President & CEO (Union Bank)

In your opinion, what have been some the macro-economic indicators?

The most important indicator is the Overseas Filipino Workers pouring in billions of much needed dollars into the Philippines. If you look into our balance of payments, it’s the single most important item. There are other benefits that we’ve seen, not only in the remittance concentrated to a few companies, but also to several sectors. Another important area is that over the years, there have been some small political problems now and then related to the south. This is not really a factor that will flow up foreign investment in the equity markets. The rest, of course, is up and down. The agricultural sector during good weather moves up, during bad weather slows down. It’s actually the services sector that started to move. Also with the global economy expanding very quickly, they started to employ locally. Unemployment has always been a challenge for the Philippine government.

How is the globalization and liberalization process affecting the economic growth and the strengthening of the financial sector within the country?

Initially, globalization in the Philippines occurred in the 1990’s. That globalization did not prepare the country very well economically so when the crisis struck, we didn’t have a safety net. At the same time, it was a blessing in disguise. In any crisis situation you respond to it, so there were a lot of financial reforms that were instituted. I think one of the major reforms was to come up with a government that the people believed could be more stable and useful. Since then, according to the government, we have seen revenues move back. They are now more optimistic than ever. They think that by the next two years, they can achieve significant revenue growth.

What have been some of the most positive reforms that helped in the strengthening of the banking sector in the Philippines under the Arroyo administration?

These reforms have been in the fiscal sector. At first, these reforms were unpopular and controversial, but I guess they have helped a lot. We’ve seen positive effects as far as the past records are concerned. The fiscal deficit was one of the main issues for the foreign investors, the banking sector, the capitalization, and the bank system. In fact, the middle of this year, the Philippines could be one of the earlier countries that will be able to implement new reforms.

What are some of the new implementations?

Being partly-owned by the government, Union Bank has partnerships with several financial institutions. There is a historical path in terms of funding social projects, particularly in the housing sector. There was the tie-up before with the Social Security System to provide easy loans to the less-privileged part of society. We had a lot of relationships also, as far as the Pag-ibig Fund is concerned. I think Union Bank has been growing very well in the past years. We just bought the International Exchange Bank last June and we are in the process of integration. We also placed the winning bid for Philippine National Bank and gave Mr. Lucio Tan the option to retain control.

What have been the characteristics and advantages of Union Bank?

When you are a smaller bank, you tend to have the appetite to be more aggressive and to ensure that you are efficient. We try to create a culture of passion. We did implement some strategies that paid off, particularly by making technology our main source for growth. We put some of the best brains to work in the financial systems. Many of our past executives are from multi-national companies.

What are the advantages that Union Bank offers?

One of the things that have put us into this situation is the recognition of how to use technology. It broke a lot of barriers as far as the market is concerned. We also introduced several products. We were able to link a lot of customers in the corporate sector, in the consumer sector, and in the government sector. We have a unique relationship with the Government Service Insurance System. The thing that makes us quite different is that we are known as a very innovative company in the Philippine banking industry, and that has opened a lot of doors for us. It resulted in a very efficient cost of production. As far as customer relations are concerned, that made us quite happy. Of course, other banks will eventually catch up, but hopefully by that time, we are a still ahead.

What do you expect is the outcome or output for 2007 in terms of revenues?

I think that the senior chief that comes out of this merger that we have initiated six months ago, and will start to pay off early past of this year. We also predict that in the next year and a half, we will see the poor impact as far as revenues is concerned, as far as our expansion or our business areas are concerned. I guess we have taken the first step to become one of the most dominant players in the financial system of the Philippines.

I think that you can see a lot of promise for the Philippines being a naturally-rich country. But, of course, you get tourism. I guess we are now offering medical tourism. There’s so much to be done. We are still beginning, I guess, at the early stage of our development. To the level, we are not self- sustaining growth. It will take some time. Gloria, our president, is a very strong-willed woman. I think she was able to defeat crisis that hit her. There are always many sides of the story, but overall, she has done very well. She’s got the energy.

Our vision is to be focused in achieving a top 3 place by 2010. You have seen our strategy.

What would you consider have been some of your most positive highlights?

In my own small way, there are no complaints. I joined a multi-national bank. I was an accounting treasurer of Citibank in the Philippines. I was invited to join Union Bank. I was with Citibank for 20 years in the area of finance. As a background, I did also researching. During the crisis, I was offering an account orthodox for Europe. They did invite me to write papers. Since then, I’ve been invited several times. Being the only Asian that’s invited, it was quite a different environment. Being a direct participant in the market, I know more or less about the Asian crisis, and my only contribution I guess was quite unique from the stand point is, I told then early on that it was not a cognitive problem to start with. The lesson of the Asian crisis is that you cannot predict that it was coming.

Would you like to give a message to the investors, to the readers?

The Philippines deserves a great look. It is an emerging country that has gone through a crisis but it was able to survive and come up stronger. The fundamental reforms are now in place for the second phase of its growth process. We have seen how receptive the Filipino people are to foreign investments. They know the benefits of it. They also know the role that the global economy plays.