PHILDEVFINANCE (old news): April 2011

Monday, April 25, 2011

BSP adopts same collection practices for all consumer loans

BSP adopts same collection practices for all consumer loans

By LEE C. CHIPONGIAN

April 25, 2011, 10:04pm

MANILA, Philippines – Unknown to a lot of people, the central bank now uses one regulation governing the credit operations of banks and other Bangko Sentral ng Pilipinas (BSP)-supervised financial institutions to better protect all financial consumers, not just credit card holders who, understandably, have front row seats in the complaints department.

“We’ve made it (policy on credit card collection) applicable to all types of loans because it works and the most effective we have,” says BSP Deputy Governor Nestor A. Espenilla Jr. This allowed the BSP to implement a single credit collection standards on all types of consumer and household loans.

A report prepared by the Supervision and Examination Sector (SES) that Espenilla heads, and the Financial Consumer Affairs Group (FCAG) said that while there are existing regulations that promote the protection of financial consumers, the central bank continues to receive complaints from the public.

Credit card complaints still dominate the list, followed by complaints on banks’ deposit operations particularly on ATM-related transactions.

Data from FCAG show that since it started operations in October 2006, the most frequently complained about aspects of credit card operations are: unfair collection practices, excessive charges, unauthorized/disputed charges, issuance of pre-approved credit cards and fraudulent use due to lost or stolen credit cards.

The total number of credit-card related complaints received by FCAG is now 1,575, just 0.02 percent of the total number of credit cards in use, which as of the end of 2010, is 6.7 million. It’s fairly small compared to the number of total credit cards but it is enough to highlight that credit card operators have been perceived by the public as abusive, for example in collection practices, in the charging of interests and fees and issuance of pre-approved cards. “The situation underscores the need to further enhance the existing regulations in order to effectively address the growing sentiment of the public against credit card-issuing institutions,” reports the SES and FCAG.

Still, despite its horrible reputation as a credit enabler, the banking industry’s credit card loans continue to expand last year, with new borrowers thinking banks are easing credit standards to encourage more loan applicants.

At the end of 2010 credit card receivables were up 4.2 percent year-on-year to P120.3 billion, exclusive of credit card subsidiaries. In all, total consumer loans residential property loans, automotive and credit card loans – grew 14.4 percent to P472.6 billion while ‘other’ consumer loans such as personal and household loans also increased by 14.4 percent to P46.4 billion in 2010.

One collection policy

Espenilla says it has been decided that the BSP will apply one regulation, including those on confidentiality of information and unfair collection practices for other types of loans, such as personal loans.

The existing regulations governing credit card operations of credit card-issuing institutions already include the following:

*Requirement that these institutions keep strictly confidential the data on the cardholder or consumer, except under certain circumstances, which include disclosure to collection agencies, counsels and other agents of the bank or card company to enforce its rights against the cardholder; and

*Provision allowing credit card-issuing institutions to resort to all reasonable and legally permissible means to collect amounts due them under the credit card agreement, but requires that in the exercise of their rights and performance of duties, they must observe good faith and reasonable conduct and refrain from engaging in unscrupulous or untoward acts.

These regulations are now applicable to other lending operations of banks and other BSP-supervised financial institutions.

Notify first, collect later

The BSP continues to review existing regulations on the credit operations of banks, quasi banks and their subsidiaries, to further strengthen policies for the protection of the financial consumer.

"The BSP is deeply involved in various projects and activities to support the economic and social development objectives of the government through its advocacies, one of which is on the promotion of consumer protection," says the SES.

The amended loan collection guidelines are considered more ‘humane’. For example, borrowers will now be given time and proper notices of when his/her accounts, which are defaulting, are turned over to third-party collectors.

Not only the name of the collection agency, but borrowers will be given the name of the agent assigned to his/her account once the bank or the card-issuing firm or the lending bank has endorsed an account to a third-party collector, according to BSP new rules and regulations on loan collection practices approved last December 15 under Circular No. 702, which includes new and stricter guidelines for collection practices.

Based on Section 4 of this circular, banks and quasi-banks and their subsidiaries/affiliate credit card companies would have to inform cardholders and borrowers in writing of the endorsement of the collection of their account to a collection agency at least seven days prior to the actual endorsement.

In the original draft circular, the days required was 15 days however the Monetary Board reduced the number of days to just seven days upon the recommendation of the Credit Card Association of the Philippines (CCAP) when consulted on the draft circular.

CCAP also asked the BSP that banks should be given sufficient time to change all communication materials – four months at least – from the date of issuance of the circular, which meant banks should start issuing new loan brochures and application forms printed in plain language and in bold black letters against a white background using the minimum ‘12’ Arial font and size by this month.

The association, however, said they ‘generally agree’ that the adjustments in fonts and size which will make for better disclosure of the summary of the applicable fees, penalties and interest rates that may be charged for the use of credit cards or loans will benefit the consumer.

In the memo explaining the new circular, SES Deputy Director Belinda G. Caraan says collection harassment continue to be a ‘major issue’ as far as credit card-related complaints are concerned, especially when cardholders have no idea that their accounts are already forwarded to collection agencies.

“(The) card-issuing institution oftentimes discloses only the name of the firm to which the account will be endorsed, leaving out the name of the agent assigned to the account. The cardholder then receives calls from agents who do not give their true identity, leaving the cardholder without sufficient information to enable them to go after abusive collection agents,” notes Caraan.

In including provisions in Section 4, Caraan says the BSP will further enhance consumer protection for the following reasons:

*The cardholder will have time to consider his/her options, including the possibility of expediting the settlement of the account prior to its endorsement to a collection agent so that he/she will save on costs including the commissions and fees that the collection agent may charge;

*The cardholder will be informed with whom arrangements for the payment of his/her account may be discussed. This eliminates the chances of confusing the cardholder as to the terms of the arrangement and will not put him/her at a disadvantaged of not knowing the true identity of the collection agent when he needs to be further clarified of these terms;

*It established accountability on the part of the collection agency and its agent/s and will encourage them to properly and responsibly handle the collection process knowing fully well that the cardholder is aware of the agency’s/agent’s true identity; and

*Alerts the cardholder on agents using aliases or pseudonyms and will eliminate the practice of unscrupulous agents who resort to collection practices considered under existing regulations as unfair, including unauthorized disclosure of the details of the credit card account to third parties.

Continued monitoring, but more vigilance required BSP has reminded the public again and again that there are rules and regulations that prohibit credit card issuers and their collection agents from engaging in the following instances of unfair collection practices:

*The use or threat of violence or other criminal means to harm the physical person, reputation, or property of any person;

*The use of obscenities, insults, or profane language which amount to a criminal act or offense under applicable laws;

*Disclosure of the names of credit cardholders who allegedly refuse to pay debts;

*Threats to take any action that cannot legally be taken;

*Communicating or threat to communicate to any person credit information which is known to be false, including failure to communicate that a debt is being disputed;

*Any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a cardholder;

*And making contact at unreasonable and/or inconvenient times or hours (before 6am or after 10pm for past-due accounts).

To further enhance the protection of financial consumers, the BSP has prohibited the issuance of pre-approved credit cards by banks and their subsidiary and/or affiliate credit card companies.

Bank Marketing Association of the Philippines President, Allan Tumbaga, says that in adapting one credit policy, especially on collection practices, it is important to really look at the essence of credit collection.

“It should be humane and not unreasonable. It is like making sure that the relationship between banks and customers have standards,” he says. “A personal loan is like a credit card but there’s a credit card rule already so that can apply. We always advise the BSP that what’s important is making sure that loan collection practices are not detrimental to the character of the person/borrower.”

Tumbaga, also Vice President for Marketing and Communications Group for East West Bank, insists banks are always willing to open talks with clients and borrowers, especially defaulting ones “We want to upgrade the banking code and we want transparency in communicating with the customers and given the transparency we must communicate clearly.”

He adds, “It’s really how we deal as banks and customers we don’t need legislations if we can communicate very clearly. (Credit and the giving of credit) is the lookout of the issuer or lending banks, and at the end of the day it’s their risk and there are no risk-less business.”

Consumer protection, and why pre-approved loans are disallowed

The prohibition on the issuance of pre-approved credit is just the latest of the SES amendments on credit card rules. The rationale why the BSP disapproved issuance of pre-approved credit was that it was not consistent with the general guidelines on the grant of loans and other credit accommodations under the BSP's Manual of Regulations for Banks (MORB).

Based on the MORB, before granting loans and other credit accommodations, a bank must ascertain that the borrower is financially capable of fulfuling his/her commitments to the bank. The requirements for the granting of loans include latest income tax return or financial statements submitted to the Bureau of Internal Revenue.

The SES however noted that since credit card issuing banks and firms determine the paying capacity of a credit card applicant, the regulations may have created the impression that it is alright to issue pre-approved credit cards as long as the credit card-issuing institution has in place the system to manage risk exposures.

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BSP to expand P5-B rural bank consolidation program

BSP to expand P5-B rural bank consolidation program

By Lawrence Agcaoili, The Philippine Star
Posted at 04/24/2011 7:09 AM
Updated as of 04/24/2011 2:36 PM

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is looking at the possibility of expanding a P5-billion program that encourages mergers and consolidation currently limited to rural banks to cover other “small” banks.

BSP Deputy Governor Nestor Espenilla Jr. said in an interview with reporters that monetary authorities are eyeing the expansion of the coverage of the Strengthening Program for Rural Banks (SPRB) that was launched August last year.

“There are ongoing discussions in that area. There are talks to cover or expand SPRB to other small banks,” Espenilla stressed.

He did not elaborate on the planned expansion saying the BSP is still looking at how to improve the SPRB.

“This a great idea to change the financial market. We strive for banks that can adequately give quality credit and service,” he added.

The BSP and state-run Philippine Deposit Insurance Corp. (PDIC) launched the SPRB last Aug. 4. It involves a P5-billion financial assistance as well as grant of regulatory relief by the PDIC and BSP over a period of two years or until 2012 and intends to encourage mergers and consolidations of rural banks to further strengthen the rural banking system.

Rural banks qualified to join the program are those whose risk based capital adequacy ratio (CAR) fall below the BSP required 10 percent and those that are merging or consolidating with an eligible STPIs.

Third party investors that are qualified to join the SPRB include those that are not under the central bank’s prompt corrective action (PCA) program and those that are not engaged in unsafe and unsound banking practices. Furthermore, the STPIs should have a CAMELS (capital adequacy, asset quality, management quality, earnings, liquidity, sensitivity to market rating) of at least “3.”

The P5-billion financial assistance covers the equity component in the form of preferred shares equivalent up to 50 percent of additional capital required to bring the CAR to the eligible level of 10 percent and should have a dividend rate equal to five-year fixed rate Treasury notes.

The shares should also be non-voting, cumulative, and convertible to common shares and should be redeemable starting the fifth year but not later than 10th year from the issuance of the preferred shares.

The direct loan component of the financial assistance covers the principal amount equal to such amount that would allow the merged or consolidated rural bank to earn a net interest spread over loan tenor and involved an effective interest rate of governmnent securities purchased using loan proceeds less three percent.

On top of the financial package, the BSP agreed to extend regulatory relief to those who would participate in the program including the waiver of the monetary penalties imposed of eligible rural banks for violations of existing laws and BSP rules and regulations as well as the condonation of liquidated damages on past due rediscounting or emergency loans as of the end of the month immediately preceding the data of request for loan restructuring.

Other sweeteners include the restructuring of past due rediscounting or emergency loans of the eligible rural banks with the BSP subject to the compliance on the guidelines of amount to be restructured, interest rate, terms of repayments, collateralization, default clause, and documentary requirement.

Other incentives include preferred shares for staggered redemption as well as the rediscounting ceiling of at least 150 percent of adjusted capital accounts of the merged rural bank for a period of one year.

The BSP and PDIC also signed an agreement to harmonize their procedures to expedite the evaluation process for mergers and acquisitions of banks to further strengthen the country’s financial system.

Latest data showed that the number of banks retreated by 27 to 758 last year from 785 in 2009 due to mergers as well as the closure of some banks. The number of universal and commercial banks was steady at 38 followed by thrift banks with 73 while the number of rural banks fell to 647 from 674.

The data showed that the operating network including branches of the banking system inched up by 2.9 percent to 8,869 last year from 8,620 in 2009 reflecting mainly the increase in commercial and rural banks’ branches or agencies.

Thursday, April 21, 2011

BSP may expand rural bank support program

BSP may expand rural bank support program
04/20/2011 | 05:00 PM

Rural banks aren’t processing more credit than what the Bangko Sentral ng Pilipinas would like them to, forcing the regulator to rethink its current program that was supposed to encourage mergers and acquisition in this subsector of the industry.

The Special Program for Rural Banks or SPRB was designed to encourage financial institutions in the countryside to fuse with or acquire each other with a view to making them stronger.

It was supposed to create larger and more competitive rural lenders on the premise that larger banks have more capital to lend more BSP Deputy Gov. Nestor Espenilla told reporters on Wednesday.

“We’re actually looking at expanding the program to cover possibly other entities. But it’s still too early to say," Espenilla said.

The original concept of the SPRB was to give rural banks in the process of merging preferential treatment, including the condonation of fees or fines for violations of BSP rules and higher rediscounting ceilings

The BSP and the Philippine Deposit Insurance Corp. contributed P2.5 billion each as seed money for the program in which the government, represented by state-owned Land Bank of the Philippines, was to become part owner — for a limited period — of banks undergoing ownership transformation.

The program authorizes LandBank to subscribe to the preferred shares of merging entities to safeguard government money until rural bank has grown larger.

Espenilla said expanding the SPRB program is a “great idea to cleanse the financial system [and] to expand the availability of credit."

“Weak banks are not in a good position to provide credit, and for credit to happen a basic precondition is that we must have financial institutions that have the ability to extend credit," the deputy governor explained.

Credit thrives when industry members do not have to worry over liquidity levels or solvency issues or need only to lend to themselves in order to survive, he said.

“In fact, they might only be lending to themselves which is what we are trying to eliminate. We have many kinds of small financial institutions and we’re trying to see if we can promote further consolidation resulting to stronger small entities," Espenilla added.

A few bank executives and another regulator acknowledged the program has languished from a lack of interest, especially from rural banks whose offers fear that enlisting in the program would send the message that their banks are in some form of financial difficulties.

Sources said rural banks were interested in the program but fear the unintended consequence of creating trouble for themselves when word goes out that some of them were seeking some form of assistance from the regulators. — VS, GMA News

Wednesday, April 20, 2011

Microfinance players to get their own credit info bureau

Microfinance players to get their own credit info bureau

MICROFINANCE institutions will begin using an online credit information bureau in a bid to prevent over-indebtedness due to multiple borrowings among their clients -- a practice that gave rise to a repayment crisis in India.

The association of large banks, the Bankers Association of the Philippines (BAP), will develop the online facility. Microfinance institutions will run it.

“We are slated to launch an online credit bureau independently run by microfinance institutions in June to July [this year] to avoid the risk of multiple borrowings by bad creditors,” BAP credit bureau managing director Leonilo G. Coronel told BusinessWorld at the sidelines of the Microfinance Stakeholders Summit at the Bangko Sentral ng Pilipinas (BSP) yesterday.

“Microfinance institutions will voluntarily provide credit information about their clients. They will provide the inputs but they will also get the output,” he added.

Microfinance involves the extension of credit to poor borrowers who are normally turned away by the banks.

The loans are often used to jumpstart enterprises -- mostly buying and selling on a micro scale -- and is regarded as a poverty alleviation tool.

Interest rates are high, ranging from 24% to 36% per annum, but this is because microfinance is labor intensive on the part of lenders. Still, microfinance, at least in the Philippines, is enjoying high repayment rates.

The multiplity of lenders and the lack of a credit information bureau, however, has allowed borrowers to tap different microfinance institutions at the same time, giving rise to the risk they might take on too much debt and default on their borrowings.

This was what happened in India, particularly in the Andhra Pradesh state. Borrowers, mostly women, did not use the loans to start businesses that would have provided cash flows. They instead used them to settle household expenses. Burdened with debts, they went from one microfinance provider to another to borrow in order to settle their earlier debts.

Multiple borrowings have been noted in the Philippines.

“Multiple borrowings by clients, which have increased in the past years, pose a risk not only to local players but to the borrowers themselves,” said Elisabeth Rhyne, managing director of US-based ACCION International’s Center for Financial Inclusion, at the sidelines of the summit yesterday.

She also gave a talk on “How to Avoid an Indian Type Microfinance Crisis in the Philippines” yesterday.

“Credit bureaus are very much needed in a multiple lender environment to avoid over-indebtedness of their (microfinance institutions) clients,” she added.

A credit information bureau mandated by Republic Act (RA) 9510 or the Credit Information System Act, which was passed into law three years ago, has failed to take off the ground.

“The problem here is information asymmetry, as lenders do not know whether the borrowers have multiple loans. Information on these borrowers’ credit background is important,” Mr. Coronel said.

Ms. Rhyne, in her talk, said the absence of a credit bureau, which permitted multiple borrowings, was the major cause why India’s microfinance sector is now in a slump.

Right after reports of suicides among borrowers who could not pay their debts, the Andhra Pradesh state imposed interest rate caps last year. Lending and collections by micro-lenders have grounded to a near halt there.

Ms. Rhyne, however, singled out the Philippines’ sensible microfinance regulatory environment, active industry associations, product diversity and the cooperation among stakeholders as “assets.”

While Malacañang takes its time appointing the president of the Credit Information Corp. -- the body that RA 9510 seeks to establish -- industry players are running their own credit bureaus.

The BAP has its own, which the Rural Bankers Association of the Philippines, the association of rural banks, is also using.

Mr. Coronel said, “It doesn’t matter who runs the credit bureau as long as it serves its purpose”.

“The lack a credit bureau or some sort of information sharing, is like journeying in the sea without a lighthouse,” he added. -- A. S. O. Alegado

Sunday, April 17, 2011

Plantersbank gets top credit rating

Plantersbank gets top credit rating
By Zinnia B. Dela Peña (The Philippine Star)
Updated February 18, 2011 12:00 AM

MANILA, Philippines - Planters Development Bank, the country’s largest private development bank, has obtained an issuer rating of PRS A plus from the Philippine Rating Services Corp. (PhilRatings).

An issuer rating of PRS A means that the obligor has an above average capacity to meet its financial commitments relative to that of other Philippine corporates. The company, however, is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than higher-rated corporates. A plus sign is added to further qualify the rating.

An issuer rating is an opinion on the general and overall creditworthiness of the issuer, evaluating its ability to meet all its financial obligations within a time horizon of one year. The focus is on financial strength and stability under normal and stressed conditions to be able to meet existing and prospective financial obligations.

Plantersbank’s key strength is in the small and medium enterprise (SME) market, where the bank has a very strong franchise. As of end-2010, SME loans accounted for approximately 62 percent of the bank’s portfolio.

The issuer rating assigned to Plantersbank reflects the bank’s established presence in its chosen market niche, good management, improving asset quality and modest profitability.

Plantersbank continues to have a strong franchise in the SME market, which it has chosen to focus on since the bank’s beginnings in the early 1960s. Efforts to reinforce Plantersbank’s image as the bank for SMEs is not limited to its products and services, but also includes the bank’s social advocacies. This consistency in purpose has been a plus factor in the continued recognition of Plantersbank as an important market player in SME credit, despite increasing competition from other financial institutions in the past years.

“Plantersbank’s strong corporate identity is the foundation upon which its management is based. PhilRatings considers the quality of Plantersbank’s management to be good. Sound leadership is provided by Ambassador Jesus P. Tambunting, chairman and president, who has ably directed Plantersbank’s growth from its small beginnings. Recent changes in management are viewed as positive developments, with the extensive banking experience of new senior officers expected to support and give direction to the aggressive growth that Plantersbank has set for itself in the near future,” PhilRatings said.

Government urged to start operating Phl credit bureau

Government urged to start operating Phl credit bureau

By Lawrence Agcaoili (The Philippine Star)
pdated April 17, 2011 12:00 AM

MANILA, Philippines - Sen. Edgardo Angara is urging the government to start operating the Philippine credit bureau to further strengthen the country’s capital markets and at the same time unlock much needed financing for small entrepreneurs, farmers, and consumers.

Angara said in his speech during the 30th National Credit Congress organized by the Credit Management Association of the Philippines that the Credit Card Information Corp. (CICC) is yet to be fully functional more than two years after the enactment of Republic Act 9510 also known as the Credit Information System Act (CISA) of 2008.

“I hope the government realizes the urgency to finally implement this important law which will certainly strengthen our capital markets,” he stressed.

He pointed out that the government has yet to name the president of CICC despite the fact that the Bangko Sentral ng Pilipinas (BSP) has issued the implementing rules and identified the members of the board last year.

The CICC is supposed to be 60 percent controlled by the National Government and 40 percent owned by qualified investors such as industry associations of
banks, quasi-banks, other credit related associations and associations of consumers is tasked to receive and consolidate basic credit data.

It is tasked to gather and consolidate credit information from banks, credit card companies and government financial institutions into a centralized databank that would serve as a common storehouse which both consumers and financial institutions could access to facilitate smoother credit transactions.

“Millions of Filipino employees and entrepreneurs experience difficulty in obtaining credit because banks are rightfully wary of their lack of credit history. As a result, high interest rates are imposed on them to compensate for perceived high risks,” Angara lamented.

Angara explained that credit is badly needed to spur growth in the countryside.

“Microfinance, micro-agri loans, micro-insurance – these are the emerging needs in our countryside. When we push for inclusive growth, we also have to advocate for inclusive finance to ensure that our rural folks also cash in on the benefits of progress,” he added.

The BSP had said that if banks had a better grasp of the credit-worthiness of borrowers, those who have maintained clean credit records may get charged lower interest rates and, therefore, be encouraged to borrow. In the same light, those with poor credit records would either be penalized with a higher premium risk.

“A credit bureau will help banks price risk better. The cost of doing business will also be rationalized in the process,” the BSP said earlier.

A study conducted by the World Bank stated that the establishment of the credit bureau would help increase the probability of small firms to access financing from 28 percent without a credit bureau to 40 percent.

It would also reduce financing constraints for small firms. Under the existing environment, only 27 percent of small firm are without constraints in obtaining borrowed funds. This number is projected to improve to 49 percent.

Sharing credit information, likewise, would increase efficiency of banks in processing loan applications by 43 percent while default rate could drop significantly to only two percent.

PhilPaSS transactions higher by 9.6% to P206.6 trillion last year

PhilPaSS transactions higher by 9.6% to P206.6 trillion last year

By Lawrence Agcaoili (The Philippine Star)
Updated April 07, 2011 12:00 AM

MANILA, Philippines - The total value of financial transactions that passed through the payments facility of the Bangko Sentral ng Pilipinas (BSP) went up by 9.6 percent last year as more overseas Filipino workers (OFWs) coursed their remittances through the central bank’s Philippine Payments and Settlements System (PhilPaSS).

The BSP reported that the value of transactions coursed through PhilPaSS amounted to P206.6 trillion last year or P18.5 trillion more than the P188.5 trillion recorded in 2009 as the number of processed and settled transactions jumped 22.2 percent to 916.3 million

“The significant increase in the number and volume of transactions stemmed mainly from OFW remittance transactions processed and settled through the PhilPaSS Remit system,” the BSP stressed.

Data showed that a total of 112.6 million OFW remittance transactions involving P4 billion were coursed through the PhilPaSS Remit system last year.

The PhilPaSS-Remit system is part of the advocacy of the BSP to help Filipinos abroad and their beneficiaries by providing a safer, faster, and cheaper means of remittance.

The BSP has encouraged banks and financial institutions to course OFW remittances through the central bank’s electronic payment and settlement system so that beneficiaries of Filipinos working abroad could enjoy lower fees. There are about 12 banks that are currently coursing their OFW remittance transactions through the central bank’s PhilPaSS-Remit System .

The project is one of the initiatives undertaken by the BSP in coordination with the Association of Bank Remittance Officers Inc. (ABROI) through a memorandum of agreement (MOA) last December.

The BSP said the settlement of OFW remittances through the PhilPaSS Remit System would result in savings of between P100 and P500 per transaction as current system charges between P150 and P550 per transaction. OFW families are expected to save at least P92 million to as high as P922 million due to the faster and cheaper delivery of remittances to the beneficiaries at a lower rate of P50 per transaction instead of the current range of between P100 and P550 per transaction.

Saturday, April 16, 2011

Smart to expand its mobile money transfer service across the country

Smart to expand its mobile money transfer service across the country

By Ehda M. Dagooc (The Freeman)
Updated April 15, 2011 12:00 AM

CEBU, Philippines - To further boost the eCommerce and mobile money transfer services in the Philippines, Smart Communications vows to further expand its Smart Money network across the country.

During the recently concluded National Microfinance Stakeholders Summit at the Bangko Sentral ng Pilipinas (BSP), Smart’s Financial services senior manager Maybelle Santos emphasized how electronic money, specifically Smart Money, empowers remote, unbanked, and underserved areas in the Philippines, by enabling them to facilitate secure, economical, and convenient financial transactions, bills payment, and airtime reloading through—mobile phone.

The two-day affair showcased products and services that cater to the needs of the microfinance sector, including Smart Money, the world's first re-loadable payment card linked to a mobile phone.

The summit kicked off with a forum entitled "BSP and Financial Inclusion: Using Mobile Phone Technology to Expand Access to Finance”, a discussion by key players in the industry of how mobile commerce and electronic money can create enabling financial ecosystems for members of the base of the pyramid (BOP) to trigger economic development and empower industries.

Out of 1,635 municipalities in the country, only 610 have banks and only 27 percent of Filipinos has access to financial channels.

In 2010, Smart Money was able to successfully facilitate P13.5 billion worth of transactions within the remote communities that used to have limited or no access to financial services.

“Through strategic collaborations with local and international partners, Smart Money is able to provide Filipinos anywhere in the archipelago with simple, secure, affordable and convenient means to send and receive cash, even without the presence of banks and ATMs in their communities,” said Santos.

There are currently over 8.5 million Filipinos using Smart Money who enjoy the benefits of airtime reloading, bills payment, ATM withdrawals from over thousands of ATMs here and abroad, peer-to-peer mobile money transfers, cash remittances from any of 95,000 international partner transfer locations, and purchases from MasterCard establishments all over the world and on the worldwide web.

The platform also allows Smart Money users to send fund transfers directly to any of over 45 million Smart subscribers. Smart Money also provides sustainable livelihood projects and new business opportunities to help the BOP and micro-entrepreneur store owners enhance their lives and maximize their strengths. (FREEMAN)

Web-based POS solution for SMEs launched by PLDT

Web-based solution for SMEs launched by PLDT
By Mary Ann Ll. Reyes (The Philippine Star)
Updated April 16, 2011 12:00 AM

MANILA, Philippines - Small and medium enterprises, who long for a point-of-sale (POS) system that can track how much they sell and how much stock they have left at their stores in real-time and from anywhere, can now turn to PLDT SME Nation.

With PLDT Check Out, SMEs can have a cost-effective POS solution that uses the web to connect their stores to the head office and transmit sales and inventory data. The owners can even monitor sales and inventory while half way around the globe as long as they have an Internet connection.

PLDT SME Nation Head Kat Luna-Abelarde said this is the first web-based POS solution for SMEs in the country.

“PLDT Check Out answers the need of SMEs for information that will allow for timely decision-making,” she said. “Studies have shown that sales can increase by as much as 20 percent and net profits can grow by 30 percent with a POS system.”

POS refers to the location where a transaction occurs. A POS system incorporates the software and the hardware, usually called the POS terminal, which is used to complete the transaction and print the receipt. This terminal is sometimes called the cash register.

“PLDT Check Out minimizes the cost of having a POS system. Convenience of tracking stores’ sales transactions and inventory levels is now within reach for many SMEs,” Luna-Abelarde added.

PLDT Check Out has two components: A POS Front-End System, which is a browser-based POS system, and a POS Headquarter System, which the owner uses to monitor sales transaction data transmitted from the Front-End System in real-time.

For a monthly service fee of P2,750 per store or branch, and a one-time fee of P500, SMEs can now have an automated process for accepting and recording sales transactions, monitoring inventory and sales analytics. The monthly fee already covers software updates, maintenance of software and 24/7 technical support.

SMEs who want to avail of PLDT Check Out must have an existing PLDT SME Internet connection. Clients just need to have a computer to access the web-based POS application.

The benefits of this solution are evident. A client with a grocery store for example can see how much he has sold at any given time. He will also know when to replenish stocks and thus cut handling and storage costs too.

PLDT SME Nation assistant vice president for marketing Amil Azurin said the traditional way of monitoring sales and inventory include pen-and-paper tracking, stand-alone electronic cash registers, and on-site POS, which can cost a lot.

“Acquiring a conventional POS system involves upfront costs for hardware and software,” he said. “This can hamper cash flow. On top of that, there are monthly payments that strain cash flow even further.”

The cost of ownership for one year for a conventional POS system – complete with software, POS terminal, and server – can reach almost P600,000 compared to only P64,988 for PLDT Check Out. The two-year cost of ownership for the conventional setup can cost more than P200,000 compared to only P44,988 for PLDT’s solution.

Since this is a web-based solution, SMEs can monitor their stores’ operations from anywhere using any computer hooked to the Internet. PLDT Check Out is also easy to set up since there is no need for high-end hardware and server requirements. The solution also obviates the need for manual back-ups, reconfigurations and upgrades.

Friday, April 15, 2011

Three telco companies complete nationwide network interconnection

Three telco companies complete nationwide network interconnection

By EMMIE V. ABADILLA

April 15, 2011, 2:48am

MANILA, Philippines – At last, subscribers of rival telecommunication companies in the same town or city will no longer have to pay long-distance rates to call each other via landline phones.

The networks of Globe Telecom, Bayan Telecommunications (BayanTel), and Digitel Telecommunications Philippines (Digitel) are now 100% interconnected nationwide, after the Globe and Digitel networks in Lucena City and the rest of Quezon province were linked.

The National Telecommunications Commission (NTC) required full interconnection among the three carriers under the law, Republic Act 7925, the Public Telecommunications Policy Act of 1995, meant to create a universally accessible, fully integrated nationwide network to attract more infrastructure investments from the private sector.

Globe and Digitel have established interconnection in common operation areas in the National Capital Region and in the provinces of Camarines Norte, Bataan, Lucena, Sorsogon, Ilocos Sur, Nueva Vizcaya, and Zambales. On the other hand, Globe and Bayantel are both present in the National Capital Region and the provinces of Iloilo, Cebu, Eastern Samar, Negros Occidental, Leyte, Southern Leyte, Misamis Oriental, Agusan del Norte, Davao del Sur, South Cotabato, Albay, Camarines Norte, Camarines Sur and Sorsogon.

Meanwhile, PLDT has yet to fulfill full interconnection with its competitors but its recent purchase of the Gokongwei-owned Digitel is expected to hasten interconnection.

To date, both PLDT and Globe are locally interconnected only in Davao City, Batangas, Cavite, Cebu, Bohol, Leyte, Negros Occidental, Negros Oriental and Cotabato City. The two companies’ networks are not yet interconnected in at least 20 more provinces where both have commercial operations, including the provinces of Pampanga, La Union and Benguet.

Earlier, the NTC and the provincial board of Pampanga announced that PLDT and Globe will implement the interconnection of its networks in the province on April 15, 2011.

“We’ve always been ready and waiting to interconnect our network with all our competitors,” declared Atty. Froilan Castelo, Globe’s head for corporate and legal services group. “Interconnection of landline facilities is a must if we want economic development to spread beyond urban areas.”

After completing its nationwide interconnection with Digitel and BayanTel, Globe hopes to speed up interconnection agreements with PLDT to develop the country’s telecommunications infrastructure.

Gov’t launches text message system

Gov't launches text message system

By GENALYN D. KABILING

April 15, 2011, 6:59pm

MANILA, Philippines -- In a bid to fight bogus alarmist messages that cause unnecessary panic, Malacañang has launched the "Official Text Message" system to provide accurate updates to the public in times of disasters and other emergencies.

The government has linked up with major telecommunications firms, namely PLDT/Smart, Globe, and Digitel/Sun, for the establishment of the free public safety advisory system via text messaging.

In a public-private partnership in public safety and disaster communication, the telecom firms have volunteered for the timely broadcast of accurate messages to their subscribers during typhoons, floods, earthquakes and other emergencies.

The "Official Text Message," that will come from concerned government agencies, will come from the mobile number 1456.

Secretary Herminio Coloma Jr. of the Presidential Communications Operations Office (PCOO) said the new public safety advisory program seeks to avoid panic and provide guidance to citizens to safeguard lives and properties during typhoons, floods, earthquakes and even security emergencies.

"In times of crisis, accurate information breeds confidence and silence breeds fear. It is vital for the government to give the correct advisories to the public to avoid panic over unverified statements and hoax messages," Coloma said.

The National Telecommunications Commission has already issued a memorandum on the guidelines for public safety broadcast of text messages during calamities and other emergencies. (Genalyn D. Kabiling)

Pres. Aquino wants shift to electric tricycles to ease impact of high oil prices, pollution

Pres. Aquino wants shift to electric tricycles to ease impact of high oil prices, pollution

13-Apr-11, 5:31 PM | Chichi Conde, InterAksyon.com

MANILA, Philippines -- The Philippines will shift to electric tricycles from oil-powered ones as part of measures to ease the impact of rising prices of oil and petroleum products, President Benigno Aquino III said on Wednesday.

Aquino, who made the announcement during the launching of “e- tricycles” in Mandaluyong City, said an initial 20,000 units will be built under the program. He pointed out that some 3.5 million oil-powered tricycles in the Philippines consume $2 billion dollars worth of petroleum products annually.

Aquino transferred 20 of these e-tricycles to Mandaluyong City. The Asian Development Bank, which donated the vehicles, called today’s event an “important first step towards a sustainable, energy-efficient transport model for the country.”

In a statement, the bank said it “is currently in discussions with the government and other development partners on a proposed project to significantly scale up the rollout of energy efficient e-trikes in Manila and other urban areas as early as 2012.”

The president said e- tricycles will be “cheaper” to operate than fuel-powered ones. The e-tricycles will run on lithium-ion batteries that are commonly used in cell phones and laptop computers. Although more expensive than the ordinary lead-acid battery used in motor vehicles, lithium-ion batteries can be recharged more than 2,000 times, allowing operators and owners to save money in the long run.

The ADB said it will install four charging stations in Mandaluyong City, which will be able to charge the e-tricycle batteries to 50 percent capacity in less than 30 minutes. One of the charging stations will use solar energy, the bank added.

Apart from being cost-efficient, e-tricycles, like electric cars, are decidedly environment friendly.

According to the ADB, motorized tricycles in the Philippines produce more than 10 million tons of carbon dioxide. "Every 20,000 e-trikes that are introduced to Manila's streets will save the Philippines 100,000 liters of foreign fuel imports each day, saving the country about $35 million annually," said Sohail Hasnie, ADB's Principal Energy Specialist. "This initiative not only benefits the environment, but it also supports the Philippines drive to become more energy independent."

Aside from emitting carbon dioxide, motorized tricycles are also a major source of noise pollution. Many villages in the Philippines disallow these tricycles from entering their communities, especially during the night, because of the noise they make. “Noise coming from these vehicles is measured at a range of 90-97 decibels (dB). Studies suggest prolonged exposure to noise levels at or above 80 dB can cause deafness,” the Asian Development Bank said in an earlier report.

Trainers for Coops Need to Register with CDA

Tuesday, April 12, 2011

PROVIDERS OF TRAINING SERVICES TO COOPERATIVES MAY NOW REGISTER WITH THE COOPERATIVE DEVELOPMENT AUTHORITY AS REQUIRED UNDER R.A. 9520

Early on in middle of January this year, we wrote about the remarks of Atty. Niel Santillan, executive director of the Cooperative Development Authority (CDA), that not one organization involved in providing training to cooperatives has yet registered with the CDA.

Now, we know the answer why.

The answer was that, apparently during that time, the CDA has not yet issued the rules for the accreditation of providers of training services to cooperatives.

True enough. A memorandum on this (Memorandum Circurlar No. 2011-01, Series of 2011) was issued only following the approval of the implementing by the CDA Board of Administrators (BOA)on February 22, 2011, per BOA Resolution No. 39, Series of 2011.

The said rules were issued pursuant to Article 44 of Republic Act 9520 and Section 5 of Rule 7 of its Implementing Rules and Regulations.

Question. Does this mean that all the trainings received by officers of cooperatives prior to March 9, 2011 (fifteen days from February 22, 2011) will not be credited to them? All because the training providers were not yet accredited by CDA. And all because there were no implementing rules issued yet by CDA then?

Anyway, under the Circular, eligible to secure for accreditation are organizations or institutions conducting training to cooperatives. These include Advocacy and Education cooperatives; cooperative federations; cooperative unions; training institutions; government organizations; non-government organizations (NGOs); local government units; state universities & colleges and academe.

A. The applicant for accreditation must posses the following minimum qualifications:

- Must have a juridical personality;

- Must have cooperative development program/s;

- Must have a pool of at least five (5) competent cooperative trainers who posseses the following minimum qualifications:

a. Must be of legal age;
b. Must be a Filipino residing in the Philippines;
c. Must be a holder of at least a Bachelor's degree;
d. Must have attended/completed training course for cooperative trainers; and
e. With at least two (2) years experience as resource person on cooperatives and must be knowledgeable on basic philosophy of cooperatives.

B. The documentary requirements are:

An applicant who seeks to be accredited as cooperative training provider must file a letter-application directly to the Cooperative Development Authority-Extension Office (CDA-EO) where such applicant is based, attaching thereto duly certified true copies of the following documents:

- For Cooperatives, Federations and Unions:

i. Certificate of Good Standing (CGS) issued by CDA specifically for purposes of accreditation;
ii. Organizational profile:

a. Basic Information (Name/address/contact details);
b. List of programs and services;
c. Historical profile of cooperative training conducted;
d. Affiliations, if any;
e. List of Officers and Staff; and
f. List of Trainers with individual profile/bio-data.

iii. Cooperative Annual Performance Report (CAPR) and Audited Financial Statements of the immediate preceding year.

-For Training Institutions/NGOs/Academe:

i. Certificate of Registration from the concerned Philippine Government Agency;
ii. Articles of Incorporation and By-laws where cooperative development is one of its objectives and purposes or cooperative development is one of its identified program thrusts;
iii. Business Permit;
iv. Organization profile

- Basic information (Name/address/contact details);
- List of programs and services;
- Historical profile of cooperative training conducted;
- Affiliation, if any;
- List of Key Officers and Staff; and
- List of Trainers with with their individual profiles/bio-data.

v. Annual Reports and Audited Financial Statements for the last 2 years.

-For GOs/LGUs/SUCs:

i. Certification from head of the agency that such office/unit has cooperative developmentg program, in lieu of the Certificate of Registration; or appropriate local issuance/s creating the office (in the case of LGUs);

ii. Organizational profile:

- Basic Information (Name/address/contact details);
- List of programs and services;
- Historical profile of cooperative training conducted;
- List of Key Officers and Staff; and
- List of Trainers with their individual profile/bio-data.

BAP to Launch Online Credit Information Bureau Run by Microfinance Institutions

Bankers Association of the Philippines (BAP) to Launch Online Credit Information Bureau Run by Microfinance Institutions

by MicroCapital on Wednesday, April 13, 2011 at 9:51am

The Bankers Association of the Philippines (BAP), a nonprofit organization that was established in 1949 to represent the interest of banks throughout the country, has announced plans to launch an online credit information bureau that will be run by microfinance institutions (MFIs). BAP intends to develop the online platform by June. MFIs will be able to provide information pertaining to their clients and will also be able to access information on clients of other participating MFIs. The platform is intended to identify borrowers with bad credit histories and to prevent multiple borrowing. While it is being developed, rural banks can still access credit information through a database that is being used by commercial banks, a privilege granted to them in January 2011. The advantages of using an MFI-only system instead of the existing one have not been enumerated.

Leonilo Coronel, managing director of BAP, commented on the need for MFIs to use credit reports as follows, “The problem here is information asymmetry, as lenders do not know whether the borrowers have multiple loans.”

MFIs in the Philippines that report to the Microfinance Information Exchange (MIX), the US-based data provider, have an aggregate loan portfolio totaling USD 590 million and aggregated assets of USD 869 million as of 2009.

By Julie Moksim, Research Associate

About Bankers Association of the Philippines: Bankers Association of the Philippines is a nonprofit organization that was established in 1949 to represent the interest of banks throughout the country. In 1964, BAP registered with the Securities Exchange Commission (SEC). BAP works in collaboration with local legal entities and the Philippines Chamber of Commerce to advocate regarding laws that relate to banking. Members of BAP include Asia United Bank, Development Bank of the Philippines, Philippine Veterans Bank and Union Bank of the Philippines.

Sources and Additional Resources:

Business World Online: “Microfinance Players to Get Their Own Credit Info Bureau”, April 4, 2011, http://www.bworldonline.com/content.php?section=Finance&title=Microfinance-players-to-get-their-own-credit-info-bureau&id=29190

MicroCapital.org Brief, January 19, 2011: Bankers Association of the Philippines-Credit Bureau Incorporated (BAP-CB) Offers Rural Banks, Microfinance Providers Access to Credit Information System, http://www.microcapital.org/microcapital-brief-bankers-association-of-the-philippines-credit-bureau-incorporated-bap-cb-offers-rural-banks-microfinance-providers-access-to-credit-information-system/

MicroCapital’s Microfinance Universe Profile: Bankers Association of the Philippines

http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bankers+Association+of+the+Philippines+%28BAP%29

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/tiki-index.php

BSP to pursue with greater vigor its advocacy of microfinance

Thursday, April 14, 2011

BANGKO SENTRAL VOWS TO PURSUE WITH GREATER VIGOR ADVOCACY PROGRAM FOR MICROFINANCE, ECONOMIC AND FINANCIAL EDUCATION, CONSUMER PROTECTION

On top of assuring the preservation of monetary and financial stability, the Bangko Sentral ng Pilipinas (BSP) vowed to continue its microfinance advocacies to promote inclusive growth and help alleviate poverty.

This is according to BSP Governor Amando M. Tetangco, in a speech delivered during the recent Economic Briefing and General Membership meeting of the Management Association of the Philippines at the Peninsula Manila.

"The BSP will continue to help create an environment of growth marked by financial inclusion. As such, our advocacy programs in microfinance, economic and financial education, and consumer protection shall be pursued with vigor," Gov. Tetangco said.

He reported that the proactive stance of BSP in microfinance, to support the development of a sustainable microfinance business in the country, expanded further the access to mainstream financial products and services to the unbanked and underserved population.

"The BSP also supported the Credit Surety Fund Program (CSFP), which was another major initiative to advance financial inclusion in 2010. The CSFP provides surety to micro, small and medium-enterprise borrowers that generally are not able to provide collateral to banks," Gov. Tetangco explained.

Through its Economic and Financial Learning Program, the BSP continues to promote greater public awareness of economic and financial issues. Through this, the BSP continued to provde information to enable households and business to make well-informed economic and financial decisions.

Tetangco added that the BSP also extended its campaign to promote a culture of saving among overseas Filipinos and their families and helped encourage the use of these savings in product investments. (END).

Thursday, April 14, 2011

A toast to financial inclusion

A toast to financial inclusion

ALL those who matter in the local microfinance industry converged recently at a Bangko Sentral ng Pilipinas (BSP)-sponsored summit not only to exchange views on ways to improve the provision of financing to sectors in the society that needed it most but also to celebrate the Philippines being named among successful countries in the field of financial inclusion.

At the National Microfinance Stakeholders Summit held April 5, nearly 300 microfinance industry leaders gathered including Rural Bankers Association of the Philippines (RBAP) President Cora Miller.

Microfinance generally involves the provision of credit to poor and low-income households who are normally turned away by banks and have limited access to credit and a secure and safe place to save.

Microfinance loans are often used to expand the activities of the economically active poor while deposit services help poor and low-income households save for the future and build their assets.

RBAP is a staunch advocate of financial inclusion. It launched the Microenterprise Access to Banking Services (MABS) in 1998 with support from the United States Agency for International Development (USAID) with the main goal of expanding access to financial services for Filipinos in the countryside by assisting the rural banking industry with its 2,700 branches and other banking offices to more effectively reach out and service more clients.

The RBAP-MABS program began in Mindanao, where it initially provided training and technical assistance to rural banks but has since expanded to support rural banks nationwide.

The program is now focused on assisting rural banks to expand the range of financial services offered to meet a range of important needs in the countryside. In addition to microfinance loans and deposit services, these new services include micro agri-loan strategies, housing microfinance services, microinsurance, money transfer and micropayment services, as well as mobile phone banking services.

RBAP expects a significant increase in the microfinance services being offered by their member banks especially under the positive direction of the current Aquino administration, which is showing its support for the private sector to expand access to financial services. To counter political patronage of the past, for instance, the Aquino administration indicated plans to revamp pro-private sector microfinance policies.

President Aquino has stated open support for the “National Strategy for Microfinance” that limited government institutions’ microfinance activities to wholesale lending to banks rather than encouraging or supporting direct government lending programs. This policy also supported a strong focus on the importance of savings services for the poor.

Such a government policy redirection is just in time as the microfinance industry which forecasts growth in deposits and various new initiatives such as agriculture-related microfinance products, microinsurance, and greater access to mobile money platforms.

“The advent of expanded financial tools such as providing savings and micro insurance to the unbanked sector will be drivers for microfinance growth,” BSP Deputy Governor Nestor Espenilla Jr. said during the Microfinance Stakeholders Summit.

He said the BSP is now partnering with other government institutions and stakeholders in developing and regulating these up-and-coming microfinance products.

At the summit, leaders of the industry highlighted issues such as preventing credit pollution and over-indebtedness as a result of multiple borrowings.

To achieve such aims, rural banks and other microfinance institutions have stressed the need for a comprehensive credit information system, the strengthening of consumer protection and enhancing financial literacy of clients.

Microfinance services, according to the latest BSP data, are offered now by over 200 banks providing microfinance services to over 900,000 clients with the entire rural banking industry now managing close to 5 million micro-deposit accounts with balances of below P15,000. These combined numbers demonstrate why rural banks are becoming one of the largest and most important providers of microfinance services in the country.

The recent summit was inspired by the consistent high ranking of the Philippines in an international survey of countries with microfinance industries by the Economist Intelligence Unit (EIU).

In EIU’s “Global Microscope on the Microfinance Business Environment,” Philippine microfinance was cited as best in the world in terms of regulatory framework, and second best performing in terms of overall business environment. The recent ranking of the country in the survey was an improvement from 2009 when the Philippines was number three in overall business environment.

The summit gained from presentations of two international experts, Dr. Alfred Hannig from the Alliance for Financial Inclusion that provided an international perspective on the importance of instituting policies that work and the value of peer-to-peer learning in order to help shape the global landscape for microfinance and financial inclusion, and Dr. Elisabeth Rhyne from the Center for Financial Inclusion at ACCION International who spoke on the microfinance client protection principles and the present the global initiatives of the Smart Campaign in promoting consumer protection.

The summit was capped by a ceremonial signing of the Practitioners’ Commitment to Safe, Sound, Sustainable and Consumer-Friendly Microfinance by the participants and a ceremonial toast to the industry by BSP Gov. Amando Tetangco.

Financial inclusion is expected to become a stronger philosophy for industry with the just concluded summit.

BDO-Exportbank deal OK’d

BDO-Exportbank deal OK'd

BANCO DE Oro Unibank, Inc.'s (BDO) acquisition of the Export and Industry Bank, Inc. (Exportbank) has neared completion after the state deposit insurer green-lighted the transaction.

In separate disclosures to the stock exchange yesterday, BDO and Exportbank said the Philippine Deposit Insurance Corp. (PDIC) has approved BDO's purchase of the smaller bank's assets and liabilities, including deposits.

BDO, the country's largest bank by assets, in its disclosure however added "the transaction is still subject to the execution of definitive agreements and documentation acceptable to the parties and PDIC and the fulfillment of certain closing conditions, which include the final approval of the Monetary Board."

Once the transaction is completed, BDO will add Exportbank's 50 branches, 35 of which are in Metro Manila, to its 726.

The big banks have been disallowed to put up more branches in Metro Manila by the central bank in a bid to encourage them to expand to the less-served areas.

The Monetary Board, the policy-setting body of the Bangko Sentral ng Pilipinas approved in principle the BDO-Exportbank merger on July 16, 2010. Exportbank's stockholders approved the deal during the special stockholders' meeting called on Sept. 20, 2010.

BDO President Nestor V. Tan in a text message to BusinessWorld yesterday said, "[BDO] got the letter of approval from PDIC late Tuesday."

"While the broad terms have been approved, details of the transaction still need to be defined and agreed upon," he added.

He said BDO will assume Exportbank's P18.5 billion worth of deposit liabilities.

Exportbank also borrowed a total of P9 billion from the PDIC. The state deposit insurer extended P7 billion in income support and P2 billion in subordinated debt -- all released on Oct. 20, 2006 to Exportbank -- to prop up the bank, which was sinking due to non-performing assets and losses.

Exportbank's report as of the third quarter of 2010 showed P30.5 billion in assets and P28.7 billion in total liabilities.

Luis S. Reyes, Jr., BDO investor relations and corporate planning head, in a phone interview said the liabilities to be assumed by BDO "could still change and would be determined and finalized on the closing date."

Asked when the transaction would be finalized, Mr. Reyes said, "It could be a couple months down the road. It could be one, two or three months."

For his part, Exportbank President Juan Victor S. Tanjuatco in a statement said, "The transaction with BDO brings to full circle the efforts we started five years ago. We infused capital and initiated reforms all geared at improving the bank's financial condition and making it attractive to investors."

"Our transaction with BDO is the best for all Exportbank stakeholders.

It brings the bank to safe harbor. The resulting synergies from BDO's large scale operations will enhance the position of our depositors, representing about 80,000 deposit accounts," he added.

Exportbank had been in search of buyers since 2007 due to heavy losses. As of end-September, it had posted P535.93 million in net loss, down from a P606.04-million loss in the same period a year ago.

Exportbank, in its disclosure also said PDIC has approved the sale of EIB Savings Bank, Inc., Exportbank's thrift subsidiary, to its corporate buyers.

Exportbank, in its 2009 annual report, said it has sold EIB Savings Bank, located in Talisay City in Cebu, to Project Quest Corp., Fleetwood Holdings Corp., Navion Capital Resources Corp., and Santos Gonzalez Hijos, Inc. for P71 million.

BDO, controlled by the Sy family, has expanded through the years by acquiring other banks.

It first bought the Dao Heng Bank's subsidiary in the Philippines in 2001, followed by the First e-Bank in 2002. The following year, BDO swallowed Banco Santander Central Hispano's subsidiary in the Philippines.

In 2005, it acquired the United Overseas Bank. Next was Equitable PCI Bank in 2006. The year after, it bought American Express Savings Bank and two years later, GE Money Bank.

Its assets summed up to P1.01 trillion as of December, besting second-ranked Metropolitan Bank & Trust Co. and third-ranked Bank of the Philippine Islands, whose assets reached P885 billion and P867 billion respectively.

As of end-2010 BDO posted a net income of P8.8 billion, 46% higher than in 2009.

BDO shares closed at P52.30 apiece yesterday, 65 centavos higher than the previous day. -- Ann Rozainne R. Gregorio

Tuesday, April 12, 2011

Peso expected to finish 2011 at P42.50:$1

Peso expected to finish 2011 at P42.50:$1

THE METROPOLITAN Bank & Trust Co. said it sees a “roller coaster” trajectory for the peso this year, as remittances and demand for dollars from exporters push and pull the local currency in two directions.
In a market commentary released yesterday, Metrobank, the country’s second largest bank by assets, said the peso could strengthen to P42.50 per dollar in the second quarter as Filipinos living and working abroad send dollars home to finance their families’ education.

“Nevertheless, the peso may well come under renewed pressure and may go back to around the P43-P44 level as demand for dollars picks up ahead of the import season in the third quarter, amid potentially soaring oil and commodity prices,” it said.

With remittances going to pour in again in the fourth quarter, in view of the Christmas season, the peso could strengthen back to around P42.50 per dollar.

“It may well be a roller-coaster ride for the peso this year, albeit at a tighter band as the central bank intervenes and smoothens the peso-dollar volatility. The overall consensus however is one of peso strength going towards yearend regardless of such volatility,” the bank pointed out.

Sunday, April 10, 2011

Tetangco: Thrift banks will keep economy on the growth track

Tetangco: Thrift banks will keep economy on the growth track

BY JIMMY CALAPATI

"I believe that thrift banking industry will continue to keep our economy on the growth track," Bangko Sentral ng Pilipinas (BSP) governor Amando Tetangco said during last week’s national convention of the Chamber of Thrift Banks (CTB).

Tetangco, in his speech, said that the BSP and CTB share the same objective "to have a sound and stable banking system as well as to contribute to the realization of our country’s social and economic aspirations."

"Thrift banking industry accounts for roughly 10 percent of deposits, loans and capital of the banking system. In 2010, both our economy and thrift banking industry did quite well," he said.

Between December 2005 and December 2010, Tetangco said that consolidated deposits in thrift banks grew 88 percent to P491 billion.

While net loans increased by 87 percent to P345 billion.

In the same five-year period, total assets of the thrift banking industry expanded by 75 percent to a record high P606 billion while capital increased 47 percent to an all time high of P66.8 billion in December 2010.

Likewise, the thrift banking industry has expanded its client reach with an increase in the number of its members’ branches, from 1,333 to 1,419 as of December 2010, 80 percent of these offices and branches are located in Luzon, 14 percent in Visayas, and 6 percent in Mindanao.

"Based on the track record, indeed, these are well and good," Tetangco said.

THE NEED TO CONTINUE REFORMS

But beyond these numbers, Tetangco said that they see the need to continue to pursue necessary reforms that will transform banks into even better and stronger institutions.

"Banks that adhere to good governance practices and banks that operate in a safe and sound manner as part of its total customer care commitment. Let us not forget that banking is imbued with public trust," Tetangco said.

From a developmental perspective, the central bank chief said that they can streamline processes to become more efficient, invest more to strengthen the core competencies of bankers, and strengthen guidelines that protect the public from potential abuse and malfeasance.

"While our banking sector remains sound and stable, we should not be complacent. The market landscape continues to shift and change…. and so should we. And at all times, good governance will be the key to long-term sustainable growth," he added.

"We have shown the world how strong the Philippine banking system can be under the most difficult of global conditions. As we face new challenges, (we should) re-affirm our strength by continuously advocating faithful adherence to good governance practices," Tetangco said.

In a bid to create stronger institutions, the central bank issued new rules that raised the capital requirement for new thrift banks.

Thrift banks that locate their head offices in Metro Manila, for instance, must have a minimum capital requirement of P1 billion instead of P325 million while those in Cebu and Davao, are required to have P500 million instead of P52 million.

TO FOCUS ON CONSUMERS, ENTREPRENEURS

Riding high after a bullish economy in 2010, the country’s thrift banking industry seeks to sustain the wave of momentum this year by focusing on consumers and entrepreneurs as key drivers for economic growth.

The Chamber of Thrift Banks (CTB), the industry’s umbrella organization, says that the optimistic economic outlook in 2010 in which the Philippines ranked 3rd globally, resulted in increased consumer spending and setting up of businesses, especially Micro, Small, and Medium Enterprises (MSMEs).

CTB and HSBC Savings Bank President Patrick Cheng said that as people feel good about the state of the economy, "they want to spend their money wisely and they want to engage in putting up businesses."

"CTB wants to seize this opportunity by continuing to generate deposits, creating more opportunities for lending, implementing more aggressive marketing programs, and increasing the public’s confidence in thrift banks," Cheng said.

This year’s CTB Convention Chairman and BPI Family Savings Bank President Jose Teodoro Limcaoco said that "CTB wants to capture this as they celebrate their 37th founding anniversary."

"As CTB realizes the importance of consumers and entrepreneurs in keeping our industry and economy on track, we are incorporating the theme Thrift Banks: Fuelling Consumers and Entrepreneurs as Engines for Sustained Economic Growth in our annual convention," Limcaoco said.

According to CTB, the theme of the convention which was held this year at the Dusit Thani Hotel, highlights the thrift banking industry’s commitment to provide first-class products and services to their niche markets and sees that this convention will be the biggest one that they have had so far.