Corporate strategy for Far East Bank & Trust Co.

• Main Author: Dy, Giselle N.
• Format: text
• Language: English
• Published: Animo Repository 1998
• Subjects: Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/2139
• Institution: De La Salle University

The financial services industry is a group of companies providing services such as obtaining funds for those who wish to invest them, providing income-earning outlets for those with funds to lend or invest, payment services, and financial advice. The Philippine Financial system, composed of the Bangko Sentral ng Pilipinas (BSP) and the different financial services firms is the broad environmental of banks operating in the Philippines. The BSP is the regulatory body overseeing the operations of all the institutions within the system. Financial institutions are generally classified as banks and non-banks. Under the banking segment, are commercial banks, which can be regular or expanded commercial banks, thrift banks, rural banks, and specialized government banks. Non-bank financial institutions can be in the form of investment houses, financing companies, pawnshops, insurance companies, credit unions, savings and loans associations, venture corporations, securities dealer / brokers, investment companies, fund managers, lending investors, and government non-bank financial institutions. Commercial banks are among the predominant institutions in the Philippine financial system. As of the 2nd quarter of 1998, total resources of the commercial banking segment amount to Php 2.504 trillion. Far East Bank and Trust Company, being an expanded commercial bank, belongs to the commercial banking segment of the industry. This segment is composed of 36 local commercial banks, 14 foreign banks, and 1 specialized government banks. Due to the recent financial crisis and the El Nino phenomenon, the economy did not perform very well for the first half of the year. GNP growth declined to 2.5% from last years 5.8% and GDP growth down to 1.7% from 5.1% last year. Analysts still expects a slow growth for the rest of the year. Meanwhile, the monetary authorities through the BSP have introduced several regulations to stabilized the financial sector: increase in capitalization requirements of banks between 20 to 60% of present level additional loan loss provisions greater incentives for mergers and acquisition and other regulations. With all these trends taking place in the environment, competition is intensifying in the industry. Far East Bank and Trust Company is among the top 10 local banks in the industry. Others on the list are Metrobank, PNB, BPI, PCI Bank, RCBC, UCPB, Equitable Bank, Allied Bank, and Union Bank. FEBTC considers the first 6 players on the list as its peer banks. Competition in the commercial banking industry is concentrated in three key areas: (1) branch banking, where banks jockey for locations more accessible to their customers (2) pricing, where the cost of financial services is placed within the range that customers can afford and are willing to pay (3) quality of services, in which automation and the human factor combine to make the delivery of financial services more efficient and effective. Far East Banks draws its strengths from the professional management of the bank by highly competent senior executives with different industry background, its superior technology base, its highly skilled workforce, its strategic alliances and linkages with international firms, its extensive branch network, and its sound financial ratios. In order to compete effectively amidst a slow growing economy and rising competition, the bank should focus on the following major objectives and strategies: (1) Increase its profitability by generating low cost funds, increasing fee-based income and improving the quality of loans. (2) Increase its market share by enhancing its presence in the middle and consumer market, establishing leadership in certain niches, and fostering international links. (3) Increase its resources by increasing deposits, increasing and improving loan portfolio and beefing up funds.