for the future extends well beyond the Bank and its network; it reaches far higher than the business targets for the year. Building for the future is given real meaning in the profound, continued fulfillment of the Bank’s corporate social responsibility objectives and programs. The bank’s endeavors hewed closely to a long-standing track record of support to social development, reflecting a clear vision of a future built on a foundation of excellence, self-determination, and fearless initiative.
A.Management
There are thirteen duly elected board of directors for Banco De Oro. Henry Sy, Sr., 84, Filipino, is the Chairman Emeritus of BDO. He is the Founder and Chairman of SM Group of Companies, he is known as the visionary of Philippine retail because of his innovations in the industry. the shoe store he founded in 1958 as since evolved into a dynamic group of companies, with retail merchandising and shopping centers as core businesses and complementary ventures in banking, real estate, and leisure tourism development.
Teresita T. Sy-Coson, 57, Filipino is the Chairperson of BDO. Concurrently, she sits as
Chairperson and/or Director of various BDO subsidiaries such as BDO Private Bank, BDO Leasing and Finance, Inc. (formerly PCI Leasing & Finance, Inc.), and BDO Capital & Investment Corporation. Ms. Sy-Coson is also the Vice Chairperson of SM Investments Corporation, Chairperson of Supervalue, Inc. and a director of SM Prime Holding, Inc. Shoemart, Inc., multi-Realty Development Corporation, and First Asia Realty Development Corporation.
Corazon S. De la Paz-Bernardo, 66, Filipino, assumed the post of Vice Chairperson of
BDO in July 2007. Prior to that, she served as the Chairperson of Equitable PCI Bank from February 2006 to June 2007. She is currently the President and CEO of SSS.
Jesus A. Jacinto, Jr., 60, Filipino, was elected Vice Chairman of the Bank in May 1996,
and is concurrently the Chairman and President of BDO Insurance Brokers, Inc. He is likewise a Director and Treasurer of BDO Realty Corporation. Mr. Jacinto is currently a Director and Vice President of the Bankers Association of the Philippines.
Christopher A. Bell-Knight, 63, Canadian, was appointed Director of BDO in May
2005. He was formerly a Director of Solidbank Corp. from 1990 to 1998, and Vice President and Country Head of the Bank of Nova Scotia. He has had over 40 years of banking experience in England, Canada, and Asia.
Nazario S. Cabuquit, Jr., 74, Filipino, was elected Director of EPCIBank on July 2005.
he had also been elected to the board of several EPCIB subsidiaries as well as various board committees in both EPCIB and some of its subsidiaries. He currently serves on the BDO Board as a nominee of the SSS, where he is Special Assistant to the President and CEO.
Terence Ong Sea Eng, 58, Singaporean, was appointed BDO Director in July 2006. He
is also presently a Senior Executive Vice President of United Overseas Bank Ltd. and a Director of United Overseas Bank-Philippines. He holds a Bachelor’s degree in accountancy from the then University of Singapore and was previously the Deputy General Manager of the Board of Commissioners of Currency in Singapore.
Henry T. Sy, Jr., 54, Filipino, was elected BDO Director in July 2007. he is the Vice
Chairman of SM Investments Corporation, SM Development Corporation, and Highlands Prime, Inc., and a Director of SM Prime Holdings, Inc., and San Miguel Corporation. He is chiefly responsible for the real estate acquisitions and development activities of the SM Group of Companies and holds Board positions in several companies within the SM Group.
Josefina N. Tan, 62, Filipino, is a director of BDO. Concurrently, she serves as Director
and President of BDO Private Bank and a Director of BDO Realty Corp. Ms. Tan is also the Vice Chairperson of Miriam College, the President of Regal Properties, Inc., and a trustee in the Development Center for Finance and Laura Vicuna Foundation.
Nestor V. Tan, 50, Filipino, was elected President and Director of BDO in July 1998. He
concurrently sits as Director of various subsidiaries of BDO including BDO Capital and Investment Corp., BDO Realty Corp., General Pilipinas Insurance Corp., BDO Leasing and Finance, Inc., and Generali Pilipinas Life Insurance Corp.
Teodoro B. Montecillo, 73, Filipino, was appointed as an independent Director in
August 2004. He is concurrently an Independent Director in PDS Holdings Corp., Philippine Dealing Exchange Corp., Philippines Securities & Settlement Corp., and Philippinne Depository & Trust Corp.
Jimmy T. Tang, 72, Filipino, has served as Director of the Bank since 1984. He is also
the President of Avesco Marketing Corp. and presently the Honorary President of the Federation of Filipino-Chinese Chambers of Commerce & Industry, Inc.
Edmund L. Tan, 62, Filipino, was appointed Corporate Secretary of BDO-EPCIBank on
July 2007. He is currently Chairman of EBC Investments, Inc. He was likewise appointed Chairman and President of EBC Strategic Holdings Corp. He serves as Director and Corporate Secretary of APC Group, Inc., Philippine Global Communications, Inc., PhilCom Corp., and Aragorn Power & Energy Corp.
Corporate Governance
The Bank enforced strict accountability and transparency while, at the same time, maintaining operational efficiency and pursuing dynamic innovations to deliver increased value to the banking public. This Pro-active and long-term view of corporate governance was translated into concrete actions and results by the Bank’s various working committees. The
committees reaffirmed in their respective areas how the Bank interprets corporate governance as a conscious and methodical effort, reinforced in an active and day-to-day advocacy of financial responsibility, integrity, and commitment to service.
Executive Committee
The Executive committee is headed by Teresita T. Sy-Coson with Nestor V. Tan; Jesus A. Jacinto, Jr.; Corazon S. De la Paz-Bernardo; Josefina N. Tan as members. They are the ones authorized to act on behalf of the Board of Directors on matters affecting the operations of the bank subject to legal limits and by laws of the bank, and such ceilings that may be imposed by the Board of Directors. It has the authority to approve within set limits, for instance, technology-related project or such other initiatives for enhancing the Bank’s operating and service delivery capabilities; operating policies and/ or manuals; and the establishment of branches and/or extension offices as well as domestic or foreign subsidiaries. The Executive Committee meets as necessary to pass upon matters referred to it and is comprised of at least three directors appointed/designated by the Board.
Audit Committee
The Audit committee is headed by Teodoro B. Montecillo with Corazon S. De la Paz-Bernardo; Henry T. Sy, Jr.; Jimmy T. Tang; Christopher A. Bell-Knight as members and Nazario S. Cabuquit, Jr.; and Jesus G. Tirona as advisers. They act on behalf of the Board and provides oversight of the Bank’s financial reporting and control as well as internal and external audit functions. It reviews and assesses the Bank’s annual audit plan, its system of internal controls, and regular financial and audit reports. It further reviews strategic issues relating to plans and policies, financial and system controls, and methods of operation, seeing to their adequacy and pinpointing possible improvements.