Tuesday, January 24, 2012

Micro and small firms need more bank financing

Published : Monday, January 23, 2012 00:00 Article Views : 276 Written
by : RAADEE S. SAUSA REPORTER

BANKS, particularly thrift, rural and cooperative banks. can provide
more financing support to micro, small and medium enterprises (MSMEs)
especially those located in the provinces.

An Asian Development Bank (ADB) SME financing survey indicated that the
universal and commercial banks (UKBs) remain as the primary source of
MSME funds, accounting for over 72 percent of the total amount lent to
the sector.

Niny Khor, an economist in the Economics and Research Department of the
ADB, said that UKBs released about P6 billion in 2010 to MSMEs in direct
loans, seven times higher than the average of thrift banks.

This even as thrift, rural and cooperative banks have managed to
increase their market share to 27 percent during the year, from just 16
percent more than a decade ago.

"There is still room to grow for SME financing, especially in the
micro-small segments," she said in a forum.

Khor said that while there was a significant increase in bank branches
in the last ten years, these were distributed unevenly across the
Philippines and most concentrated in the National Capital Region (Metro
Manila).

In 2007 alone, there were 2,689 banks that served MSMEs and people in
Metro Manila; 1,210 in Calabarzon (Calamba, Laguna, Batangas, Rizal and
Quezon or Region4A); and 885 in Central Luzon (Region 3).

These were much higher compared to only 24 banks in the Autonomous
Region and Muslim Mindanao, and 119 to 543 banks in the other regions.

According to the SME financing survey, banks lend to MSMEs because of
their perceived profitability, their existing relations with large
clients. and because of intense competition for retail customers and
from large corporations.

In the same forum, Khor cited the need to design better policies aimed
to enhance MSMEs in the country.

"Helping small business is also inclusive in gender. In our data, we
also found that about 60 percent of all Philippine enterprises are run
by women," she added.

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Metrobank unit looking for micro-lending partners

MONDAY, 23 JANUARY 2012 19:18 JUN VALLECERA / REPORTER

CHARTER Ping An Insurance Corp., the non-life insurance arm of the
Metropolitan Bank and Trust Co, sees microinsurance as a potentially
rewarding revenue source and is on the lookout for micro-lending
cooperatives as possible partners.

Charter Ping An Insurance President Melecio C. Mallilin bared the
expansion plan at a briefing where he anticipated growing the company's
profits by 33 percent to P200 million this year.

Mallilin said they have explored various models of engaging the
microinsurance business and understand they cannot market the product
directly because the costs involved are high.

"We decided that partnering with cooperatives is the best possible
model," he said.

There are at present 21 microfinance-engaged cooperative banks listed by
the Bangko Sentral ng Pilipinas (BSP), essentially cooperative lenders
with less than half of their portfolio dedicated to the business of
micro lending.

According to Mallilin, the insurance business observes the law of big
numbers, one in which the potential profit is a function of the extent
of its risk cover.

The more Charter Ping An and its microinsurance cooperative partners
extend risk cover on the greater the returns, he said.

Regulators acknowledge the Philippines is a top performer in the global
endeavor to cast a financially inclusive net for its citizens as a
weapon against poverty.

The BSP under then Gov. Rafael Carlos Buenaventura started the financial
inclusion program by making it attractive for financial institutions to
engage in micro lending which is now a P7-billion industry benefiting
close to a million poor Filipinos with collective savings of some P3.7
billion thus far.

The business of extending contingent risk cover on poor but
entrepreneurial Filipinos had been the next logical step in the
financial inclusion program which aims to address the financial services
needs of those who would only be ignored by the large banks and
financial institutions.

In micro insurance, premium payments can be as small as one peso up to
P19 a day and the benefit payout as large as P190,000 per policy.

These are arbitrary numbers believed suited to the contingent risk
requirements of low-income Filipinos who may pay premium of P30 up to
P570 a month, considered affordable rates by regulators.

By law, microinsurance products should be simple, with provisions
clearly stated as to the face amount of risk cover, the benefits therein
and the terms of the cover.

Commercial non-life insurers like Charter Ping An, mutual benefit
associations, cooperatives, pre-need companies and health maintenance
organizations or HMOs may engage in it with the permission of relevant
authorities such as the Insurance Commission, the Securities and
Exchange Commission, the Cooperatives Development Authority and the BSP.

New governance rules for banks OK’d

BY NEIL JEROME C. MORALES, Reporter

New governance rules OK'd

THE POLICY-making Monetary Board of the Bangko Sentral ng Pilipinas (BSP) has approved more stringent corporate governance rules for banks in a bid to create well-run financial institutions.

The move will ensure not only the adoption of sound banking practices but also increase the public's confidence in banks, BSP and banking officials said late last week.

"[On Friday] afternoon, the Monetary Board approved a new set of enhanced standards on corporate governance in banks as well as rules to strengthen the banks' compliance systems," BSP Governor Amando M. Tetangco, Jr. said in his speech during the annual Bankers' Night last Friday in Manila.

"Basically, it raises the governance standards and places them closer to the [Organisation for Economic Cooperation and Development] principles of good governance," Mr. Tetangco later explained in an interview.

The OECD Principles of Corporate Governance were first published in 1999 and were revised in 2004.

The OECD principles serve as benchmarks for governments and regulators in drawing up rules and regulations on corporate governance. The principles also provide guidance for stock exchanges, investors, and companies.

Good corporate governance, the OECD has pointed out, results in companies that are well run, and if they are well run, then they are most likely to attract investors who can come up with financing that can fuel more growth.

Moreover, well-run firms not only create confidence in themselves but also in the industry they are in.

The OECD principles are constantly evolving and the experience of the 2008-2009 financial crisis showed shortcomings in corporate governance, particularly in checks and balances. In 2010, the OECD recommended changes in remuneration, risk management, board practices and the exercise of shareholder rights.

The principles the Monetary Board approved are contained in a circular the BSP will release this week.

"Many of the reforms embodied in the new corporate governance circular is based on the proposals coming from OECD in 2010 as a response to the global financial crisis," BSP Deputy Governor Nestor A. Espenilla said in a separate interview.

He said the new rules, which were six months in the making, went through the banking industry, the Securities and Exchange Commission (SEC) and Institute of Corporate Directors for comment before they were finalized.

Under the new corporate governance guidelines, banks should allot 20% of board seats to independent directors instead of the fixed number of two. "Those with big boards need to have more independent directors," Mr. Espenilla said.

The BSP adopted the SEC's terms for independent directors, Mr. Espenilla said. Independent directors can serve for up to five consecutive years. There will be a two-year "cooling-off period" before they can be reappointed.

"We also tightened the board's oversight on conglomerates," Mr. Espenilla said.

He explained the board must monitor related-party transactions beyond loans to other transactions such as equity investments and sale of assets.

Banks will be ordered to set up "mandatory committees" aside from hire a chief risk officer. "There will be audit, risk oversight, governance committees [for the big banks]," Mr. Espenilla said.

But for smaller banks, only the audit committee is required.

Mr. Espenilla said the rules should be adopted by banks during their next stockholders' meetings.

Such efforts are part of strengthening the governance of banks and ensuring stable banking practices.

"This is positive to have good corporate governance in the banking sector. It is important for people to trust the bank so the good thing with governance is it makes things transparent," Aurelio R. Montinola III, president of the Bankers Association of the Philippines, said in an interview.

Mr. Montinola, also the preident and chief executive of the Bank of the Philippine Islands, said the rules will formalize the corporate governance efforts of some banks.

"Banks will be more focused on sound practices and that should translate to more sustainable profit opportunities," Mr. Espenilla said.

"They will also avoid unexpected losses from bad reputation or mismanagement," Mr. Espenilla added.

For Mr. Tetangco, the BSP will continue to stamp out unsafe and unsound banking practices and create a more vibrant and inclusive financial system."

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Foreign ownership in rural banks gets BSP backing

THE BANGKO Sentral ng Pilipinas (BSP) supports a Senate bill seeking to allow foreigners to own up to 40% of rural banks, a ranking central bank official said, noting the need to shore up investments in financial institutions serving the people in the countryside.

“We support the proposal,” BSP Deputy Governor Nestor A. Espenilla, Jr. said in a text message at the weekend, pertaining to Senate Bill (SB) 3089 filed by Sen. Edgardo J. Angara that seeks to amend Republic Act (RA) 7353 or the Rural Act of 1992.

The bill seeks to allow foreigners to “own, acquire, or purchase up to 40% of the voting stock of a rural bank.”

RA 7353 does not allow foreign ownership in rural banks.

Mr. Espenilla said the bill’s enactment will address the need for more investments in financial institutions servicing the unbanked and underbanked sectors in rural areas.

“It’s an opportunity for rural banks to take in strong partners that can provide additional capital for expansion as well as new technology and systems that will enhance competitiveness,” he said.

“From BSP standpoint, the potential diversification of ownership will also promote better corporate governance,” the central bank official added.

Amending RA 7353 is one of the priorities of the Senate banks, financial institutions and currencies committee chaired by Sen. Sergio R. Osmeña.

The House of Representatives has approved its own version, leaving it up to the Senate to act on the initiative.

Rural Bankers Association of the Philippines (RBAP) President Ian Eric S. Pama on Friday said his group supports the bill, saying its enactment will “level the playing field with with our commercial and thrift bank counterparts.”

RA 8791 or the General Banking Act of 2000 allows commercial and thrift banks to have foreign investors. -- Antonio Siegfrid O. Alegado

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Angara bill to allow foreign ownership in rural banks

A SENATE bill seeks to allow foreigners to own up to 40% of rural banks,
pointing out the need for investments to strengthen financial
institutions servicing the people in the countryside.

Sen. Edgardo J. Angara has filed Senate Bill (SB) 3089 that seeks to
amend Republic Act (RA) 7353 or the Rural Act of 1992.

"Non-Filipino citizens may own, acquire, or purchase up to 40% of the
voting stock of a rural bank," the bill read.

RA 7353 does not allow foreign ownership in rural banks.

"This policy deprives rural banks of foreign investment and effectively
restricts their activity and services," said Mr. Anagara in his bill's
explanatory note.

"The bill is expected to stimulate more lively activity among rural
banks by creating an environment that is beneficial to foreign
investors, local banking patrons and the national economy," he added.

Amending RA 7353 is one of the priorities of the Senate banks, financial
institutions and currencies committee chaired by Sen. Sergio R. Osmeña.

The House of Representatives has approved its own version, leaving it up
to the Senate to act on the initiative.

Rural Bankers Association of the Philippines (RBAP) President Ian Eric
S. Pama said his group supports the bill.

"RBAP fully supports the bill that will allow foreign equity in rural
banks," he told BusinessWorld in a text message on Friday.

Mr. Pama said the bill's enactment will "level the playing field with
our commercial and thrift bank counterparts."

RA 8791 or the General Banking Act of 2000 allows commercial and thrift
banks to have foreign investors.

"There will also be a transfer of technology and human resource
development," Mr. Pama added, "and an increase in loanable funds to the
countryside." -- Antonio Siegfrid O. Alegado

Friday, January 20, 2012

DA, LBP open P400-M loan window for rice farmers

(The Philippine Star) Updated January 20, 2012 12:00 AM Comments (0)

MANILA, Philippines - The Department of Agriculture (DA) and Land Bank
of the Philippines are forging an agreement to launch a P400-million
loan program for rice farmers in four pilot provinces.

Agriculture Secretary Proceso J. Alcala and LBP president and CEO Gilda
E. Pico are launching today the loan program as one of the credit
components of the Aquino administration's Food Staples Sufficiency
Program (FSSP).

The DA and LBP are contributing P200 million each to come up with the
initial P400 million loan program that will be initially implemented
this 2012 dry season in four major rice-producing provinces of Isabela,
Nueva Ecija, Iloilo and North Cotabato.

The loan program will initially serve farmers who are members of
irrigators' associations (IAs) of good standing.

A farmer can borrow a maximum of P42,000 per hectare per cropping, if
they will plant hybrid rice, and P37,000 per hectare if they will
produce inbred rice.

The initial P400 million will serve approximately 2,000 farmers per
province, for a total of 8,000 farmers.

To qualify, IA members must at least own one hectare or up to five
hectares of irrigated land which will be used as a "table collateral"
for their loan.

A "table collateral" means that the bank merely holds on to the
collateral, but does not register the collateral yet.

Other loan requirements include a farm plan and budget, purchase order
from the National Food Authority or National Agribusiness Corporation,
and a promissory note for the amount borrowed.

Applicants must have no existing palay production loan.

Borrowers will be charged 15 percent interest per annum, inclusive of
crop insurance, payable within six months.

Declining interest will be applied to borrowers who establish good
credit standing.

For the first two cropping cycles, the interest rate will be pegged at
15 percent which will be reduced by one percent every succeeding cycle,
starting from the third cycle up to the sixth cropping cycle.

Tuesday, January 17, 2012

BSP rule seen to boost local banks' credit rating

By Lawrence Agcaoili (The Philippine Star) Updated January 17, 2012
12:00 AM Comments (0)

MANILA, Philippines - New York-based Moody's Investors Service said the
decision of the Bangko Sentral ng Pilipinas (BSP) to implement a higher
capitalization requirement for universal and commercial banks under the
Basel III reforms starting 2014 would translate to higher credit rating
for Philippine banks.

In a report, Moody's analyst Simon Chen said the decision of the BSP to
impose tighter capital adequacy standards beginning 2014 instead of the
2018 schedule set by the Bank for International Settlements (BIS) would
be favorable to the credit rating of local banks.

"BSP's stricter guidelines are a proactive measure to ensure that
Philippine banks add to their loss absorption capacity and limit the
deterioration of their credit profiles amid adverse external
conditions," Chen stressed.

Compared with the international standards, he pointed out that BSP's
Basel III guidelines are stricter as it imposes a higher minimum capital
requirements of six percent common equity Tier 1 (CET1) ratio compared
to 4.5 percent by the BIS, a Tier 1 ratio of 7.5 percent versus six
percent, and a total capital ratio of 10 percent versus eight percent.

He added that the January 2014 deadline for the implementation of a 2.5
percent capital conservation buffer set by the BSP is faster tham the
January 2019 deadline set by the BIS.

"Setting the local benchmark above the international standard reflects
BSP's consistent drive to create stronger banks and improve banks'
ability to overcome systemic risks," the analyst said.

This early, Chen said Philippine banks are generally well capitalized by
international standards as the average CET1 ratio of its rated
Philippine banks' stood at 12 percent, Tier 1 ratio at 13 percent, and
total capital ratio at 16.9 percent as of September last year.

"Strong earnings and proactive capital management will help banks
maintain capital levels well above the higher minimums," Chen added.

The analyst pointed out that Metropolitan Bank and Trust Co.,
Development Bank of the Philippines, and Rizal Commercial Banking Corp.
would not find the higher capital requirements onerous as their
estimated CET1 ratios were well above the higher requirement at 11
percent as of end-September.

Furthermore, banks with aggressive growth plans including BDO Unibank
Inc. and United Coconut Planers Bank would be most affected by the
higher capital requirements as they have been growing their loan assets
more rapidly than the industry's average annual growth rate of 11
percent over the past three years.

"Higher capital requirements will force them to re-prioritize and scale
down their growth plans. Against a backdrop of rising net interest
margin pressures domestically, a likely consequence is the decline in
their loan and income growth, and, in turn, their ability to generate
capital internally," Chen warned.

The rating agency said UCPB would be more affected as its estimated CET1
ratio is below six percent as over 80 percent of its Tier 1 capital is
in capital notes issued as part of its rehabilitation plan.

"Unlike BDO, whose shares are actively traded on the local bourse, UCPB
has no capital market access because it is under rehabilitation and the
bulk of its shares are sequestered by the Philippine government," he said.

Likewise, the decision of the BSP to impose tighter capitalization
requirements starting 2014 would not affect the proposed merger of
Philippine National Bank and Allied Banking Corp. - both owned by
airline and tobacco magnate Lucio Tan - as their average CET 1 ratios
stood above 12 percent as of end-September.

Bankers Association of the Philippines (BAP) president Aurelio Montinola
III earlier said most banks operating in the country are ready to comply
with the tighter capitalization requirement under the Basel III.

"Directionally, the implementation of tighter rules is a good move as it
adheres moves together with enhancements of international standards," he
stressed.

Montinola, who is also president and chief executive officer of the
Ayala-controlled Bank of the Philippine Islands (BPI), said the
Philippines was also ahead in complying with the capitalization
requirements under Basel II.

Sunday, January 15, 2012

BSP’s ‘Paeng Awards’ launched to honor bank micro lenders

BSP's 'Paeng Awards' launched to honor bank micro lenders

MONDAY, 09 JANUARY 2012 19:44 JUN VALLECERA / REPORTER

THERE is now a nationwide recognition framework for banks and other
lending units that engage in micro loans, their efforts to be cited as
exemplary in a field that began almost as an outreach program but which
has now become a P7-billion industry benefiting more than a million
borrowers.
The Paeng Awards, "a nationwide awards program recognizing outstanding
microfinance institutions who, as a result of their pioneering
initiatives, have been able to carry out exemplary work worthy of
emulation, having been able to create positive changes in a community,
sector or village that otherwise would not have occurred," the Bangko
Sentral ng Pilipinas (BSP) said in a statement released on Monday.

The annual event will be launched today, Tuesday, at the BSP's Executive
Business Center along Roxas Blvd. in Manila to honor Rafael Carlos B.
Buenaventura, who started it all in 1999 when microfinance was more a
buzzword than an actual program that would change the lives of its
beneficiaries.

Buenaventura, "Paeng" to constituents and friends, served as BSP
governor from 1999 to 2005, and was perhaps its most-loved chief executive.

He pursued the microfinance program early on in his term and pushed for
its extensive adoption, recognizing this could be a powerful
anti-poverty tool.

"This is the first major undertaking of the Rafael B. Buenaventura
Microfinance Resource Center Foundation Inc., otherwise known as the RBB
Foundation. The foundation deemed it appropriate to highlight the role
of pioneers in the development of the microfinance industry," the BSP said.

The different microfinance councils, banking associations and other
foundation partners were to nominate microfinance institutions the
winner of which will be announced late in November coinciding with the
death anniversary of the former BSP governor.

At the launching, BSP Gov. Amando M. Tetangco Jr. will also sign a
memorandum of agreement with Microfinance Data Sharing System or MiDAS,
the first-ever ratings unit looking over the creditworthiness of the
various microfinance units now in operation, among other functions.

MiDAs is an initiative of seven of the largest microfinance institutions
whose aim is to address the rising problems of over-indebtedness, ensure
client protection and maintain a high degree of quality of the loan
portfolios of micro-finance institutions.

Bankers back BSP plan to tighten capital requirement

By Lawrence Agcaoili, The Philippine Star

Posted at 01/15/2012 4:13 PM | Updated as of 01/15/2012 4:13 PM

MANILA, Philippines - Bankers welcomed the plan of the Bangko Sentral ng
Pilipinas (BSP) to impose tighter capitalization requirements ahead of
schedule compared to international standards, but warned the program
should be adopted with caution.

Aurelio Montinola III, president of the Bankers Association of the
Philippines (BAP), said in an interview with reporters that most banks
operating in the country are ready to comply with the tighter
capitalization requirement under the Basel III global standards.

"Directionally, the implementation of tighter rules is a good move as it
adheres moves together with enhancements of international standards," he
stressed.

Montinola, who is also president and chief executive officer of the
Ayala-controlled Bank of the Philippine Islands (BPI), said the
Philippines is also ahead in complying with the capitalization
requirements under Basel II.

However, he pointed out that the plan should be implemented with prudence.

The capital adequacy ratio (CAR) is a ratio of a bank's capital to its
risk and the central bank tracks this indicator to ensure that banks
have the capability to absorb a reasonable amount of loss and that they
are complying with their statutory capital requirements.

Earlier, BSP Deputy Governor Nestor Espenilla Jr. said the central bank
has issued a memorandum containing the implementation plans for Basel
III standards on minimum capital requirement approved by the Monetary
Board last Jan. 5.

The proposed roadmap contains the capital adequacy standards under Basel
III that would be imposed on universal and commercial banks starting
January 2014.

Espenilla said the move recognizes the present strong capital position
of the banking industry while providing for a reasonable transition period.

"Now is the perfect time to introduce reforms. Our banks are doing
pretty well and they could further shore up their capitalization," he
stressed.

According to him, the BSP has previously set its Basel implementation
standard higher than the international norm with a capital adequacy
ratio of 10 percent versus the international norm of eight percent.

By adopting the capital adequacy standards by January 2014, the BSP
official said the regulator effectively accelerates the implementation
of the Basel III accord for universal and commercial banks including
their subsidiary banks, and quasi-banks.

Basel III introduces a complex package of reforms designed to improve
the ability of bank capital to absorb losses, extend the coverage of
financial risks, and have stronger firewalls against periods of stress.

The Basel Committee on Banking Supervision outlined a staggered
implementation of Basel III stretching through the end of 2018 to allow
internationally-active banks time to raise capital organically.

As part of the reforms, the bank regulator is set to implement a capital
conservation buffer of 2.5 percent above the regulatory minimum while
the common equity Tier 1 ratio would be set at a regulatory minimum of
six percent higher than the international standard of 4.5 percent and
the total Tier 1 ratio would be at 7.5 percent that is higher than the
international treshhold of six percent.

The Monetary Board also approved further streamlining of the Tier 1 and
Tier 2 limits and the handling of deductions against Common Equity Tier
1 that were not covered by BSP Circular 709 issued December 2010.

The circular that amended the existing risk-based capital adequacy
framework by adopting the minimum conditions of Basel III for inclusion
of non-common equity regulatory capital instruments in qualifying
capital would be derecognized starting 2014.

The BSP would hold consultative discussions with players in the banking
industry in the first quarter of the year after which the guidelines
would be finalized in the third quarter.

This would pave the way for a one-year parallel run of the old and new
guidelines in 2013 before taking into effect starting Jan. 1, 2014.

Montinola said the timetable would give banks enough time to comply with
the tighter capitalization requirements.

Latest data showed that the CAR of the banking system remained healthy
at 16.48 percent on a solo basis and 17.39 percent on a consolidated
basis as of end-March last year from the revised end-December 2010 level
of 15.99 percent and 16.93 percent despite the tensions in the Middle
East and North African states as well as the sovereign debt crisis in
Europe.

Data released by the BSP showed the CAR of universal and commercial
banks improved to 16.42 percent as of end-March from 16.23 percent as of
end-December 2010 on a solo basis and to 17.42 percent from 17.27
percent on a consolidated basis. Thrift banks improved to 16.11 percent
from 12.62 percent rural banks improved to 18.86 percent from 18.2
percent; and cooperative banks increased to 16 percent from 17.13 percent.

BSP Issues Basel 3 Memorandum On Banks' Capital Base Standards

By LEE C. CHIPONGIAN

January 14, 2012, 11:23pm

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has issued a
memorandum incorporating Basel 3 principles on capital base that the BSP
will adopt in two years' time, ahead of schedule.

BSP Deputy Governor Nestor A. Espenilla Jr. in a memo letter said banks
should begin preliminary assessments on the potential impact of the
changes on capital base categorization under Basel 3.

The BSP issued Memorandum M-2012-002 in a resolution dated January 5 and
released January 10 which incorporated the capital base changes as
detailed in the existing regulation under Circular No. 538 of 2006.

Basel 3 standards, which the BSP will adopt as part of its risk-based
adequacy framework for universal and commercial banks includes adoption
of a new categorization of capital base such as tier 1 which will now be
common equity tier 1 (CET1) and the elimination of tier 2 capital.

In the meantime the memo said the existing limits on eligible hybrid
tier 1, lower tier and tier 2 capital will be removed while the BSP will
also adopt the regulatory deductions in Basel 3 such as deductions taken
out of CET1 capital in full as against the current practice of deducting
the same from tier 1 and tier 2 on a 50:50 basis.

The minimum capital ratio for CET1 is six percent, 7.5 percent for tier
1, and 2.5 percent for the capital conservation buffer. The minimum
capital adequacy ratio will still be 10 percent. Under Basel 3, the
minimum capital CET1 required ratio is 4.5 percent while for tier 1 it
is six percent. The CAR minimum is eight percent.

Espenilla said the draft of the Basel 3 implementing guidelines of the
BSP will be circulated this quarter for banks' comments and inputs. "The
final guidelines are intended to be issued by the third quarter of
2012," he said in the memo.

He added that this allow a one year parallel run that will allow banks
to transition between Basel 2 and Basel 3. "The BSP will release further
implementation plans and guidelines later (this year) covering other
aspects of Basel 3."

The new BSP guidelines, which will be released not later than April this
year, will adopt Basel 3 standards on the areas of capital and liquidity
in order to address "weaknesses brought to light by the global financial
crisis," according to a BSP report.

Saturday, January 14, 2012

Smart Partners With Bayad Center

By EMMIE V. ABADILLA

January 13, 2012, 11:53pm

MANILA, Philippines — Soon, people will have 200 new channels to
withdraw and deposit money in a Smart Money account, the world's first
reloadable payment card linked to a mobile phone.

Smart Communications, Inc. (Smart) recently teamed up with CIS Bayad
Center, Inc., the country's pioneer in over-the-counter multiple bills
payment collection business, to enable all Bayad Center branches all
over the country to become "money-in, money-out" (MIMO) centers.

This expands the MIMO network of Smart Money, which already includes
over 4,000 Smart Money Centers in every corner of the country, and 100
Smart Stores.

Now, Smart Money account holders may proceed to the nearest Bayad Center
to load funds into their Smart Money account. Upon loading, account
holders can use their Smart Money as an "electronic wallet."

Benefits include the convenience of peer-to-peer mobile cash transfers
or buying airtime for their own or their loved-ones' Smart cellphones,
with just a few clicks on their handset, anytime, anywhere.

They may also use the Smart Money card like an ATM card to pay for goods
and services from partner MasterCard establishments worldwide and
online, or withdraw from over 10,000 ATMS in the country and Cirrus ATMs
around the world.

Smart Money account holders who need to encash funds in their account,
particularly those who receive remittance from overseas, may also do so
at any Bayad Center.

This is possible because Filipinos all over the world can make cash
transfers to Smart Money accounts in the Philippines. They can do this
through any of over 95,000 international money transfer locations,
including participating locations of The Western Union Company® and
MoneyGram International in the United States, Malaysia, and in Hong Kong.

Once the funds are sent, the Philippine-based beneficiary receives a
free SMS notification about the fund transfer. They have the option to
encash the fund transfer from any of Bayad Center's branches, or let the
money stay in the Smart Money account to electronically pay for goods
and services with just a few clicks on their mobile phone.

Smart Money is issued in the Philippines by BDO Unibank, Inc. To find
the nearest Bayad Center, users can go to www.bayadcenter.com.

US Treasury official visits mobile banking site in Quezon City

January 13, 2012, 12:18am

MANILA, Philippines — US Deputy Secretary of the Treasury Neal S. Wolin
visited Wednesday a mobile banking site in Quezon City and discussed
ways to expand access of lower-income "unbanked" citizens to financial
services.

Wolin visited Gamot Publiko, an agent of BPI Globe BanKO, Incorporated
(BanKO), and discussed how the Philippine government and private sector
are working together to expand access to financial services using mobile
communications technology.

During the visit, Wolin spoke with BanKO mobile banking clients about
the positive impact of this innovative service.

Gamot Publiko is located in Quezon City across from Kamuning Market and
near Delgado Clinic.

The two-day visit of Wolin in Manila highlighted the efforts of the US
and Philippine governments to promote broad-based economic growth, which
is a key objective of the Partnership for Growth program launched by the
two nations in November last year.

A joint venture between the Bank of the Philippine Islands, the Ayala
Corporation, and Globe Telecom, BanKO offers financial empowerment to
individuals who otherwise would not have access to credit and savings
services using mobile technology.

A study revealed that an estimated 85 percent of Filipinos have a mobile
phone, but only 26 percent have access to formal financial services like
credit and savings.

Wolin is the Deputy Secretary of the Department of the Treasury. Prior
to this, he served in the Obama White House as Deputy Assistant to the
President and Deputy Counsel to the President for Economic Policy.

Before joining the Obama Administration, Wolin was the President and
Chief Operating Officer of the property & casualty insurance companies
of The Hartford Financial Services Group, Incorporated.

He served as Executive Vice President and General Counsel of The
Hartford from 2001 to 2007 and oversaw the company's law, government
affairs, communications, marketing and tax functions. (CSL)

Friday, January 13, 2012

Using biomass energy may generate more jobs, says Aquino

AMITA O. LEGASPI, GMA News January 12, 2012 8:38pm

Some 89,000 jobs may be generated by increased use of biomass energy,
President Benigno Aquino III said Thursday.

The President expects the use of biomass energy to increase from 39
megawatts (MW) to more than 300 megawatts by 2015.

The increased use of biomass energy has a multiplier effect, because
people with sources of income "become empowered consumers who can
stimulate local economies and create even more jobs," Aquino said in his
speech at the 1st Philippine BioEnergy Conference.

"The effects of advancing the biomass sector will also reach close to
577,000 farm families who can benefit, for example, by gaining
additional income from the sale of agriwaste or forest residues that can
be used in the development of biomass resources," the President noted.

Last year saw major developments in the Department of Energy's
alternative fuels program, part of which is the biofuels program that
promotes two types of biofuels for transport — biodiesel and bioethanol.

The President said with nine coco biodiesel plants operating in the
country, the Philippines has a production capacity of more than 390
million liters as of 2011.

"This means that we are capable of producing about 60 percent more than
the local demand at two percent blend which provides us with an
opportunity to take advantage of the growing worldwide demand for
biodiesel and, at the same time, revitalize our ailing coconut
industry," Aquino added.

He noted that nearly 39 percent of the country's energy requirements
comes from renewable sources such as hydropower, geothermal, solar,
wind, and biomass.

Aquino said the renewable energy program allows the country to
contribute to the worldwide effort to mitigate the impact of climate change.

"After all, the Philippines is one of the countries most vulnerable to
its effects and we are hoping that the rest of the world would join us
in proactively responding to what is perhaps the most pressing challenge
of our age," he said.

"Our challenge lies in harmonizing our national goals with the goals of
individuals like yourselves who share the belief that we can no longer
go on using the energy the way we used to," he said.

He also urged them to ensure that the joint efforts redound to the
benefit of the people.

"Exploring alternative energy options is a noble endeavor. Our country
believes that it can also be economically viable and can contribute to
the alleviation especially in our rural areas and move us closer to our
goals at equitable progress and inclusive growth," he said.

"If we are able to act upon the knowledge we gather and share in
conferences like the one we are having today, we can protect ourselves
from swings in the global commodities market while, at the same time,
ensuring a clean, safe planet for future generations," he added. — VS,
GMA News

Saturday, January 7, 2012

House approves bill allowing foreign equity in rural banks

Finally, after a long wait - things are moving. House approves bill
allowing foreign equity in rural banks

January 5, 2012 1:13pm

The House of Representatives passed on third and final reading a bill
allowing foreign equity into the rural banking system.

In a statement Thursday, the House of Representatives said House Bill
5360 seeks to amend Section 4 of Republic Act 7353 or the Rural Banks
Act of 1992 to open new source of equity infusion for rural banks,
allowing non-Philippine citizens to become members of the board of
directors.

Under Section 4 of RA7353, only Philippines citizens should own and hold
directly and indirectly the capital stock of rural banks.

"With the restriction, rural banks remain the only category of domestic
banks that is not allowed any foreign equity," said Rep. Sergio Apostol
(2nd District, Leyte), who chair's the House committee on banks and
financial intermediaries.

"The State recognizes the need to promote comprehensive rural
development to attain a more equitable distribution of opportunities,
income and wealth, a sustained increase in the amount of goods and
services produced by the nation for the benefit of the people," Apostol
noted.

Government helps and encourages the establishment of a rural banking
system design to make credit available and accessible in rural areas at
reasonable terms, Apostol noted.

With House Bill 5360, non-Filipinos may buy and own up to 40 percent of
a rural bank's authorized capital stock.

"The bill provides that non-Filipino citizens may become members of the
board of directors of a rural bank to the extent of their foreign
participation in the equity of the bank," said Apostol.

Rep. Pedro Romualdo (Lone District, Camiguin), who authored the bill,
said foreign investment in the rural banking sector should pave the way
for a sustained competitive and vigorous banking system.

According to the Camiguin representative, "the rural bank industry plays
a pivotal role in meeting and sustaining the needs of various sectors of
the local economy such as the business sector, agriculture and fisheries
sector, micro-enterprises and small [businesses]."

"The banking industry is one of the engines of development in the
country, but most universal and top banks are operating in highly
urbanized areas and in economically viable towns to the prejudice of
depressed areas," Romualdo noted.

"The amendment in the rural banking policy is a positive step towards a
better banking environment, allowing the rural banks to expand their
services, modernize their facilities and hire highly competent personnel
to handle their operations and services," Romualdo added.

House Bill 5360 tasks the Bangko Sentral ng Pilipinas to prescribe the
necessary rules and regulations on the amendments of the Rural Bank Act,
in consultation with various stakeholders, and distribute the entry of
foreign equity into the rural banking system. — CMA/VS, GMA News

Thursday, January 5, 2012

BSP raises ceiling on micro-credit

THE BANGKO Sentral ng Pilipinas (BSP) has raised the existing cap on microfinance loans to allow banks to provide more financing to clients.

In Circular No. 744 dated Dec. 28 and posted on its Web site yesterday, the BSP added “microenterprise loan plus” or “microfinance plus” to the types of microfinance loans that banks may extend to their clients.

Whereas microfinance loans are capped at P150,000, the microenterprise loan plus or microfinance plus are capped at double that or at P300,000.

“We created the microfinance plus concept in recognition of the success of a growing number of microenterpreneurs,” said BSP Deputy Gov. Nestor A. Espenilla, Jr. in a text message yesterday. “They need bigger loans.”

Pia Roman-Tayag of the BSP’s Inclusive Finance Advocacy Staff, said the P300,000 limit is still less than what traditional banks offer.

She said those who need the bigger loans have been “largely unserved.”

“The borrowers that will qualify as recipients of Microfinance Plus shall have a track record of at least two microfinance loan cycles in the P50,000 to P150,000 range, demonstrating the success of the business,” Circular 744 read.

These borrowers should also demonstrate their increasing demand for loans and increased capacity to pay for these.

Furthermore, the borrowers should have savings accounts.

Circular 744 will take effect 15 days after its publication in a newspaper.

The circular amends Annex A of Circular 694, series of 2010, which defined microfinance and microfinance loans, and details the features of microfinance loans, among others.

A microfinance loan is a “small loan granted to basic sectors, on the basis of the borrower’s cash flow, and other loans granted to the poor and low-income households to enable them to raise their income levels and improve their living standards,” the annex read.

Aside from microfinance loans, banks may also extend housing microfinance loans and micro-agri loans.

A housing microfinance loan, capped at P300,000, may be used for home improvements, house construction, and house and/or lot acquisition.

A micro-agri loan, meanwhile, is a “short-term loan granted for farming activities, agribusiness, and agri-related fixed assets, among others…”
Microfinance loans are usually unsecured and may require the guarantee of one or more persons.

The BSP said that as of June 2011, banks with microfinance operations have outstanding loans to over 963,000 borrowers reaching over P7 Billion, or an average of P7,260.00 per microentrepreneur.

--  --------------------------------------------- CARLOS ANI - SEEDFINANCE Corporation - http://www.seedfinance.net Email: carlosani@seedfinance.net  Landline Phones: +63495010127  and +63495762924    Cellphone: +639152919580  DEVJOBS - http://www.devjobsmail.com  PHILDEVFINANCE - http://phildevfinance.posterous.com   CONSULTING - http://www.carlosani.com  My News Clippings - http://www.myclipps.posterous.com  Family website:  http://www.anifamily.net ------------------------------------------

Tuesday, January 3, 2012

The financial power of the poor

By Washington Sycip

Today is the first working day of the New Year, that time of the year
when we try to come up with resolutions to improve our careers,
relationships or attitudes. I find it an opportune occasion to recommend
a New Year's resolution for the business community -- that in 2012, we
all step up our personal efforts to help reduce poverty in our country!

In last week's column, I discussed how investing in education can make a
profound difference in the progress of the nation. Another area that
needs attention is the cost of credit to the poor. Along with education
and public health, this is another advocacy that I ardently espouse.

My father, Albino Z. SyCip, co-founded China Bank and had a reputation
for extending loans to young and penniless entrepreneurs. He must have
been a good judge of character as he would sometimes just rely on the
borrower's word of honor. John Gokongwei and Jobo Fernandez were both
recipients of my father's good will. However, bankers in general would
not risk lending to the poor who have no collateral whatsoever; it just
does not make business sense. Or does it?

In the last few years, microfinance has been gaining ground in the
Philippines as a viable source of credit for the poor. The Bangko
Sentral ng Pilipinas (BSP) defines microfinance to include "financial
services such as deposits, loans, payment services, money transfers and
insurance products to the poor and low-income households and their
microenterprises." It should be emphasized that microfinance is not
engaged in charity, subsidized credit or dole outs nor is it the only
remedy for poverty.

In the past dozen years, microfinance activities in the Philippines have
greatly increased. In 2010, total loans amounted to USD632.1 million
with 3 million active borrowers. Deposits in 2010 totaled USD454.4
million with 3.7 million borrowers. What do these numbers tell us?

Generally, they speak positively about the capacity of the poor to save
and repay their debts when they are given access to credit. The figures
also suggest that microfinance institutions (MFIs) -- rural and thrift
banks, nongovernment organizations or NGOs, and cooperatives -- can be
profitable institutions.

The key to microfinance is in small, unsecured loans (as low as Php5,
000) with very frequent
amortizations also in small amounts. The risk of an unsecured loan is
built into the price. Most MFIs would charge from 2.5% to 3.5% interest
per month which, to some may be considered high, but this is so much
lower than the outrageous 20% interest rate charged by the informal
"5-6" lenders.

However, I believe that the real secret behind the success of MFIs is
the credit discipline instilled in their clients. MFIs normally meet
their clients (mostly women) every week when they pay their loans,
report on their business, and bond with their fellow borrowers. The
typical collection rate for good MFIs is about 98% while the industry
standard is at 94%. This clearly demonstrates -- against conventional
wisdom -- that the poor have integrity. That given the opportunity, they
can rise above their misfortune. Most of them do not need charity; what
they need is our confidence in them.

Besides the soundness of the MFI business model, the more essential
dimension of microfinance is its tremendous impact on the poor. A Php5,
000 loan may seem small, but to a family of five (the average Filipino
family), it means a potential daily income of Php200-300 per day that
the mother earns from her sari-sari store. This can spell the difference
between having three square meals a day instead of the typical one or two.

I will continue to incessantly promote microfinance in the Philippines
as a means of alleviating poverty. The late President Cory Aquino was a
leading advocate of MFIs through her involvement with the PinoyMe
Foundation. I have also been working closely with Dr. Aris Alip, founder
and president of the Center for Agriculture and Rural Development (CARD)
Inc. (CARD NGO).

CARD NGO started in 1986 as an NGO and has evolved into an outstanding
MFI. Several organizations were set up subsequently to support CARD NGO.
These organizations, together with CARD NGO, are collectively called
CARD Mutually Reinforcing Institutions (CARD MRI). CARD MRI's major
organizations are CARD NGO, CARD Bank, Inc., CARD Mutual Benefit
Association, Inc., CARD SME Bank and CARD MRI Development Institute (CMDI).

CARD MRI's microfinance program comprises credit programs (providing
loans to small businesses), Flexible Capital Build Up (a savings
mobilization program), micro insurance, Credit with Education (training
modules on business, insurance, etc.) and a Microfinance and Health
Protection Program.

As of November 2011, CARD MRI already had over 1, 300 offices all over
the Philippines, 1.4 million active clients and 7.1 million insured
persons. As of same date, MRI boasts a total loan portfolio of Php5.9
billion and a remarkable repayment rate of 99.43% while total
deposits/capital buildup amounted to Php4.1 billion. Its total assets
are at Php11.7 billion and total equity/fund balance is at Php2.6 billion.

On my 90th birthday last June, an American investor and philanthropist,
Paul Kazarian, generously donated a fund to expand services in basic
education and microfinance. The Kazarian Foundation also set aside a
second fund for research, education, and training on microfinance to see
how their studies can benefit our microfinance industry and to assess
how CARD MRI can also help other microfinance organizations abroad.

MFIs like CARD MRI have been contributing to the growth of microfinance
in the country. Just last October, a study conducted by the Economist
Intelligence Unit ranked the Philippines second overall in having a good
microfinance environment (against 54 other developing economies around
the world). The Philippine Government was cited for encouraging the
"establishment of microfinance banks and the commercialization of the
microfinance sector, and has specifically promoted the upgrading of NGOs."

This is good news indeed, but the real challenge for all of us is how --
as a society -- we can increase the number of those who are able to
expand their microenterprises and become integrated into the mainstream
economy. Let us not belittle the financial power of the poor. Their
absolute number could make a significant improvement in our economy. To
my mind, the real value of microfinance is that it gives hope to many in
the midst of despair.

Let me sum up my thoughts on microfinance with this Chinese saying:
"Flowers leave some of their fragrance in the hand that bestows them."

Lending a hand to the poor and encouraging entrepreneurship though
microfinance are not just a good deeds; they have an enduring effect on
their lives. Perhaps, this can be your New Year's resolution in 2012.
Guest Columnist Washington SyCip is a retired Partner and the Founder of
SGV & Co.

This article is for general information only and is not a substitute for
professional advice where the facts and circumstances warrant. The views
and opinion expressed above are those of the author and do not
necessarily represent the views of SGV & Co.

Monday, January 2, 2012

BSP okays new microfinance loan

By LEE C. CHIPONGIAN

January 2, 2012, 4:01am

MANILA, Philippines — The Monetary Board of the Bangko Sentral ng
Pilipinas (BSP) has approved a new microfinance loan called
"microfinance plus" that microenterprises and small businesses can avail
of to fund their expanding operations.

The BSP issued Circular No. 744, which was approved last December 28 and
signed by BSP Governor Amando M. Tetangco Jr., amended Circular No. 694
to include the microfinance plus in the list of microfinance loan
categories.

Under revised rules but similar to other microfinance loan products, a
borrower can take out a maximum of P300,000 to fund his growing
business. This is technically a second loan for borrowers that could
show sustained capacity to pay.

Circular No. 744 states, "the borrowers that will qualify will have a
track record of at least two microfinance loan cycles in the P50,000 to
P150,000 range demonstrating the success of the business, its increasing
credit demand and subsequent increased capacity to pay."

Microfinance, generally, has originally intended to mean financing for
microenterprises or small livelihood activities but the BSP has since
expanded the loan products to include microfinance housing, micro-agri
loans, micro-insurance and micro-deposits.

For all loans, it starts with P150,000 up to a maximum of P300,000.
Currently, there are 202 microfinance institutions operating in the
Philippines.

By the end of the third quarter this year, microfinance loans have
increased to P7.3 billion from end-December's total of P6.5 billion.

Tetangco in a previous interview said they continue to enhance policies
to promote, grow and increase microfinance business in the country,
which was one of the most important pro-poor mandates of the General
Banking Law of 2000.

He said the banking system is much more inclusive today with almost
979,353 microfinance borrowers with loans amounting to P7.53 billion.
This was higher than end-2010's 932,622 borrowers.