Classifications

of Banking
Institutions
Classifications of Banking Institutions
• Universal Banks
• Commercial Banks
• Thrift Banks
• Rural Banks
• Cooperative Banks
• Islamic Banks
• Digital Banks
• Government Owned Banks
A. Commercial Banks
• offer a variety of services to individuals and businesses, but their core
functions can be boiled down to two main things: accepting deposits and
lending money.
• Deposits
• Demand/current account deposits
• Fixed/time deposits
• Saving deposits

• Loans
• Demand loans
• Short term loans
Commercial Banks
Functions:
• accepting drafts
• issuing letters of credit
• discounting and negotiating promissory notes, drafts, bills of
exchange, and other evidences of debt
• accepting or creating demand deposits;
• receiving other types of deposits and deposit substitutes
• buying and selling foreign exchange and gold or silver bullion
• acquiring marketable bonds and other debt securities
Letter of credit
Commercial Banks
Functions:
• extending credit, subject to such rules as the Monetary Board may
promulgate.
• invest in the equities of allied enterprises
• purchase, hold and convey real estate
• receive in custody funds, documents and valuable objects
• act as financial agent
• make collections and payments for the account of others and perform
such other services for their customers
• act as managing agent, adviser, consultant or administrator of
investment management/ advisory/consultancy accounts
• rent out safety deposit boxes
Commercial banks as of 2018
• Bank of Commerce • Bank of China Limited – Ltd., – Manila Branch
• BDO Private Bank, Inc. Manila Branch • Shinhan Bank – Manila
• Philippine Bank of • Citibank, N.A. Branch
Communications • JP Morgan Chase Bank, • Sumitomo Mitsui Banking
• Philippine Veterans Bank N.A. Corporation – Manila
• KEB Hana Bank – Manila Branch
• Robinsons Bank
Corporation Branch • Industrial Bank of Korea –
• Mega International Manila Branch
• CTBC Bank (Philippines)
Corporation Commercial Bank Co., Ltd. • United Overseas Bank Ltd.,
• The Bank of Tokyo- – Manila Branch
• Maybank Philippines,
Incorporated Mitsubishi UFJ, Ltd. • Hua Nan Commercial
• First Commercial Bank, Bank, Ltd., – Manila Branch
• Bangkok Bank Public Co.
Ltd. Ltd., – Manila Branch
• Bank of America, N.A. • Cathay United Bank Co.,
B. Universal Banks
• As defined by the General Banking Law of 2000 (GBL), a
universal bank is a commercial bank with the additional
authority to exercise the powers of an investment house.
• Compared to a regular commercial bank, a universal bank in
the Philippines can also:
• Offer investment products like stocks, bonds, and mutual funds.
• Engage in underwriting activities, helping companies raise capital.
• In some cases, even sell insurance products.
Universal banks as of 2018
• Land Bank of the Corporation • United Coconut
Philippines • Rizal Commercial Planters Bank
• Australia and New Banking Corporation • China Banking
Zealand Banking • Security Bank Corporation
Group Limited Corporation • East West Banking
• Deutsche Bank AG • Union Bank of the Corporation
• ING Bank N.V. Philippines • Metropolitan Bank
• Mitzuho Bank, Ltd. – • Al-Amanah Islamic and Trust Company
Manila Branch Investment Bank of • Philippine National
• Standard Chartered the Philippines Bank
Bank • Development Bank of • Philippine Trust
• The Hongkong & the Philippines Company
Shanghai Banking • Bank of the Philippine
Corporation Islands
• Asia United Bank • BDO Unibank, Inc.
Allied vs. Non-allied enterprises
Allied Enterprises:
• Closely related to the core business of banking.
• Can be further divided into:
• Financial Allied Enterprises- Companies involved in
activities that complement banking services, like
insurance, leasing, or investment firms.
• Non-Financial Allied Enterprises- Businesses that support
core banking functions but aren't directly financial, such
as data processing companies or security firms.
Allied vs. Non-allied enterprises

Non-Allied Enterprises:
• Businesses with activities unrelated to banking.
• This could include companies in manufacturing, retail,
or any other non-financial sector.
*Commercial Banks are typically restricted from investing in non-allied
enterprises. Their focus is on traditional banking activities while Universal
Banks (UBs) have greater freedom. They can invest in both allied
(financial and non-financial) and even non-allied enterprises, subject
to certain regulations.
C. Thrift banks
• Its function is to accumulate the savings of depositors and invest
them together with their capital, loans secured by bonds, mortgages in
real estate and insured improvement
• Savings Accounts- They traditionally offered higher interest rates on savings
accounts compared to commercial banks, encouraging people to save money.
• Mortgage Loans- They specialized in providing home loans, particularly for first-
time homebuyers.
Thrift banks
• 1 1st Valley Bank, Inc. A • Equicom Savings Bank, Inc. • Philippine Savings Bank
Development Bank
• First Consolidated Bank, Inc. (A • Producers Savings Bank Corporation
• AllBank (A Thrift Bank), Inc. Bangko Private Development Bank)
Kabayan, Inc. (A Private • Queen City Development Bank, Inc.
Development Bank) • Hiyas Banking Corporation or Queenbank, A Thrift Bank
• Bank of Makati (A Savings Bank), • ISLA Bank (A Thrift Bank), Inc. • Rizal Microbank, Inc. - A Thrift Bank
Inc. of RCBC
• LOLC Bank Philippines Incorporated
• Bank One Savings Corporation (A Thrift Bank) • Sterling Bank of Asia, Inc. (A Savings
Bank)
• BPI Direct BanKO, Inc., A Savings • Luzon Development Bank
Bank • UCPB Savings Bank
• Makiling Development Bank
• Card SME Bank Inc., A Thrift Bank Corporation • Wealth Development Bank
Corporation
• Century Savings Bank Corporation • Malayan Savings Bank, Inc.
• Yuanta Savings Bank Philippines,
• China Bank Savings, Inc. • Pacific Ace Savings Bank, Inc. Inc.
• City Savings Bank, Inc. • Penbank, Inc. (A Private
Development Bank)
• Citystate Savings Bank, Inc.
• Philippine Business Bank, Inc., A
• Dumaguete City Development Bank, Savings Bank
Inc.
D. Rural Banks
• Under the rules, regulation and supervision of the
Central Bank of the Philippines, continuously
provide credit and other banking services to
farmers, fisher folks and rural businesspeople to
improve the quality of life in the countryside.
E. Cooperative banks
• Banks established to assist the various cooperatives
by lending those funds at reasonable interests'
rates.
F. Islamic Bank
• Islamic banking, also referred to as Islamic finance or Shariah-compliant
finance, refers to finance or banking activities that adhere to Shariah
(Islamic law).
• Two fundamental principles of Islamic banking are the sharing of profit
and loss and the prohibition of the collection and payment of interest by
lenders and investors.
• Islamic banks make a profit through equity participation, which requires
a borrower to give the bank a share in their profits rather than paying
interest.
G. Digital Banks

• A digital bank offers financial products and services

that are processed end-to-end through a digital
platform and/or electronic channels with no physical
branch/sub-branch or branch-lite unit offering
financial products and services. (BSP circular no. 1105, s. 2020)
Digital Banks
A digital bank may perform any or all of the following services:
• grant loans, whether secured or unsecured;
• accept savings and time deposits, including basic deposit accounts as
defined under Sec. 213;
• accept foreign currency deposits, as defined under Republic Act (R.A.)
No. 6426, as amended;
• invest in readily marketable bonds and other debt securities,
commercial papers and accounts receivable, drafts, bills of exchange,
acceptances or notes arising out of commercial transactions;
• act as correspondent for other financial institutions;
• act as collection agent;
Digital Banks
• act as correspondent for other financial institutions;
• act as collection agent;
• issue electronic money products subject to the guidelines
provided under Sec. 702;
• issue credit cards subject to pertinent Bangko Sentral
regulations;
• buy and sell foreign exchange;
• present, market, sell and service microinsurance products
subject to the guidelines provided under Sec.113-8.
H. Government Owned Bank

• Banks organized by the government to serve a

special purpose.
• Development Bank of the Philippines
• Land Bank of the Philippines
• Al-Amanah Islamic Bank
Development Bank of the Philippines
• Provides loans for developmental purposes, gives loans to the
agricultural sectors, commercial sectors, and industrial sectors.
• The DBP, under its new charter, is classified as a development
bank and may perform all other functions of a thrift bank. Its
primary objective is to provide banking services principally to
cater to the medium and long-term needs of agricultural and
industrial enterprises with emphasis on small and medium-scale
industries.
Land Bank of the Philippines

• The LandBank of the Philippines (LandBank) is a

financial institution wholly owned by the
Government of the Philippines. It aims to strike a
balance in fulfilling its social mandate of
promoting countryside development while
remaining financially viable.
Al-Amanah Islamic Investment Bank of the
Philippines

• Operating as the only Bank that offers Islamic

banking services in the Philippines, it provides
deposit products, as well as commercial and
investment banking services.
Non-banking
Institutions
Non-banking Financial Institutions
• A nonbank financial institution (NBFI) is a financial
institution that does not have a full banking license
and cannot accept deposits from the public.
However, NBFIs do facilitate alternative financial
services, such as investment (both collective and
individual), financial consulting, brokering, money
transmission, and check cashing
Non-banking Financial Institutions
• Investment House
• Investment Company
• Credit Cooperatives
• Microfinance
• Savings and Loans Association
• Pawnshops
• Securities Dealers and Brokers
• Insurance Companies
• Venture Capital
• Financing Companies
Non-banking Financial Institutions
• Investment House- Any enterprise which engages in
the underwriting of securities of other corporations
• Underwriting- the act or process of guaranteeing the distribution or
sale of securities of any kind issued by another corporation.
(Presidential Decree N0. 129)

• Investment company- An investment company means

any issuer which is or holds itself out as being
engaged primarily, or proposes to engage primarily, in
the business of investing, reinvesting, or trading in
securities (Sec. 4. a, Republic Act No. 2629 or Investment Company Act)
Non-banking Financial Institutions
• Credit cooperatives- is a cooperative that promotes
and undertakes savings and lending services among
its members.
• Microfinance- Microfinance refers to the financial
services provided to low-income individuals or groups
who are typically excluded from traditional banking.
Most microfinance institutions focus on offering credit
in the form of small working capital loans, sometimes
called microloans or microcredit.
Non-banking Financial Institutions
• Pawnshop- shall refer to a person or entity engaged in the business of
lending money on personal property delivered as security for loans and
shall be synonymous, and may be used interchangeably, with
pawnbroker or pawnbrokerage. (PRESIDENTIAL DECREE No. 114)
• Insurance Companies- A business that provides coverage, in the form of
compensation resulting from loss, damages, injury, treatment
or hardship in exchange for premium payments.
• Life insurance
• Variable
• Traditional

• Non-life insurance