Universal and commercial banks represent the largest single group, resource-wise, of financial
institutions in the country. They offer the widest variety of banking services among financial institutions. In
addition to the function of an ordinary commercial bank, universal banks are also authorized to engage in
underwriting and other functions of investment houses, and to invest in equities of non-allied
undertakings.
Universal Banking
WHAT IT IS:
Universal banking refers to the practice of offering clients retail banking as well
as investment services.
HOW IT WORKS (EXAMPLE):
Investment services and retail banking services (savings and checking accounts, loans,
mortgages, etc.) have customarily been housed in separate banking institutions:
investment banks and retail banks, respectively. Commonly practiced by European
banks, Universal banking brings retail and investment services together in the same
bank for client convenience and higher revenues.
To illustrate, suppose bank XYZ offers universal banking services. Current clients who
hold only a checking or savings account can also learn about and take advantage of
investment services should they wish to open their own investment portfolio. XYZ's
combined retail and investment bankingservices allow its clients to fulfill all of their
banking needs in the same place.
WHY IT MATTERS:
Universal banking benefits both banks and their clients. The integration of retail
and investmentservices benefits banks by providing them with more ways to
generate revenue, while it benefits clients by providing them with the convenience of
accessing a full range of banking services from a single provider presumably trust.
CHAPTER IV
DEPOSITS. LOANS AND OTHER OPERATIONS
Article I
Operations Of Universal Banks
Section 23. Powers of a Universal Bank - A universal bank shall have the authority to exercise, in
addition to the powers authorized for a commercial bank in Section 29, the powers of an investment
house as provided in existing laws and the power to invest in non-allied enterprises as provided in
this Act. (21-B)
Section 24. Equity Investments of a Universal Bank. - A universal bank may, subject to the
conditions stated in the succeeding paragraph, invest in the equities of allied and non-allied
enterprises as may be determined by the Monetary Board. Allied enterprises may either be financial
or non-financial. Except as the Monetary Board may otherwise prescribe:
24.1. The total investment in equities of allied and non-allied enterprises shall not exceed fifty
percent (50%) of the net worth of the bank; and
24.2. The equity investment in any one enterprise, whether allied or non-allied, shall not exceed
twenty-five percent (25%) of the net worth of the bank.
As used in this Act, "net worth" shall mean the total of the unimpaired paid-in capital including paid-in
surplus, retained earnings and undivided profit, net of valuation reserves and other adjustments as
may be required by the Bangko Sentral.
The acquisition of such equity or equities is subject to the prior approval of the Monetary Board
which shall promulgate appropriate guidelines to govern such investments. (21-Ba)
Section 25. Equity Investments of a Universal Bank in Financial Allied Enterprises. - A universal
bank can own up to one hundred percent (100%) of the equity in a thrift bank, a rural bank or a
financial allied enterprise. A publicly-listed universal or commercial bank may own up to one hundred
percent (100%) of the voting stock of only one other universal or commercial bank. (21-B; 21-Ca)
Section 26. Equity Investments of a Universal Bank in Non-Financial Allied Enterprises. - A
universal bank may own up to one hundred percent (100%) of the equity in a non-financial allied
enterprise. (21-Ba)
Section 27. Equity Investments of a Universal Bank in Non-Allied Enterprises. - The equity
investment of a universal bank, or of its wholly or majority-owned subsidiaries, in a single non-allied
enterprise shall not exceed thirty-five percent (35%) of the total equity in that enterprise nor shall it
exceed thirty-five percent (35%) of the voting stock in that enterprise. (21-B)
Section 28. Equity Investments in Quasi-Banks. - To promote competitive conditions in financial
markets, the Monetary Board may further limit to forty percent (40%) equity investments of universal
banks in quasi-banks. This rule shall also apply in the case of commercial banks. (12-E)
Institution
Land Bank of the Philippines
Australia and New Zealand Banking Group Limited
Deutsche Bank AG
ING Bank N.V.
Mizuho Bank, Ltd. - Manila Branch
Standard Chartered Bank
The Hongkong & Shanghai Banking Corporation
Asia United Bank Corporation
Rizal Commercial Banking Corporation
Security Bank Corporation
Union Bank of the Philippines
Al-Amanah Islamic Investment Bank of the
Philippines
Development Bank of the Philippines
Bank of the Philippine Islands
BDO Unibank, Inc.
United Coconut Planters Bank
China Banking Corporation
East West Banking Corporation
Metropolitan Bank and Trust Company
Philippine National Bank
Philippine Trust Company
Updated June 11, 2018 by BSP
