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The ASSET MANAGEMENT & TRUST INDUSTRY
Jul 25, 2011

(collectively referred to as the Trust Industry)

 

Trust operations began in the Philippines in 1918 upon the establishment of a corporation called Philippine Trust Company, to administer and manage the properties of Americans during their early occupation of the Philippines. Since then, trust operations gradually emerged as one of the more popular services being offered by banks. It was however from 1983 to 1991 where the industry experienced remarkable growth, from P18 billion in 1983 to about P37 billion in 1986, and then reached the P100 billion mark in 1991. The Industry then moved on to grow in the 90s into a multibillion industry - as the public becomes more aware of the more sophisticated Asset and Trust Management services available.

This P700B industry is not however reflected in the total resources of the Banking Industry. This is consistent with the industry’s off-balance sheet nature, as these figures are carried and remain to be direct assets instead of the Banks' trust clients as its real and/or beneficial owners. As such, Assets Held in Trust or those received by the bank in its fiduciary capacity (collectively referred to as: ‘AHIT’) may not be looked upon for recovery by any of the Bank’s creditors (depositors) anytime. Consistent with the latter, unlike traditional banking products, products and services offered through the bank’s trust department do not, and can not carry any bank guarantee in terms of investment return on principal nor are required to be covered by a PDIC guarantee. Thus, true to its business trade, the industry is primarily premised on their respective client’s “trust” to the said financial institution. Because of its inherent nature, the industry is mandated to be conducted clearly independent from that of the bank’s traditional deposit-taking activities. An independent Trust Officer with no less than 2 years experience in the business is mandated by law to report directly only to a duly constituted Trust Committee (composed of the Trust Officer himself, the Banks President, and 3 Bank Board Directors on a rotation basis), who in turn reports directly to the Bank’s Board of Directors. Moreover, safeguards consistent with the fiduciary obligation of banks to their clients are put in place to protect the investing public.



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