Mellon: Philippines may gain from crisis

Mellon: Philippines may gain from crisis
November 21, 2008 03:37:00
Doris Dumlao

Philippine Daily Inquirer

The Bank of New York Mellon, a global leader in asset management and securities servicing, sees the Philippines to be in good shape, capable of hurdling, and even profit from, the global financial crisis.
“The Philippines is inherently strong, a potential beneficiary of these financial woes,” BNY Mellon’s chairman for Asia Pacific, Christopher Sturdy, said in an interview with the Philippine Daily Inquirer on Thursday.
Sturdy, who assumed the post in June and is visiting the Philippines for the first time, cited the country’s adequate foreign exchange reserves, a sustained current account surplus driven by remittances from overseas Filipino workers, and its robust business process outsourcing (BPO) industry.
“It’s one of the havens for BPO, and as people come into tougher times, you need to be able to cut costs. Many people are looking at BPO, so fundamentally, you have some good things to trade on I think, in this country, in this economy,” Sturdy said.
“Having said that, nobody is immune from the foreign exchange volatility that’s been going on,” he said. “But it can be good for this country [which is] getting US dollars in remittance, so it can cancel out the negative side.”
BNY Mellon, which follows a “bank for banks” model, is a big global player in asset management, issuer services and treasury services. The US bank divested its retail banking interest in previous years.
Amid the US financial meltdown, it has been tapped to service the US government’s Troubled Asset Relief Program (TARP), which is meant to take out toxic assets clogging the financial system.
Asked on whether a program similar to TARP could be applied in Asia, Sturdy said it would be good for the region, depending on the extent of the asset clean-up needed.
But he said banks in the region, especially within Southeast Asia, were in a better position now, having learned their lessons during the currency crisis of the late 1990s, particularly those on risk assessment.
“I think I’d like to be in the position of the Philippines, if I were a country, because you have some natural advantages and some track record in areas which may be important going forward,” Sturdy said.
BNY Mellon executive vice president Jai Arya said a crisis is often triggered by liquidity, not by capital structure. And contrary to the credit crunch now crippling the West, liquidity is not much of a problem in this region, he said.
“Asian financial institutions are far, far more liquid because they’re paranoid about liquidity,” Arya said. “As a bankers’ bank, most of the banks [in the region] have dollar accounts with us, and looking at the balances that they keep with us, it’s amazing how much liquidity they have and how important liquidity is to them. Even if it will cost them earnings, they are willing to keep high liquidity.”
In the Philippines, where it maintains a representative office, BNY Mellon’s biggest business is the servicing of remittances going through banking and non-banking channels. For remittances coursed through banks, it has a market share of 20-25 percent.
BNY Mellon has 16 offices in 12 countries in the Asia-Pacific, and has been doing business in the region for over 50 years.
It provides services in asset and wealth management, asset servicing, as well as issuer clearing services and treasury services.
It has more than $23 trillion in assets under custody and administration worldwide.
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(a look on the bright side: thanks to my multiply buddy xxxriainxxx, Rye the Man)