Aboitiz-led Union Bank of the Philippines received a green light from the Bangko Sentral ng Pilipinas to establish its own digital bank, joining other players in the emerging industry.
In a disclosure to the stock exchange on Wednesday, UnionBank said the BSP approved on July 15 its application to form a fully virtual bank to be known as Union Digital Bank or UnionDigital, a wholly-owned subsidiary.
The clearance gives the Philippines its fourth digital-only bank. Earlier, the BSP gave digital banking licenses to Overseas Filipino (OF) Bank of state-run Land Bank of the Philippines, Tonik Digital Bank and UNObank.
More companies are expected to join the nascent industry¸ including Lucio Tan-owned Philippine National Bank, PayMaya’s Voyager Innovations and Yuchengco-owned Rizal Commercial Banking Corp. The Gokongwei Group is also reportedly applying for a digital banking license.
It was just last December when the central bank issued a circular creating a new bank category for virtual lenders. The BSP requires digital banks to have a minimum capitalization of P1 billion.
For the initial phase, the BSP has limited the number of digital banks that can operate in the country to five so regulators can easily assess their financial performance and their impact on the banking system. But Governor Benjamin Diokno recently said the cap may be lifted depending on the results of the BSP’s assessment.
As it is, Diokno is hoping that digital banks can assist the BSP in achieving its goal of shifting 50% of total retail transactions in the Philippines to digital channels and raise the number of Filipino adults with bank accounts to 70% by 2023.
As of 10:18 a.m. on Wednesday, shares in UnionBank were trading flat at P76.85 apiece. The main index was down 1.04%.