Offshore Banking Unit

Offshore Banking UnitWhat is OBU?branch of a foreign bank located in an offshore financial centre (OFC). It may accept deposits from other foreign banks and OBUs and make Eurocurrency loans, but may not accept deposits from (or make loans to) the residents of the country in which it is located. OBUs are otherwise unrestricted in their legitimate activities, and are free from the monetary controls of the country of location.

National Commercial Banking Act 1949HSBCBank of AmericaCitibankStandard Chartered BankHistory in the PhilippinesStudies were conducted in order to tap the international financial market.Was expected to improve the access of the country to the worlds financial institutions.Was envisioned to bolster the growth of the countrys economy.As of Jan 23, 1976, 28 offshore banks were approved by the Central Bank.FunctionsTransactions with non-residents and/or with other OBUs.Transactions with foreign currency deposit units.Transactions with residents other than FCDU and other OBU subject to prior approval when required under CB regulations, and OBU may invest in foreign currency denominated debt instruments of residents and/or extended foreign currency loans and advances to such residents.FunctionsOBUs may engage in transactions with resident banks, which are authorised to accept foreign currency deposit- under RA No. 6426; implemented in 1982.OBUs in the Philippines are NOT allowed to accept local currency deposits except in HK & SG.OBUs are the largest creditors of the Philippines.Classification According to Form of OrganisationUnit BankBranch Banking systemGroup BankingChain BankingUnit BankSingle banking corporation, which makes and implements its own policies.One place of businessE.g. United StatesBranch Banking SystemMultiple office banking system.Banks with branches and extension offices located in various place to extend banking services to other areas of the country.E.g. PhilippinesBranch Banking SystemBecause we lack capitalIdle funds in one area of the country can be properly employed in other areasFor the convenience of its customersThere is less overhead expense to run a branch than to organise a new bankGroup BankingUnit banks/branch banks whose majority shares of stick are held by a holding company.Unit banks resort to group banking in order to control the banking business of a particular territory.Chain BankingIndependent unit banks, which are owned by a group of people.Monopoly of the banking business is the main objective of this banking system.