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Capital Marketspdf

There are several types of financial intermediaries that make up the Philippine financial system. Banks include universal banks, commercial banks, thrift banks, and rural banks. Non-bank financial intermediaries can be divided into those with quasi-banking functions, such as financing companies, and those without, such as investment houses. The Bangko Sentral ng Pilipinas (BSP), Securities and Exchange Commission (SEC), and Insurance Commission (IC) regulate these various financial intermediaries. The financial system aims to ensure risk management, liquidity, and the flow of financial information through these intermediaries.

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236 views84 pages

Capital Marketspdf

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Hannah Marie Naduma

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AN OVERVIEW OF THE

PHILIPPINE FINANCIAL SYSTEM

FM 418
University of Cebu - College of Business and Accountancy
THE PHILIPPINE
FINANCIAL SYSTEM
Financial Intermediaries, Segments
The Capital Markets
Basic entities
1. The financial intermediary
2. 3 functions of a financial intermediary
3. 3 government regulators
4. 2 kinds of financial intermediary
5. Bank financial intermediaries
6. Non-bank financial intermediary
7. 2 types of non-bank
8. 4 segments of the Philippine financial system
Financial intermediaries ensure
Risk Management, Liquidity & information
Banks Non-Banks
Universal Banks Investment Houses*
Commercial Banks Financing Companies
Thrift Banks Securities Dealers/Brokers
Rural Banks Investment Companies
Specialized Gov’t Banks Insurance Companies
Lending Investor
Pawnshops
Gov’t Non-Bank FI
Venture Capital Corporations
Mutual Building & Loan Assn
Non-stock Savings & Loans

There are 2 types of financial intermediaries

Bangko Sentral ng
Pilipinas (BSP)

Securities &
Exchange
Commission (SEC)

Insurance
Commission (IC)

These 3 Government Agencies regulate

our financial intermediaries
This slide shows which financial intermediary is regulated
by which government agency

Banks SEC BSP

Universal Banks
Commercial Banks
Thrift Banks
Rural Banks
Specialized Gov’t Banks

Non-Banks

Investment Houses*
Financing Companies
Securities Dealers/Brokers
Investment Companies
Lending Investor
Pawnshops
Gov’t Non-Bank FI
Venture Capital Corporations
Mutual Building & Loan Assn
Non-stock Savings & Loans
Insurance Companies IC
Here’s how our banks look like side by side

As of August 2020 Data fíom Bangko Sentíal ng Pilipinas

Specialized Gov’t Rural Banks Thrift Banks P325M Commercial Banks aka Universal Banks aka.
Banks engaged in P3.2M min. min. capitalization in KB; P2.8B min. EKB, UB or Expanded
specialized lending capitalization in 5th, MM; P25M outside capitalization Commercial Bank; P5B
programs for 6th class MM min. capitalization,
economic municipalities; P32M granted special licenses
development in MM
Here’s how our banks look like side by side

As of August 2020 Data fíom Bangko Sentíal ng Pilipinas

445

47
25 21
Rural Banks Thrift Banks Commercial Banks Universal
Banks
Here’s how our banks look like side by side
Total Assets
As of Decembeí 2019 Data fíom Bangko Sentíal ng Pilipinas (in million Php)

1 BDO Unibank Inc. 3,069,394.98

2 Metíopolitan Bank & Tíust Co. 2,116,897.17
3 Land Bank of the Philippines 2,033,417.30
4 Bank of the Phil Islands 1,912,624.66
5 Philippine National Bank 1,067,676.31
6 China Banking Coíp 866,900.13
7 Secuíity Bank Coíp 788,233.37
8 Rizal Commeícial Banking Coípoíation 762,310.50
9 Development Bank of the Philippines 761,498.56
10 Union Bank of the Philippines 706,866.96
Bangko Sentral ng
Pilipinas (BSP)

In the Philippines, Non-bank financial institutions are

supervised by BSP

Source: http://www.bsp.gov.ph/downloads/Publications/2013/StatRep_1Sem2013c.pdf
Β
Non-bank Non-bank
With Quasi banking functions Without Quasi banking functions

They are composed of non-banks with quasi-banking

functions and non-banks without quasi-banking
functions

Source: http://www.bsp.gov.ph/downloads/Publications/2013/StatRep_1Sem2013c.pdf
Non-bank
Without Quasi banking functions

Non-banks without Quasi banking functions do not

have a full banking license but they facilitate
bank-related financial services, i.e., investment, risk
pooling, contractual savings and market brokering
Source: http://www.bsp.gov.ph/downloads/Publications/2013/StatRep_1Sem2013c.pdf
Β
Non-bank
With Quasi banking functions

Non-banks with Quasi banking functions have a

full banking license

Source: http://www.bsp.gov.ph/downloads/Publications/2013/StatRep_1Sem2013c.pdf
Β
Non-bank
With Quasi banking functions

On top of facilitating bank-related financial services, they

can engage in the borrowing of funds from 20 or more
lenders for it’s own account

Source: http://www.bsp.gov.ph/downloads/Publications/2013/StatRep_1Sem2013c.pdf
Β
Non-bank
With Quasi banking functions

They can do this through issuances, endorsement or

assignment with recourse or acceptance of deposit
substitutes for purposes of re-lending or purchasing
receivables and other obligations
Source: http://www.bsp.gov.ph/downloads/Publications/2013/StatRep_1Sem2013c.pdf
Β
Non-bank
With Quasi banking functions
Cebu International Finance Corporation
RCBC Leasing and Finance Corporation
First Metro Investment Corporation
Orix Metro Leasing and Finance Corporation
Philippine Depository and Trust Corporation
RCBC Capital Corporation
Toyota Financial Services Philippines Corporation (TFSPH)

As of August 2020, these are our Non-banks with Quasi banking

functions
Source: http://www.bsp.gov.ph
Non-bank
Without Quasi banking functions
AB Capital and Investment Corporation PBC Capital investment Corporation
Asia United Leasing & Financial Corporation PBcom Finance Corporation
Bancasia Financial & Investment Corporation Phil Comml Capital Inc
BDO Capital & Investment Corporation PNB Capital & Inv'T Corporation
BDO Leasing & Finance Inc. PNB-Ibjl Leasing And Finance Corporation
BPI Capital Corporation SB Capital Investment Corporation
BPI Century Tokyo Lease & Finance Corporation SB Finance Company Inc
China Bank Capital Corporation SBM Leasing Inc
CitiCorporation Capital Philippines Inc. Security Finance And Leasing Inc
CitiCorporation Financial Services and Insurance Brokerage Sumisho Motor Finance Corporation
Philippines Inc UCPB Ciif Fin & Devt Corporation
DBP Leasing Corporation UCPB Leasing And Finance Corporation
East West Leasing and Finance Corporation Unicapital Finance & Investments Inc
LBP Leasing Corporation Unicapital Inc
Maybank Atr Kim Eng Cap Partners inc

As of August 2020, these are our 28 Non-banks without

Quasi banking functions
Source: http://www.bsp.gov.ph
Here are other financial institutions that play a big role in our
financial markets today:

Exchange

• Marketplace where securities, commodities, derivatives and other financial

instruments are traded

• Gives companies, governments and other groups a platform to sell securities

to the investing public

• Ensures fair and orderly trading, as well as efficient dissemination of price

information for any securities trading on that exchange
Here are other financial institutions that play a big role in our
financial markets today:

Clearing House

• Company acting as intermediary in making deliveries upon payment to

effect settlement in securities transactions

• Determines who will deliver or receive either cash or security in a

transaction

• Validates and reconciles details of transactions between trading

participants prior to Settlement – which is the simultaneous, irrevocable
and final exchange of securities and cash
Here are other financial institutions that play a big role in our
financial markets today:

Broker

• Must be registered with the exchange

• Acts as intermediary between a buyer and seller
• Charges a commission

Dealer

• Acts as a principal in a securities transaction

• Trade for their own account and risk

Transfer agent

• Appointed by a corporation to maintain records of stock owners

• Cancels and issues certificates
• Resolves problems arising from lost, destroyed, or stolen certificates
MONEY CAPITAL
MARKET MARKETS

PHILIPPINE
FINANCIAL
SYSTEM

FOREX MARKET DERIVATIVES

MARKET

Source: Essentials of Investments in the Philippine Capital Markets 2nd ed. By Santos, Quinitio et al, p.50

The Philippine Financial System has four segments

Deals with short term
financial contracts
MONEY MARKET
like Treasury Bills (T-Bills) less
than 360 days,
Short Term Commercial
Papers issued by companies

The Philippine Financial System has four segments

Deals with trading of major
foreign currencies traded in
FOREX
Philippine Dealing System
(PDS) or MARKET
in the “grey market” aka.
money changers

The Philippine Financial System has four segments

Deals with financial contracts
which derive their value from
DERIVATIVES any other underlying asset/s.
MARKET like futures, options, swaps,
forward rate contracts

The Philippine Financial System has four segments

Deals with debt &
CAPITAL equity markets;
MARKETS In the primary & secondary
markets;