Outsourcing loans
Management guru and bestselling writer Stephen Covey puts it as the sixth most important habit. When applied to businesses, to synergize simply means to combine expertise, resources, and strengths of two or more companies to produce desirable results.
Synergies in Business
Many businesses are forming synergies or “creative cooperations” as they drive to achieve bigger targets, better services, greater efficiencies, and higher bottomlines.
Hong Kong and Shanghai Banking Corporation’s (HSBC) Senior Vice President for Personal Financial Services Sebastian Arcuri says that HSBC’s Employee Privilege Plan (EPP), one of the bank’s financial service offerings, is a very good example of synergy.
Under the EPP, HSBC enters into a partnership with a particular company to provide its employees with a package of consumer products and services. Under the plan are five key offerings – employee loans (which include home, car, and salary loans), wealth management services (which include deposit and checking services), credit card services, insurance referral services, and overseas banking services for expatriates and employees who regularly travel abroad.
And take note, employees can get the loans at lower than market rates.
Global financial leader HSBC believes that there is a market need for this kind of service. “Companies are concerned with the welfare of their employees. But, if for example a company’s 1,000 employees ask for a salary advance at the same time, the company – which may be in manufacturing – may not know how to go about it, if at all they have the resources for this. We try to sort these issues out for the company so they can concentrate on their core business,” says Arcuri.
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To be part of the EPP, HSBC requires that a company be in operation for more than three years and should have a minimum employee size of 30 employees.
HSBC is not the only bank into this kind of service. More and more, banks are starting to see the returns and wisdom in offering financial services to employees of other companies.
Equitable PCI Bank’s (EPCIB) Consumer Banking Head and First Vice-President Virgilio Pamatmat says the bank, through its corporate banking and consumer banking groups, is also aggressive in offering corporate accounts with consumer loan products and services such as housing, car, and even multipurpose salary loans. In some cases, the bank also purchases the loan portfolio of a corporate account.
Philippine Savings Bank (PS Bank), a subsidiary of Metrobank, offers the Multipurpose Loan, a financial service they came up with in September 2000, to offer salary loans to employees of the country’s top 7,000 corporations.
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More and more, banks are starting to see the wisdom
in offering financial services like car loans to employee
of corporate accounts |
To be accredited with PS Bank’s Multipurpose Loan Program, the company must belong to the top 7,000 corporations based on annual revenues, must be in operation for the past three years with favorable credit ratings, and must have a minimum of 50 employees, majority of which should be gross earners of at least P8,000 per month. The loan is paid back through salary deduction.
Currently, PS Bank, in cooperation with the Department of Education (DepEd), is the only one which
offers a similar scheme to public school teachers.
With over 140 partners and a
target of 200 corporate accounts
under the multipurpose loan by yearend, Jonas Cochico, Senior
Manager and Department Head for Corporate Sales Dept and Acting
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Employees under the loan partnership usually get better terms and interest rates than if they go to the bank directly
Department Head for DECS
Multipurpose Loan, said that PS Bank is moving to target more corporate clients in the future. “The bulk is still from our direct sales, meaning direct consumer loans. But we’re starting to build up our portfolio by way of more partnerships. And even the DepEd Multipurpose Loan is gaining ground.”
Do Win Win
Employees under the loan partnership usually get better terms and interest rates than if they go to bank directly. PS Bank offers employees of client companies up to P250,000 in salary loan at rates of 1.16 to 1.2 percent per month. The bank calls these “clean loans” since no collaterals are required from the borrower.
For EPCIB, one of the country’s largest commercial banks, employees not only enjoy preferential rates or rate breaks, better terms and
interest, but are also able to take
advantage of the bank’s relationships with car dealers and real estate
companies for special deals on
housing or car purchases.
Payments are usually made through salary deductions, though there are instances when some companies subsidize interest payments, thus extending to their employees
interest-free benefits.
EPCIB’s Corporate Banking Senior Vice-President Edward Wenceslao points out, “The service makes for a good mix in the bank’s portfolio and provides a secure venue for
consumer loans due to the automatic remittance of payments made through salary deduction.”
HSBC, on the other hand, offers a comprehensive package ranging from credit cards to retirementbenefits. “There are not many
players out there who can offer such a comprehensive package, and that is where our strengths lie. We offer special toppings like a
dedicated account manager who handles everything for the company. We also have quarterly raffles, management days, and home loan days where we give consultations and talks for employees. We make the program very attractive for the company and the employees,” explains Glenn Lagcao, HSBC AVP for Personal Financial Services.
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A Happy Client
Lelet Fernando, Compensation
Manager for Glaxo SmithKline Inc. (GSK), is one happy client of HSBC. “HSBC has been a big help to us. They’ve provided another avenue for our employees to get loans. We want our employees to save and not be borrowers, hence, in-house, we only provide for emergency loans like hospitalization and sickness benefits. We do not offer educational and home loans.”
Asked if she would recommend the program, Fernando has only good words. “Definitely. The program is a big help because it doesn’t pressure the companies to provide more loans to their employees and the rates are quite low. There’s a wide range of services to choose from and
everything is done very fast. “
“For the company, it’s a win-win situation because they can
concentrate on what they do best. If they are manufacturing cars, they would be concentrating on how to produce their cars; they will not be thinking about human resource
issues,” Arcuri explains.
The synergy allows the bank to reach a critical mass through the companies. HSBC ended the year 2000 with only ten companies under the EPP, but the number has since grown to over a hundred
companies and over 25,000
individual clients in the food,
manufacturing, and services
industries.
But most importantly, Arcuri adds that revenue has gone up when they launched EPP. “It was very significant and it helped us on both fronts; on the retail side, because we were
selling to individuals, but also under an expanded relationship with the
corporate side because the program’s good results make companies more willing to do corporate business with the bank.”
“We want to be known as one not in this business just to do salary loans, but one which aims to have a strong partnership with the corporation that we are assisting in sorting out their employees’ financial requirements,” says Arcuri.
In his book, The Seven Habits of Highly Effective People, Covey wrote that if you place two plants close together, the roots commingle and improve the quality of the soil so that both plants will grow better than if they were separated. The same way with business. Two
companies borrowing from each other’s strengths can achieve better results than if it were working alone.
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