(Philippine) Local firms boost defenses vs credit risk.


From BusinessWorld Philippines
10 August 2011

FIVE FINANCIAL institutions have signed up with Chicago-based TransUnion, a credit and information management firm, to give them vital credit information on clients.

The five are Banco de Oro Unibank, Inc. (BDO), Bank of the Philippine Islands (BPI), HSBC, Citibank and Metrobank Card Corp.

TransUnion is currently gathering data on the five institutions’ clients to come up with a database that would allow the five to better process, manage and minimize credit risk exposure upon extending credit.

“Credit information will allow credit providers to make more informed decisions in extending credit and avoid lending to borrowers who are overextended financially,” Bankers Association of the Philippines (BAP) and BPI President Aurelio R. Montinola III told a press briefing yesterday.

Mr. Montinola added that “consumers [would] manage their credit better and responsibly once they have access to their credit profiles.”

BAP at present maintains its BAP Credit Bureau, Inc. while the government is set to launch the Central Credit Information Corp. (CCIC), the central credit information bureau, after the firm files its corporate registration papers at the Securities and Exchange Commission.

Asked if the five institutions’ partnership with TransUnion would simply duplicate the BAP’s credit bureau and the CCIC, Mr. Montinola said, “it would in fact complement the two credit bureaus.”

Newly-appointed CCIC President Baltazar N. Endriga, in a phone interview agreed, saying, “This would compliment the CCIC.”

“We could even exchange information with them,” he said, but pointed out that “charges” would need to be discussed.

For his part, TransUnion East Asia President Lawrence Tsong said, “the credit information database can influence banks to adapt risk-based pricing.”

“Banks can customize their loan rates for each client based on their risk profile and provide a lower borrowing cost for consumers with good credit records,” he explained.

Asked how long TransUnion would hold on to the data it would gather, TransUnion General Manager Shawn Thomas said, “we have a five-year holding period for the data.”

The database, he said, would include the basic information of a client such as the name, address, contact details, employment and education records and credit information.

Mr. Tsong said TransUnion is open to providing its service to other credit card firms in the country.

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