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"To become one of the top three universal bank in the Philippines in the first decade of the 21st century, with a full range of financial products and services for which we shall be the acknowledged leader in service, innovation, and value-for-money, conveniently accessed anytime, anywhere by delighted customers, for whom we shall be the dominant financial services portal, all enabled by bold, smart and self-driven professionals."

FOCUS 2011
Union Bank is guided by FOCUS 2011, our compass to achieving our vision to become a top 3 universal banks by 2011. FOCUS 2011 centers on five specific strategic initiatives we are working on with stronger resolve:

Financial Value : Enhance the financial value of the Banks operations; Operational Excellence : Increase productivity while reducing costs; Customer Franchise : Increase customer base and reduce customer attrition; Union Bank Brand/Experience : Establish a unique brand image in strategic markets; and Superior Innovation: Continue to offer innovative products and services.

UnionBank was established in 1968 as a saving bank with the name Union Savings and Mortgage Bank. In 1981, certain assets and liabilities of the erstwhile Bancom Development Corporation that were owned and controlled by Social Security System and Land Bank of the Philippines were transferred to Union Savings and Mortgage Bank. On January 19, 1982 Union Savings and Mortgage Bank changed its name to its current name, UnionBank of the Philippines. Beginning 1988, UnionBank gradually implemented its three-phase privatization plan. Phase I saw the 40% equity acquisition by the Aboitiz Group in the Bank. The Aboitiz Group is one of the largest conglomerates in southern Philippines, its core businesses are in power, banking, food and transportation. Phase II involved the acquisition by Insular Life Assurance Co., Ltd. (one of the majority Filipino-owned life insurance companies in the Philippines) and Ramcar, Inc. of 20% and 10%, respectively, of the equity interest in the Bank then held by the Social Security System in 1991. In 1999, Ramcar, Inc. subsequently sold its 10% equity interest in the Bank to the Social Security System. In July 1992, Phase III of the Privatization Plan was implemented by way of an initial public offering covering 10% of the common stock of the Bank then held by the Government. In the same year, UnionBank became a universal bank. In 1993, in line with the privatization of the Governments equity holdings in International Corporate Bank ("Interbank"), UnionBank acquired Interbank to beef-up its asset size. As a result of the acquisition, UnionBank entered the league of the 10 largest universal banks in the Philippines in terms of assets.

Since then, UnionBank had continued to expand steadily and had successfully established itself as the leading bank in the Philippines in the use of state-of-the-art information technology to provide advanced banking solutions, particularly in the field of cash management solutions, to its customers. In 1999, UnionBank began its credit card business by issuing cards under the name of UnionBank Visa. In 2004, UnionBank won the bid to develop an electronic payment system for GSIS and its 1.5 million members, and subsequently launched the multi-functional GSIS eCard program. The GSIS eCard functions as a Visa card, a debit card, an ATM card and a biometric-based identity card through which GSIS members can access their GSIS social security benefits. Also in 2004, UnionBank launched the OneHub.Gov, the first and only single web platform offering in the Philippines that enables customers to make online payments to, and file salary loan payments and tax returns to, five government agencies, including the BIR, SSS, Pag-IBIG, the Bureau of Customs and Philhealth. In 2006, UnionBank acquired International Exchange Bank (iBank). iBank was then the 12th largest private domestic commercial bank in the Philippines in terms of assets. On August 28, 2006, UnionBank merged with iBank, creating then the 7th largest private domestic commercial bank in terms of assets and the 9th largest private domestic commercial bank in terms of deposits in the Philippines. Just prior to the merger, the UnionBank was the 9th largest private domestic commercial bank. The merger was in line with the UnionBank's "FOCUS 2011" strategic plan to become one of the leading universal banks in the Philippines by the year 2011. The objective of the merger was to take advantage of the synergies of the merger to reposition UnionBank as a top-tier universal

bank with the necessary scale and enhanced product offerings to compete in the Philippine banking sector. Through the merger, the UnionBank expects to generate cost savings from combined infrastructure, operations and manpower as well as improve the financial stability and capacity of its banking divisions. IBank was identified by UnionBank as an ideal target for acquisition as iBank possessed a stable middle-market customer portfolio and a strong localized customer service structure which UnionBank believed would complement and further enhance its existing business portfolio and deposit base. On April 26, 2007, UnionBank embarked on primary offering of 90 million new common shares. These new shares expanded the shareholder base by 16.3% and raised for the Bank additional equity of over P5.1 billion. These additional shares were listed in the Philippine Stock Exchange on May 10, 2007. The purpose of the offering was to raise the Banks equity in order to strengthen it capital adequacy ratio in anticipation of Basel II requirements and thereby enhance further its financial flexibility. After the listing, the ownership structure of UnionBank was as follows: Aboitiz Equity Ventures- 36.1%; Social Security System- 23.1%, Insular Life16.1% and public- 24.7%. UnionBank aims to continue to distinguish itself from its competitors through, among other things, its innovative technologies and products, customer service and cash management services, many of which are delivered to relevant target customer groupings via an extensive expanded branch banking network comprising a total of 166 operational branches and 187 automated teller machines ("ATMs"). UnionBank is now the 6th largest private domestic commercial bank in the Philippines.


Exceptional Customer Service Aggressive in Treasury Market Trading Exceptional Branding Image

Thin Portfolio in Loans Management Recuperate and Growth in Automation

Advancement in Marketing Strategies Expansion of Branches Aspiring to become one of the Leading Banks in the Philippines

More Competitors in terms of branches Less Competent in terms of Retail and Commercial Banking


EXCEPTIONAL CUSTOMER SERVICE Union Bank is capturing the market; exceptional service has to be delivered among its customers/clients. They have strong orientation when it comes to providing service, provision or package in which they satisfy their customers to maintain loyalty. Employees are fully aware of its compliance with the regulations of BSP, thus, this establishes ethical control within the company. AGGRESSIVE IN TREASURY MARKET TRADING Strong and advance in investment outlet, they know where to invest and when to invest. They are always informed with updates on the treasury market, when it is safe investment apprises. They have control over these thats why the company gains stability and looks forward to become profitable. EXCEPTIONAL BRANDING IMAGE Image in branding is a must to create business niche in the market.

THIN PORTFOLIO IN LOANS MANAGEMENT The company focuses more on treasury services, hence resulting in a thin business venture. The company is not aggressive in discovering business opportunities without sacrificing its capital adequacy.

RECUPERATE AND GROWTH IN AUTOMATION Less assertive in technological advancement.

ADVANCEMENT IN MARKETING STRATEGIES The company is always visible in providing customer needs.

EXPANSION OF BRANCHES Union bank doesnt stop in increasing number of branches to provide services to their customer needs wherever they are in the Philippines. This is always the continued goals of Union bank in order to satisfy their financial needs. ASPIRATION TO LEAD Union bank doesnt limit itself to implement its goal to become one of the leading banks in the country. They always centre their strategies to financial value, operation excellence and customer franchise. MORE COMPETITORS BRANCHES Other banks are more aggressive in addressing customer needs. LESS COMPETENT IN TERMS OF RETAIL AND COMMERCIAL BANKING Union bank focuses more in treasury, the scope of the business is narrow that they tend to concentrate on what they are good at and in a way there is much more income they would generate if they continue on their traditional way.

To establish and maintain customer loyalty To achieve stable target market To offer competitive rates in the market To deliver customer changing needs To have an information system program installed

Set aside capital for the installation of information system for automation.

5 PORTERS ANALYSIS Rivalry Before we consider the threat of the new entrants, there are numerous established banks which are already present in the market creating a high rivalry among firms in the banking industry. Union Bank standing on the market as the number 7 Universal Bank in the Philippines. The company is still expanding, services are being improved and the products are innovated to better suit the demand of the customers because the company believes that in an environment with high rivalry the competitive advantage is always at stake.

Threat of New Entrants Putting up a simple business is not an easy task, how much more when a corporation is being formed. Many aspects are considered before you can manage to enter into that small corporate world, again how much more if you tend to enter the much larger one. Before anything else, you must have the capability and usually it is summed up in your investment capacity. Knowing all of these and considering our economy, I could say that the threat of new entrants to banking industry is close to zero percent. Substitute Products Here comes the problem; though the threat of new entrants is almost close to zero percent but the threat of substitute products is very high. There are two major products most banks usually offer- the deposit and the loan products and the market have their own substitutes for these.

For the deposit account, there are multipurpose cooperatives that offer almost the same product as the bank but with higher risk and of course higher interest rate. Insurance companies with their insurance products such as mutual fund and the rest are also considered as a substitute product for such. For loan products, there are private and government financing institution or program that offers almost the same as what banks could offer. There are even individual capable of offering the same product and they are termed as loan sharks or the five six people. Bargaining Power of Customers Bargaining power of customer in this is considered as low. The economys situation determines the demands of the customers. The rate provided by the bank on their products is solely dependent on the market and the market is dependent on the economy. People will still save or borrow money no matter what but the amount of savings and loan may differ depending on the economy. Having the whole range of players apart from the full-fledged banks, it is evident that customers can move within banks. Supplier Power Supplier power is also not an issue on a service type of business. The products or services being offered by this type of business is not directly related to the supplier unlike in the manufacturing firm wherein everything is concentrated on their raw materials. Service providers are indirectly related to the companys operation thus, the supplier power is weak.

CONCLUSION: Union bank has been growing at a high speed. These are good news to the customers. On the other hand this has increased a tremendous competition within the industry. The bargaining power of the customers is high although barriers to entry are gentle. Finally the Porters Five Frameworks reveals that this industry is of TWO starts. This implies that two (bargaining power of suppliers and threat of substitutes) forces are favourable to those who are already fullfledged banks. Other forces are unfavourable. It is therefore urged from this analysis that on average industry is not attractive. This signifies that for the bank to survive profitably in the industry, it needs to choose a strategy, which can lead to a possibility of charging premium price for some products. Since Union bank focus more in treasury services, they must be flexible in their loan portfolio management without sacrificing capital adequacy. Because customers have a high bargaining power, it is imperative for the banks to make sure that they have a customer retention strategy in place. In this industry therefore, it is about survival of the fittest. There is no room for losers but winners only.

Porters Five Forces Framework

THREAT OF NEW ENTRANTS Absolute cost advantages Learning curve

SUPPLIERs POWER Supplier Concentration Inputs Differentiation

DEGREE OF RIVALRY Exit Barriers Products Switching Cost Branding Identity

BUYERs POWER Bargaining Leverage Buyers Information

THREAT OF SUBSTITUTES Switching Cost Buyers Inclination to Substitute