PHILDEVFINANCE (old news)

Monday, May 30, 2011

Corporate governance gets SEC priority

Corporate governance gets SEC priority

By JAMES A. LOYOLA
May 30, 2011, 12:30am

MANILA, Philippines — The Securities and Exchange Commission’s (SEC) new chairperson Teresita Herbosa is considering new measures that will “change the game” in the commission’s thrust to protect shareholders by making firms subscribe to higher standards of corporate governance.

In her keynote address during the Institute of Corporate Directors’ 2010 Corporate Governance Award, Herbosa said her plans will extend beyond the usual measures to promote and protect stockholder rights, competitiveness, transparency, and accountability.

“Corporation which have diligently and faithfully complied with the standards of corporate governance such as the platinum awardees should be given priority to SEC services,” Herbosa said. She said these firms are entitled to a “fast lane” in the processing and review of their applications and filings with the SEC.

“We hope that with this incentive, more corporations will aspire for platinum status,” Herbosa said.

Platinum awardees are firms that have received Gold awards for three years in a row. The Gold award is given to companies that have received a scorecard rating of 95 percent or higher by the ICD.

Aside from this incentive, Herbosa said the SEC will change its approach “from mere persuasion to stricter and more vigorous enforcement” to ensure that board directors are faithful to their responsibilities.

She noted that “the faithful discharge of the duties of a director is dependent largely on qualifications. It is imperative, therefore, for the SEC to closely review and evaluate the qualifications of persons elected to the position of director and, if justified, permanently or temporarily disqualify those not deserving to sit as such.”

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Philippines as solar energy hub

Philippines as solar energy hub

By BERNIE CAHILES-MAGKILAT
May 30, 2011, 12:43am

MANILA, Philippines — Solar energy experts will tackle the possibility of making the Philippines a manufacturing hub for solar energy production, its challenges and strategies.

These issues would be addressed by solar energy experts who will gather at the first ever Philippine Solar Photovoltaic Summit during the Philippine Semiconductor and Electronics Convention and Exhibition, which will run from June 1-3, 2011 at the SMX Convention Center at the Mall of Asia Complex in Pasay City.

The three-day event is being hosted by the Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) and the Philippine Solar Power Alliance (PSPA). The German Philippine Chamber of Commerce and Industries also supports the event.

Invited participants are managers, engineers, CEOs of manufacturing, generation and supplier companies engaged in the solar energy business. Also invited are government bodies/legislators, research and funding institutions, chambers of commerce, the media and other parties interested in the development of solar energy in the Philippines and in the region

The 2011 Philippine Solar/PV Summit will be the first to bring together government, businesses, funding institutions, research agencies, and most of all, manufacturers, suppliers, and power generation companies engaged in wafer slicing, cell fab, panel manufacturing, systems integration and renewable energy solutions.

At the same time, it will provide a venue for learning about global trends and best practices from countries with long and proven experience in the renewable energy/solar power sectors; and acquiring knowledge on how these solar companies and governments set out to establish a solar energy industry, met challenges, and expanded renewable energy in their regions.

Highlighting the summit is the CEO Forum/Roundtable Discussion that will tackle the topic: ‘Making the Philippines a solar manufacturing hub: Strategies & Challenges.’

The summit will also feature speakers from various countries representing Asia, Europe, and North America.

Weather change led to Batangas fishkill, says BFAR

Weather change led to Batangas fishkill, says BFAR
By Marrah Erika Lesaba
Inquirer Southern Luzon
5:17 am | Monday, May 30th, 2011

FISHKILL Workers bring to port tons of milkfish (“bangus”) killed in the Taal Lake in Batangas following a drop in temperature. ARNOLD ALMACEN

BATANGAS CITY—A sudden drop in temperature that lowered oxygen level at the onset of the rainy season in Taal Lake has killed 752.6 metric tons of fish worth P57.226 million since Friday, officials said on Sunday.

The fishkill was the worst climate change disaster to hit Batangas, according to Rosario del Mundo of the Bureau of Fisheries and Aquatic Resources (BFAR) office in the province.

The loss at Talisay town’s side of the lake involved 375 MT of bangus (milkfish); 160 MT of tilapia, 50 MT of bangus and 1.6 MT of bangus fingerlings in Laurel town; 160 MT tilapia in Agoncillo; and 12 MT of bangus in San Nicolas.
Del Mundo said she first received the report of a decrease in oxygen level at the lake on Thursday, and the cultured fish began dying by the next day.
“If the dissolved oxygen drops and it rains, the fish cannot breathe and it dies,” she said.

Schools of fish were seen swimming in circles before they floated dead to the surface in huge numbers. The deaths have occurred in the past at summer’s end, but in much smaller numbers, officials said.

Biya, a fish species that only thrives in the lake, and crabs also died.
Del Mundo said the loss could still go higher because some fish cage owners, mostly Chinese, were still determining damage.

Talisay Mayor Zenaida Mendoza yesterday said she had ordered the dead milkfish, unfit for eating, buried under a mixture of soil and lime to dispel the foul odor in an isolated and upland area of Barangay Sampaloc.
Mendoza said that Gov. Vilma Santos-Recto sent a backhoe to help in the disposal, hampered by heavy rains.

Aquaculture is a multimillion-peso enterprise in Batangas, with at least 6,000 fish cages dotting the Taal Lake. With a report from AP

Sunday, May 29, 2011

PHL ready for mobile-banking takeoff

PHL ready for mobile-banking takeoff

Monday, 23 May 2011 19:24 Jun Vallecera / Reporter

MOBILE-phone use in the Philippines as platform for obtaining financial services is considered the best among countries with the strongest market as well as institutional mechanisms in place for such services, the World Economic Forum (WEF) said.

Prepaid mobile phone users in the Philippines number more or less 60 million based on estimates supplied separately by the global payments services firm Visa, and its potential as delivery platform for financial services is considered very high.

But while the Philippines tops four other countries in terms of high readiness in the use of mobile phones, the WEF said relatively few people in developing markets as the Philippines actually use them.

“Only a few smaller countries have seen adoption of mobile-financial services reach more than 10 percent of the adult population. Services deployed at scale in these countries are focused primarily on payments,” the WEF said in a paper titled “The Mobile Financial Services Development Report for 2011.”

A copy of the report was made available by the Bangko Sentral ng Pilipinas, the central bank being a strong advocate for the use of mobile phones as a tool in its financial-inclusion program.

Financial inclusion, as the term suggests, aims to empower even the financially savvy poor who are often excluded from the use of the various financial services readily available to most everyone else.

According to the WEF, the Philippines leads such countries as India, Brazil and Pakistan whose market and institutional environments for mobile phones as financial-services platform is accorded the highest state of readiness.

But it also said the services deployed in the cited countries are focused primarily on payments systems rather on the whole gamut of financial services.

Also, mobile phone use for financial services often results from lack of alternatives and often dictates their initial adoption.

“Countries with currently high mobile-finance adoption rates have relatively low levels of access to traditional financial services. While proportional regulatory frameworks and competitive markets are highly important for the long-term development of mobile financial services, they have not been as important as the sheer lack of alternatives in driving initial adoption,” WEF said.

It also said countries that have been most ready to adopt mobile phone technology as financial services platform may not be the most ready for the development of a portfolio of services.

“The institutional environment [which includes regulatory proportionality and consumer protection] and market environment [spanning market competitiveness and the presence of certain key catalysts] together can be considered an indicator of ‘readiness’ for the long-term development of mobile-financial services. A number of countries identified as ‘most ready’ have not yet achieved significant scale but may be poised to do so across a portfolio of services,” WEF said.

“A well-developed agent network is a threshold requirement for achieving scale. A dense and capable agent network is a necessary precondition for achieving scale. In addition to providing vital cash-in, cash-out services and enrolling new customers they also can be important for building trust for first-time users of formal financial services. The analysis confirms that countries that have achieved high adoption levels distinguish themselves from other countries by the density of their agent network,” it said.

LandBank loans up 30% to P160.8B in Q1

LandBank loans up 30% to P160.8B in Q1

Sunday, 22 May 2011 19:26 Jennifer A. Ng / Reporter

STATE-RUN Land Bank of the Philippines (LandBank) disclosed that its loans to its priority sectors, which include farmers and fisherfolk, grew by almost 30 percent to P160.8 billion from January to March.

LandBank president and chief executive officer Gilda E. Pico noted that the bank’s loans to priority sectors comprised 68 percent of the bank’s total regular loan portfolio, or P236.6 billion.

“The sustained improvement in the bank’s loan portfolio for its priority sectors attests to our commitment to intensify support to key players and partners in countryside development,” said Pico in a statement.

Figures from LandBank showed that its outstanding loans to small farmers and fisherfolk grew to P21.3 billion as of the first quarter from P16.9 billion in the same period last year.

Loans for agribusiness went up to P23.4 billion from P20.1 billion last year, while loans for micro enterprises and small and medium enterprises (SMEs) increased by P2.4 billion to P21.5 billion.

The bank released P6.2 billion in loans to small farmers and fisher-folk from January to March 2011. This reached more than 174,000 small farmers and fisherfolk nationwide.

The amount is 31 percent higher than the P4.7 billion released during the same period last year. The loans were channeled through 523 farmers and fisherfolk cooperatives and 185 countryside financial institutions.

The priority sectors of LandBank are small farmers and fisherfolk, microenterprises and SMEs, livelihood, agribusiness, agri-infrastructure, agri-related projects, environment-related projects, socialized housing, schools and hospitals.

Earlier, the bank declared that it is targeting the release of P7 billion to boost a government program aimed at improving food supply this year.

The bank has so far released P1.97 billion to finance projects under the Food Supply Chain Program. The program is meant to boost food supply by improving the technical capability of and market access for farmers and other food producers.

E-money seen as viable savings instrument

E-money seen as viable savings instrument

WHILE the Philippines faired “relatively well in future readiness for mobile financial services,” regulators should consider e-money as an alternative for consumers to earn interest, the World Economic Forum (WEF) said.

In a latest report entitled “The Mobile Financial Services Development”, the WEF said the Philippines’ readiness was partly attributed to the mature nature of the country’s mobile financial services deployments.

“The Philippines has explored the implementation of mobile financial services for a relatively long time and has realized high levels of adoption and a wide array of available services. An important role is played by the government, which has shown leadership by using mobile financial services to distribute social payments and collect taxes,” the WEF said.

“Countries such as Kenya and the Philippines that have achieved high levels of adoption certainly have provided an inspiration in their demonstration of commercial viability and scale,” it added.

The WEF said that Manila’s robust performance in the other pillars within the institutional and market environment has indicated a high level of “readiness” to continue this leadership.

“The Philippines has managed to build a dense agent network which may be a key asset for the provision of an even broader range of services in the future. The relatively large volume of incoming remittances that are sent home by Filipinos abroad can potentially be a driver to achieve further scale,” the WEF said.

With the growing belief that poor people need a full array of financial services, financial inclusion advocates are now focusing on how to responsibly provide low-income individuals with financial services beyond microcredit—services such as savings, payments and insurance.

The report further notes that a primary obstacle to the provision of such services, particularly low-value payments and savings, has historically been high transaction costs.

“It has been too expensive to develop the infrastructure required to profitably reach underserved population segments. Branchless banking, however, is changing the economics of providing financial services by leveraging existing and widespread retail outlets and technology, particularly mobile telephones, to provide more services to more people at lower cost,” the WEF said.

In an effort to distinguish such products from savings accounts, regulators around the world have regulated them as “payments” services, denying e-money accounts the benefit of interest payments and deposit insurance.

In some cases, these prohibitions extend to e-money issued by banks, particularly in countries such as the Philippines and Malaysia where e-money is regulated as a product regardless of whether the issuer is a bank or non-bank, the report said.

“In regulating e-money as a payments product, regulators may be missing an opportunity to make great progress in financial inclusion. E-money can safely and efficiently be used as a savings vehicle. Regulators should allow e-money to offer the full benefit of savings accounts—interest and deposit insurance—to the millions of low-income e-money users,” the WEF said.
LAILANY P. GOMEZ

Saturday, May 28, 2011

RP has big shortage in rice and corn dryer capacity

RP has big shortage in rice and corn dryer capacity

By MELODY M. AGUIBA
May 28, 2011, 2:34am

MANILA, Philippines —The Philippines has a big deficit of 8.6 million metric tons (MT) of dryer capacity for rice and 4.58 million MT for corn that leaves a room for unnecessary loss in food production.

While there is a region in the country, Region 4, that has surplus in rice drying capacity, it is notable how the rest of the 14 regions in the country registered deficits as indicated in a report in a National Academy of Science and Technology Philippines farm supply chain forum.

This absence of drying capacity brings a loss of 5.87 percent on rice output as averaged in four provinces (Camarines Sur, Davao Sur, Iloilo, and Leyte) based on a study.

Dryers are just among the post harvest (PH) facilities lacking in rice farms. There are also inadequacies for threshers in Region 8 and ARMM (Autonomous Region for Muslim Mindanao); mills particularly in Regions 3, 9, 12, and 11; and storage facilities in 13 regions where the largest deficits are found in Regions 6, 2, 12, and 8, according to a lifted study of as of 2009.

With post harvest losses and other identified problems particularly high cost of production inputs, limited access to formal credit sources, high cost of logistics, low usage rate of mechanical post harvest facilities, Lantican reported that farmers enjoy a low profit-cost ratio.

Bureau of Agricultural Statistics-Department of Agriculture (BAS-DA) data showed that out of a P37,156 per hectare cost for rice or a P9.86 per kilo production cost, net return is P4.27 per kilo or a low cost-profit ratio to farmers of 0.43.

“There’s a need for government assistance to reduce production cost,” Lantican said.

On the transport side, 24 to 44 percent of wholesale prices represent logistics cost.

“High transaction costs are caused by inefficient and costly logistical services (handling, transport, and storage) and poor condition. The result is farmers sell unmilled rice or corn on pick-up bases to traditional buyers or financiers that command lower prices,” she said.

But while farmers work laboriously to produce food, inequalities in wealth sharing obviously exists as a supply chain review in Isabela indicated that a hefty profit share is actually enjoyed three times more by retailers in yellow corn compared to farmers.

At the retail price of P21.86 per kilo of corn grits, the retailer in this Isabela study got 30.69 percent share in net income; the feedmiller, 11.21 percent; the farmer, 9.38 percent; and the local trader 5.4 percent.

With these problems in rice and corn supply chain, Lantican recommended the formation of a strong association of input suppliers, small and medium scale producers, and miller-processors to foster grains supply chain integration.

“We should enable farmers to buy inputs in bulk, obtain price discounts, and sell produce in bulk in alternative market outlets. They should have access to formal credit and production and processing technologies such as through Land Bank,” she said.

Cost sharing scheme should be implemented in the provision of post harvest facilities to highly-organized farmers’ associations (FA). FA beneficiaries may even provide free labor in the maintenance of farm-to-market roads (FMR).

Despite the passage of the Agriculture and Fisheries Modernization Act, it is a fact that there is a need to give fiscal incentives to local manufacturers of PH machineries and to develop a local maintenance service industry for these machines supplying parts and after sales service.

RCBC microfinance lends P200 million

RCBC microfinance lends P200 million

May 27, 2011, 1:03am

MANILA, Philippines — Rizal Commercial Banking Corporation reported that its microfinance business hit the P200 million disbursement threshold this past week ending May 13 after lending activities started in July 1, 2009.

Disbursements totaled P200.2 million and the businesses’ outstanding loan portfolio totaled P32.79 million. Over 4,500 loans have been disbursed since the start of microfinance lending operations and to-date active borrowers total 864 micro entrepreneurs.

Average loan disbursement amount is P44,000. Portfolio-at-risk (PAR) 1-day and above ratio is a comfortable 0.77 percent.

These disbursements emanated from lending offices in Laguna province (Calamba, Cabuyao), Batangas province (Tanauan City, Rosario, Lemery, Bauan, Nasugbu, Laurel), Quezon province (Candelaria), Occidental Mindoro province (San Jose City), South Cotabato province (Koronadal City) and Davao City.

RCBC expects to extend its microfinance business to Tagum, Davao del Norte and Digos, Davao del Sur by the third quarter of 2011.

The bank projects that it will hit the P300 million disbursement threshold by November 2011 supported by geographical expansion through the establishment of three new MBOs in southern Luzon and two new branches in southern Mindanao.

RCBC’s microfinance business in southern Luzon is housed within President Jose P. Laurel Rural Bank, Inc. based in Tanauan City while the bank’s business in southern Mindanao is housed within Rizal Micro Bank (Merchants Savings & Loan Association, Inc.).

The microfinance business caters primarily to micro entrepreneurs through the disbursement of working capital loan facilities with tenors between 3 - 6 months. The loan product carries the brand name PITAKA. (JAL)

Friday, May 27, 2011

Landbank East Visayas loans reach P10B

Landbank East Visayas loans reach P10B

TACLOBAN CITY -- Landbank Eastern Visayas recorded deposits totaling P10 billion in the first quarter, more than double the amount of loans released last year.
“This means that we are sending funds to other regions for the government’s financing programs,” said Alex A. Lorayes, Landbank assistant vice president for Eastern Visayas, in an interview.

“This could also mean that local investors are hesitant to part with their money to put up or expand their businesses,” he added.

Eastern Visayas ranks first in terms of Landbank performance in the Visayas and third in the whole country, he claimed.

“The amount represents only the deposits in our bank. There’s a lot of money in the region, including deposits in private banks,” Mr. Lorayes added.

The total loans released as of last year reached only P4.6 billion.

Of the loan amount released, P4.4 billion was intended for farm-related activities and only P150 million for small and medium enterprises.

Landbank loans have benefited 28,420 individuals, mostly small farmers and fisherfolks, according to Mr. Lorayes. The bank noted a repayment rate of 99.6% last year.

He said the bank has been assisting small entrepreneurs and producers in the region in identifying markets for their products aside from providing them with credit access.

Economic activities regularly financed by the Landbank include crop production, livestock, fishery activities, agricultural services, marketing loans, and agro-processing.

The bank plans to open four more branches in the region in the next two years. It operates 11 branches here at present. -- Sarwell Q. Meniano

Stronger rural banks seen

Stronger rural banks seen

THE RURAL banking sector will see fewer banks as mergers and consolidations continue, but will be armed with more resources as they reach out to the millions of Filipinos still without access to the country’s financial system.
“Mergers and consolidations that are happening will result in fewer rural banks that are stronger in terms of resources,” said Tomas S. Gomez IV, Rural Bankers Association of the Philippines (RBAP) spokesman, at the sidelines of the group’s national conference last Wednesday.

“In the future, we will see a stronger rural banking sector, with more resources, continuing to reach out to the unbanked and underbanked.”

Central bank data showed that the number of rural banks had shrunk to 607 in December from 613 in September and from 631 in December 2009. The Bangko Sentral ng Pilipinas (BSP) said this was a result of weak banks closing as well as mergers and consolidations.

Mr. Gomez, also the president and chief executive of the GM Bank of Luzon, Inc. added that “mergers and consolidations are happening as economics dictate,” even as the central bank and the state deposit insurer have put up a P5-billion fund to spur such changes.

“There are applications under Strengthening Program for Rural Banks (SPRB),” he noted, referring to the P5-billion program. “The results of this will definitely be seen in the future.”

The SPRB grants merger, consolidation and acquisition incentives to participating rural banks.

The program, which was launched on August 4 of last year, will run until 2012.

Sought for comment, BSP Deputy Governor Nestor A. Espenilla, Jr. said the impact of SPRB is yet to be seen. It’s “too soon to tell,” he said, as “we are still waiting for deals to complete,” he told BusinessWorld through a text message.

Mr. Espenilla, however, agreed with Mr. Gomez, that mergers and consolidations are happening as rural bankers themselves strive to be more competitive by pooling their resources together.

Mr. Gomez’s GM Bank of Luzon, for one, used to be called GM Bank, Inc. before it consolidated with Bangko Luzon, Inc. late last year. GM Bank, in turn, was a consolidation of three Nueva Ecija-based banks, namely, Community Rural Bank Inc., the Muñoz Rural Bank Inc., and the SME Bank.

Poised for growth

Mr. Gomez also pointed out that rural banks’ return on equity -- net income earned as percent of stockholders’ equity and a key measure of management’s performance -- is “larger” than that of universal and commercial banks.

Rural banks are expected to grow further on the back of agricultural loan, microfinance and microinsurance products. “There is a growing trend for more products, and rural bankers are ready to take the challenge,” Mr. Gomez.

He added that rural bankers will make use of new technologies, such as mobile banking, and new regulations that support their sector, as they penetrate the country’s unbanked and underbanked municipalities.

“We are firm in our commitment to work for better financial inclusion,” he said.

Mr. Gomez, however, acknowledges the hurdles that rural bankers face, foremost being financial illiteracy.

“We will work hand in hand with the government and other non-government institutions in order to move forward,” he said. -- ASOA

Thursday, May 26, 2011

Tax exemption urged for microinsurance

Tax exemption urged for microinsurance

Microinsurance companies are urging the House of Representatives to enact a law that will exempt microinsurance from taxes to bring down its cost and directly benefit Filipinos, a press release from Congress said.

The microinsurance companies made the appeal during a recent symposium on the present concept of microinsurance and its current state in the country.

Jhun Benedicto, Chairman of Philippine Insurers and Reinsurers Association, the umbrella organization of all non-life insurance companies in the Philippines, removing the taxes will bring down the cost of microinsurance by about 25 percent.

"The tax exemption will directly benefit our fellow Filipinos. As of now, the taxes on non-life insurance policies include the 12.5 percent documentary stamp, 12 percent EVAT, 0.5 percent local government tax, 2 percent fire service tax (for fire policies)," Benedicto said.

He said the tax exemption will also be the government's contribution in ensuring that the poor are given access to financial services in general, and insurance in particular.

Microinsurance provides specific insurance, insurance-like and other similar products and services that meet the needs of the low-income sector for risk protection and relief against distress, misfortune and other contingent events, the press release said.

These include all forms of insurance, as may be defined by concerned regulatory bodies and comprise premiums and contributions, fees or charges are collected or deducted before a contingent event; and guaranteed benefits are provided upon occurrence of a contingent event, the press release said.

There is a low insurance coverage among many Filipinos because of reasons like the lack of awareness of insurance and low financial literacy level among the low-income sector, it added.

Various case studies of the Microinsurance Center show that the poor either lack an understanding of insurance or have a negative perception or distrust of it, the press release also said.*

Wednesday, May 25, 2011

BSP receives 700 MBO applications

BSP receives 700 MBO applications

A CENTRAL bank move to ease bank branching has borne fruit, with banks lodging 700 applications for micro-banking offices (MBOs) with the Bangko Sentral ng Pilipinas (BSP).

“We have received 700 applications for micro-banking offices, with the majority of the requests coming from rural banks,” said Pia Bernadette Roman-Tayag, BSP inclusive finance advocacy staff head, in an interview at the sidelines of the Rural Bankers Association of the Philippines-Microenterprise Access to Banking Services (RBAP-MABS) National Roundtable Conference at the Hyatt Hotel yesterday.

“The central bank is at present processing 500 of these applications,” she added.

The central bank issued Circular 694 in October 2010 that allowed banks to establish MBOs or MFOs (microfinance-oriented OBOs).

The new rules essentially introduced a new variant of OBOs or other banking offices, which are permitted to do just non-transactional banking functions such as marketing, accepting of loan applications or hosting of automated teller machines.

MBOs or MFOs are allowed to do more, such as accept micro-deposits; disburse micro-loans and collect payments; sell, market and service micro-insurance products; and receive and pay out authorized remittance transactions.

The central bank hoped that the new rules would encourage banks to expand -- particularly to unserved or underserved areas -- without shelling out the large sums they usually do for branches.

Ms. Tayag said the 700 MBO applications would cover around 37% or 606 out of 1,635 unbanked municipalities in the country.

“MBOs need not be attached to a microfinance bank or branch and are viable in light of their complete range of product offerings,” she added.

The establishment of MBOs, among other inroads by the government, ensures financial inclusion among the country’s poor, she also pointed out.

Still, as BSP Deputy Governor Nestor A. Espenilla, Jr., in his keynote speech during the roundtable, said, “Microfinance plays a key role in reaching out to both the unbanked and underbanked. With the sector lauded by the Economist Intelligence Unit and World Economic Forum, there is more that needs to be done.”

Financial education among poor clients so they know the types of services available from microfinance institutions and full understanding of these services are some of these, he said.

The two day conference, which ends today, aimed to provide a venue for banks to discuss the annual results of their microfinance operations as well as local and international microfinance best practices and innovations. -- Antonio Siegfrid O. Alegado

Sunday, May 22, 2011

LandBank releases P1.97B to improve food supply

WEDNESDAY, 11 MAY 2011 18:53 JENNIFER A. NG / REPORTER

STATE-RUN Land Bank of the Philippines (LBP) released P1.97 billion for
a government program meant to boost food supply by improving the
technical capacity of and market access for farmers and other food
producers.
LBP president and chief executive officer (CEO) Gilda E. Pico also
revealed the bank will target the release of P7 billion for the Food
Supply Chain Program (FSCP) this year.

"[The bank] has been taking pro-active efforts in encouraging more
participants to the program. We are confident that with more key market
players on board, FSCP will go a long way in fulfilling its objectives
of benefiting the small farmers and fisherfolks, cooperatives and small
and medium producers," said Pico in a statement.

LBP noted that the program is aimed at "increasing farmers' income by
way of providing necessary financial and technical support along the
value-added chain of a commodity or industry." FSCP was launched in October.

So far, Pico said the program has attracted a total of 35 "anchor
firms." A total of 195 cooperatives and SME producers nationwide has
formalized their participation to the program.

The 35 anchor firms - 21 from Luzon, 4 from Visayas, and 10 from
Mindanao - are expected to buy the produce of the participating
cooperatives and small and medium enterprises, and provide technical
assistance to improve production efficiency.

The bank organized a series of island-based summits in Batangas,
Pampanga, Bohol, and Davao to attract more participants to the program.
It also began conducting regional "food chain forums" which aim to
invite more participants to the FSCP.

Since February, regional forums covering the production, processing, and
marketing of commodities including rice and corn, fruits and vegetables,
fish and livestock have been conducted in 17 provinces.

Forums were held in Camarines Norte, Palawan, Rizal, Cavite, Romblon,
Naga, Iloilo, Tacloban, Zamboanga, Davao, Cagayan de Oro, Isabela,
Baguio, Nueva Ecija, Pampanga, Quezon, and Koronadal.

Some of the on-going FSCP projects include integrated production and
processing for rice, corn, poultry, swine, and other livestocks,
vegetables, sugarcane, banana cardava, and oil palm.

Affordable Pioneer Life product combines insurance with savings

Affordable Pioneer Life product combines insurance with savings

Insurer Pioneer Life has launched a "bite-size" product in an effort to make insurance more affordable and accessible to Filipinos.
"Sparxx Hub" combines insurance coverage as well as savings in one low-cost product, according to a company statement on Friday. It comes in three variants.

The Sparxx Hub Solo costs only P400 a year and offers coverage of up to P100,000 for personal accident and a burial assistance of P30,000.

The Sparxx Hub Sakto provides personal accident insurance of P100,000, burial assistance of P50,000 and a savings component of P300 with a guaranteed interest of 3% over a set length of time. Premiums cost P800 per year.

Lastly, the Sparxx Hub Sumo costs P1,400 per year. The insured can get the same benefits as the Sakto variant, but with additional fire protection insurance for home contents summing up to P50,000, medical reimbursement of P5,000 and dismemberment insurance of P50,000.

"We wish to extend the benefits of having insurance and savings to the most number of Filipinos that we can possibly reach," Ferdinand L. Berba, Pioner Life senior vice president and head for business development was quoted as saying in the statement.

"Aside from the fact that many people never think they need insurance, they are also misled into thinking it is too complicated and difficult. We say that with Sparxx Hub, it doesn’t have to be."

When groups avail of Sparxx Hub, Pioneer Life also offers special privileges such as financial literacy talks and seminars. The company has held these workshops since the start of the year for small and medium enterprises, security service agencies and transport groups.

This is not the first time Pioneer Life has ventured into low-cost insurance. The insurer received an International Labor Organization grant in July 2009 to support efforts to promote savings among overseas Filipino workers (OFWs) and their dependents. It launched the Pamilyang OFW Savers Club in partnership with the Catholic Bishops Conference of the Philippines- Episcopal Commission for the Pastoral Care of Migrants and Itinerant People.

Pioneer Life was the 16th biggest life insurance company in the country in 2009, according to latest Insurance Commission data. -- Diane Claire J. Jiao

Saturday, May 14, 2011

Mobile Banking: A marriage of technology and banking

Mobile Banking: A marriage of technology and banking

THE Philippines has drawn notice for its revolutionary success in providing microfinance services in the rural areas. A recent study by the Economist Intelligence Unit ranked the Philippines second in terms of overall business environment and in terms of growth and reach for microfinance, with financial inclusion of the poor reaching six percent against two percent in India and one percent in Pakistan.

Rural banks have been using leaps in technology to bridge the divide between providing banking services to the poor and keeping overhead costs low to allow a measure of financial returns for banks.

The Rural Bankers Association of the Philippines―Microenterprise Access to Banking Services (RBAP-MABS) program supported by the United States Agency for International Development (USAID) may have found the solution in providing a viable scheme to spread microfinance services especially in rural areas where these are most needed.

By forging tie-ups with Globe Telecom’s G-Xchange Inc. (GXI) in 2005 and more recently, with Smart Communications using their Smart Money platform, RBAP-MABS introduced the use of cell phones and mobile money to allow rural banks to spread its reach in providing financial services at lower cost.
Among banks’ biggest costs is the expense of collecting loan payments. Higher costs of door-to-door collection practices require banks to charge higher interest rates. With the use of mobile money payments, this is now changing.

A study made by Singapore-based mobile money technology platform provider Utiba showed that in the Philippines, the problem of the high cost of providing microfinance services is accentuated by the local geographic conditions of an archipelago of more than 7000 islands, as well as mountainous roads, waterways, remote villages and a population of over 90 million spread across a difficult terrain.

The use of cell phones and mobile money platforms allows savings for both the clients and the banks. More importantly, it is now changing the way clients transact business in rural areas. Clients are able to buy and sell products and services and even purchase from suppliers remotely and more efficiently than using a check payment.

In the recent Utiba study, a mobile payment would cost around P10 in mobile charges. However, a banking transaction would cost a minimum of P16 in a roundtrip jeepney fare, and P200 in opportunity costs due to lost hours in traveling to make a banking transaction. The study cited an example of a tricycle driver who earns a potential P200 for the four hours on average spent to make a physical banking transaction. The whole cost for a client to transact with a bank thus would be P216 against P10 to make a mobile payment via GCash. There is also the risk of theft when traveling to the bank, which can be reduced through a mobile transaction.

Utiba said that the mobile commerce ecosystem in rural Philippines is one of the most evolved in the world. It also cited the significant work of the partnership between G-Xchange, RBAP-MABS, and the more than 67 partner banks with almost 1,000 banking offices that helped make this happen in many rural parts of the country.

Bangko Sentral ng Pilipinas (BSP) Gov. Amando Tetangco Jr. recognizes the initiative, which he described as strategic in a country where roughly 99 percent of total enterprises are micro, small and medium enterprises (MSMEs) employing about 70 percent of the workforce.

Tetangco noted that mobile banking in the countryside is significant for the Philippines, where cell phone use is one of the highest in the world. At the same time, the rural banking sector is well positioned to take advantage of mobile banking in the countryside. Not only does it have the widest outreach with over 2,700 branches and other banking offices, but the sector as a whole continues to strengthen. The latest BSP figures showed an increase in the capital adequacy ratio (CAR) of rural and cooperative banks at 18.89 percent in the third quarter of last year, up from 18.79 percent in the second quarter.

The Philippine rural banking sector combined with new technologies such as mobile phone banking is set to improve the lives of the poor and provide even greater access to banking services where it is needed the most―the countryside!

Friday, May 13, 2011

Planet Rating Recognized as Microfinance Rating Agency by Philippine Central Bank, Bangko Sentral ng Pilipinas

MICROCAPITAL BRIEF:
Planet Rating Recognized as Microfinance Rating Agency by Philippine
Central Bank, Bangko Sentral ng Pilipinas

by MicroCapital on Thursday, May 12, 2011 at 1:03pm

Planet Rating, a microfinance rating agency and member of the
France-based PlaNet Finance Group, has been recognized by Bangko Sentral
ng Pilipinas (BSP), the central bank of the Philippines, as a
microfinance institution (MFI) rating agency. This recognition follows
the company's establishment of a regional office in Manila in 2009.

Rating agencies need not be recognized as a prerequisite for conducting
business in the Philippines. However, Otto Wormgoor, Operations Manager
at Planet Rating, has told MicroCapital that the firm is working with
BSP on the possibility of using ratings from recognized firms to
increase efficiencies in its supervision of MFIs.

By: Alexandra Pattee, Research Associate

About PlaNet Finance: Founded in 1998 in Paris, France, PlaNet Finance
is a nongovernmental organization (NGO) with the mission of alleviating
poverty through microfinance development. PlaNet Finance is active in
approximately 80 countries as of 2008 and is comprised of eight
independent units: PlaNet Finance Advisory Services, which provides
technical and advisory services; Planet Rating, a microfinance rating
agency; PlaNIS responsAbility SAS, which specializes in advisory
services and structuring and managing microfinance funds; MicroCred, an
investor in microfinance; PlaNet Guarantee, which specializes in
microinsurance; FinanCites, a social venture capital company; MicroFit,
a microfinance software unit; and PlaNet University, a microfinance
training provider.

About Bangko Sentral ng Pilipinas (BSP): Bangko Sentral ng Pilipinas
(BSP) is the central bank of the Republic of the Philippines.
Established in July 1993 under the provisions of the 1987 Philippine
Constitution and the New Central Bank Act of 1993, BSP took over from
the Central Bank of Philippines as the country's central monetary
authority. Headquartered in Manila, BSP has three regional offices
performing cash operations and eighteen branch offices. BSP participates
in advocacy programs concerning microfinance, financial education and
consumer protection.

---------------------------------------------
CARLOS ANI - SEEDFINANCE Corporation - http://www.seedfinance.net
Email: carlosani@seedfinance.net
Landline: +63495010127 Cellphone: +639152919580
DEVJOBS - http://www.devjobsmail.com
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http://phildevfinance.wordpress.com
CONSULTING - http://www.carlosani.com
My Clippings - http://www.myclipps.posterous.com
------------------------------------------

Thursday, May 12, 2011

Desperate efforts to sneak out of Philippines

Desperate efforts to sneak out of Philippines
By Mynardo Macaraig
Agence France-Presse
First Posted 12:17:00 05/11/2011

MANILA, Philippines—Six women dressed as nuns stood anxiously in a queue at Manila's chaotic international airport, unaware their shoes were about to end their dreams of an illegal job abroad.

At the immigration counter, an official looked up after stamping a genuine traveller's passport and surveyed the women.

"People were wondering, if they were nuns then why was one nun in rubber shoes and another in red shoes," said airport immigration chief Lina Andaman Pelia.

"And all six just had one bag. You could tell they weren't real."

Under questioning, the "nuns" admitted they were not heading to a religious seminar in Hong Kong as claimed, rather to Lebanon to work illegally as maids.

And so -- just like thousands of desperate Filipinos before them who have tried to use a dizzying array of tricks in an effort to head overseas for a higher paying job -- their journey was over before it had begun.

Deep poverty in the Philippines has for decades driven Filipinos abroad and about nine million -- or 10 percent of the population -- currently work legally and illegally in a wide range of jobs overseas, according to government data.

While the Philippine government allows its citizens to work overseas, it requires them to have guaranteed labor contracts and to register with state-approved recruiters.

The government says these measures are needed because Filipinos who go abroad can easily be exploited in many ways and, at worst, be forced into crime or prostitution.

Sometimes the country they want to work in has been blacklisted completely, such as was the case with the fake nuns, with the Philippines banning people from working in Lebanon in 2007 due to security and labor concerns there.

But many Filipinos seek to circumvent these rules, with illegal recruiters often setting up the scams.

"We have economic problems in this country and sad to say, they become willing victims," Pelia said, referring to the Filipinos who sneak overseas to work illegally.

Pelia said many prospective illegal workers simply presented themselves at airports as tourists, and it was up to the immigration officials to determine their real motive for travelling overseas.

At the immigration desk, staff look for signs to distinguish the illegal workers from legitimate tourists.

Pelia said the give-away could be a bare passport indicating the person had not travelled abroad before, or a plan to "holiday" in areas of the Middle East not normally known to attract Filipino tourists.

She said illegal workers were sometimes caught out by being unable to answer the simplest of questions, such as: "Where are you going?" or: "Who is providing for your tour?".

But on other occasions, they put more thought into their ruse.

Pelia said the government now coordinated with sports bodies to verify which athletes were heading overseas, after some workers made it to Japan by claiming to be volleyballers bound for an Asian Games there in the 1990s.

Immigration officials are also constantly on the lookout for Filipinas seeking to head abroad for work as prostitutes who travel with fake boyfriends, Pelia said.

"Carlos", a 35-year-old laborer, said he beat the system three years ago when he entered Japan to escort his mother on a vacation there.

When his mother returned home two months later, Carlos did not come back.

Instead, under a plan hatched by his family, he was sheltered by his sister, who already had permanent residency in Japan.

"We were always terrified that Japanese immigration would track me down to her house and burst in at any time. But they never came," said Carlos, who spoke to AFP by telephone on condition his real name was not used.

Carlos said his sister helped him find a job as a construction worker in Japan, and he now earns the equivalent of about P26,000 ($600) a month, three times what he could earn at home.

The problem of Filipinos being exploited saw the US State Department place the Philippines on its "tier 2 watchlist" for human trafficking in 2009.

This meant the US government believed the Philippines was failing to comply with "minimum standards" on stopping human traffickers.

The government says it has since sought to tackle the problem more seriously.

About 25,000 would-be illegal workers have been stopped from leaving the Philippines since a crackdown began in August last year, according to Chrissy Avila, a lawyer with the government's anti-trafficking task force.

And 28 traffickers have been convicted since the start of last year, with some of them being sentenced to life in jail, according to the task force.

But Avila said the prospective workers, who are not punished if caught, often remain determined to try again because of the deep social problems and poverty at home.

"What they have in mind is that they are going abroad to have a better future, to earn dollars. They don't mind the fact that they might be victims of illegal trafficking," she said.

LandBank releases P1.97B to improve food supply

LandBank releases P1.97B to improve food supply

By Jennifer A. Ng, Business Mirror
Posted at 05/12/2011 7:29 AM
Updated as of 05/12/2011 11:36 AM

MANILA, Philippines - State-run Land Bank of the Philippines (LBP) released P1.97 billion for a government program meant to boost food supply by improving the technical capacity of and market access for farmers and other food producers.

LBP president and chief executive officer (CEO) Gilda E. Pico also revealed the bank will target the release of P7 billion for the Food Supply Chain Program (FSCP) this year.

“[The bank] has been taking pro-active efforts in encouraging more participants to the program. We are confident that with more key market players on board, FSCP will go a long way in fulfilling its objectives of benefiting the small farmers and fisherfolks, cooperatives and small and medium producers,” said Pico in a statement.

LBP noted that the program is aimed at “increasing farmers’ income by way of providing necessary financial and technical support along the value-added chain of a commodity or industry.” FSCP was launched in October.

So far, Pico said the program has attracted a total of 35 “anchor firms.” A total of 195 cooperatives and SME producers nationwide has formalized their participation to the program.

The 35 anchor firms - 21 from Luzon, 4 from Visayas, and 10 from Mindanao - are expected to buy the produce of the participating cooperatives and small and medium enterprises, and provide technical assistance to improve production efficiency.

The bank organized a series of island-based summits in Batangas, Pampanga, Bohol, and Davao to attract more participants to the program. It also began conducting regional “food chain forums” which aim to invite more participants to the FSCP.

Since February, regional forums covering the production, processing, and marketing of commodities including rice and corn, fruits and vegetables, fish and livestock have been conducted in 17 provinces.

Forums were held in Camarines Norte, Palawan, Rizal, Cavite, Romblon, Naga, Iloilo, Tacloban, Zamboanga, Davao, Cagayan de Oro, Isabela, Baguio, Nueva Ecija, Pampanga, Quezon, and Koronadal.

Some of the on-going FSCP projects include integrated production and processing for rice, corn, poultry, swine, and other livestocks, vegetables, sugarcane, banana cardava, and oil palm.

Tuesday, May 10, 2011

BSP to launch online foreign loan approval

By LEE C. CHIPONGIAN

May 9, 2011, 5:10pm

MANILA, Philippines — Since more and more corporations are borrowing
from foreign sources for peso and dollar-denominated funding, the Bangko
Sentral ng Pilipinas (BSP) is putting up an online registration for
requests for foreign loan approvals including payments of fees.

Based on the memo proposal, a new Internet-based project called Foreign
Loan Approval and Registration System or FLAReS are being developed
after initial consultations with five big banks, namely Banco de Oro
Universal Bank, Metropolitan Bank and Trust Co., Bank of the Philippine
Islands, Land Bank of the Philippines and Philippine National Bank. The
project aims to eliminate the manual task of computing fees, and
preparing payment orders and finally, the acceptance of check payments
to process the foreign loan application.

Sources said the program for FLAReS are still being developed and
finalized, following issues forwarded by the sector which recommends
foreign loan applications to the Monetary Board, which is the BSP's
International Operations Department (IOD).

The system is expected to be launched in the next weeks or up to the end
of June. The BSP is preparing the memorandum of agreement with
participating banks and clients to implement the project.

The IOD evaluates these foreign loan requests from the public and
private sectors. When the FLARes system is up and in operation, foreign
loan requests that will be processed online include registration of
foreign currency deposit units or FCDU loans. Remittance to the BSP of
fees, in the meantime, will be settled through the real time Philippine
Payments and Settlements System or PhilPaSS. The minimum charge per
transaction is P10. According to the memo, FLARes will offer borrowers
convenience in paying fees and ease in communication with the BSP.

For this year the BSP expects public and private sector foreign
borrowing to reach $20.5 billion, 56.2 percent higher than what was
registered in 2010 due to improved economic and business prospects. Half
of which are private sector loans, estimated to reach $10.1 billion this
year as investments are expected to pour in for the Aquino
administration's public-private partnership or PPP programs.

--
--
CARLOS ANI
UNITED NATIONS ENVIRONMENT PROGRAMME (UNEP)
---------------------------------------------
CARLOS ANI - SEEDFINANCE Corporation - http://www.seedfinance.net
Email: carlosani@seedfinance.net
Landline: +63495010127 Cellphone: +639152919580
DEVJOBS - http://www.devjobsmail.com
PHILDEVFINANCE - http://phildevfinance.posterous.com http://phildevfinance.wordpress.com
CONSULTING - http://www.carlosani.com
My Clippings - http://www.myclipps.posterous.com
------------------------------------------

Monday, May 9, 2011

PNB to raise P10B from lower Tier 2 notes

PNB to raise P10B from lower Tier 2 notes

The Philippine National Bank is eyeing to raise as much as P10 billion in fresh capital by June, after securing the central bank’s approval for the fund-raising.
Horacio E. Cebrero III, PNB executive vice-president and head of treasury, told BusinessWorld the bank will raise P5.5 billion to refinance lower Tier 2 notes maturing in August but the amount can go up to P10 billion depending on the market appetite for the bank’s debt notes.

"This will be raised within the month or within the first week of June at the latest," he added.

In a disclosure to the stock exchange on Friday, PNB said "the Monetary Board, through Resolution No. 650 dated April 28, 2011, approved the request of PNB to issue peso-denominated 10-year unsecured subordinated debt qualifying as Lower Tier 2 capital in the amount of P10 billion."

The amount, aside from refinancing maturing debt, will also be used finance the bank’s expansion.

"The bank plans to grow its balance sheet through expanding its corporate and retail lending businesses," Mr. Cebrero said.

"The bank also plans to put up more branches this year," he added.

PNB plans to put up 15 to 20 branches this year, to be located in the CALABARZON (Calamba, Laguna, Batangas, Rizal and Quezon) or provinces close to Manila and Cebu and Davao.

The central bank has disallowed the big banks to put up more branches in Metro Manila, which is teeming with bank offices.

The arranger for the lower Tier 2 issue is ING Bank N.V. (Manila Branch). Details of the roadshow for the issuance are still being ironed out, Mr. Cebrero said.

PNB shares closed at P61.40 apiece on Friday, P1 lower than on Thursday. -- Ann Rozainne R. Gregorio

Manulife launches first microinsurance product

Manulife launches first microinsurance product

MANUFACTURERS Life Insurance Co. (Phils.), Inc. (Manulife Philippines) has ventured into the broad insurance market with its first low-cost product.
The new product, FirstProtect, was designed to address the need to insure the majority of the Philippine population, Manulife Philippines President and Chief Executive Officer Indren S. Naidoo said in a statement on Friday.

“The number of Filipinos without life or accident protection is staggering, and the country’s insurance penetration rate is among the lowest in the Asia region at around 13%,” Mr. Naidoo said.

“For families who are just making ends meet, even a small accident can be financially catastrophic. In addition, families may not have the opportunity to save for the future,” he explained.

FirstProtect provides life and accident protection for 10 years, with premiums as low as P471 per month.

It guarantees to pay out 100% of the coverage amount upon the death of the policyholder within the 10-year policy period. Should the death be due to an accident, the policy pays an additional 200% of the coverage amount, tripling the total payout to beneficiaries.

Policyholders can also enjoy a maturity benefit should they survive after the policy period, with 25% of their premiums to be returned.

The product provides accidental death and disability coverages as well.

The insured can also apply for cash loans for emergencies and other needs.

Meanwhile, a variant, FirstProtect Plus, gives policyholders both protection and savings by entitling them dividend earnings. These can be claimed as cash, diverted as premium payments or left with the company to earn interest. FirstProtect Plus policyholders can receive 50% of their premiums back after the 10-year period.

“Manulife believes insurance should be a necessity and not a luxury.

Through FirstProtect, we have created an affordable, reliable and forward-thinking product to help anyone prepare for the future,” Mr. Naidoo said.

Manulife Philippines was the country’s eighth largest insurer in premium terms in 2009. It is a wholly-owned subsidiary of The Manufacturers Life Insurance Co., the insurance company of Canada-based Manulife Financial Corp.

The company decided to venture into microinsurance or insurance for the low-income segment this year because of the success of a microinsurance product pilot-tested by Manulife Vietnam in 2009, Mr. Naidoo earlier said.

Manulife Vietnam partnered with Vietnam’s Women Union, with an estimated 13 million members, to provide a simple microinsurance life product that covered accidental death and hospitalization costs. Mr. Naidoo estimated that about 60,000 policies have been sold since its launch.

The government has been vigorously pushing microinsurance. While typical microinsurance providers include rural banks, cooperatives and mutual benefit associations, several insurance companies have expressed interest in the low-income market. Estimates have placed the number of Filipino poor -- the market for microinsurance -- at 2.9 million. -- Diane Claire J. Jiao

New rules on banks’ voting stocks out

New rules on banks' voting stocks out

THURSDAY, 05 MAY 2011 19:16
JUN VALLECERA / REPORTER

NEW rules have been written regarding the sale, transfer or acquisition
of the voting stocks of banks operating in the country at present.

While before it was enough that regulators were informed whenever such
sale, transfer or acquisition resulted to substantial ownership of the
voting stocks, new rules now require more detailed reporting of the
transaction.

The insistence on detailed disclosure comes in the wake of changes in
the ownership of some banks that later prove problematic, such as that
involving the now defunct Legacy Group of Bank where insured deposit
payouts totaled some P12 billion.

New regulations now require both the buyers and sellers of bank voting
stocks to report the transaction to the Bangko Sentral ng Pilipinas
(BSP) so that the policy-making monetary board may act on it as appropriate.

The request should be submitted within 60 days from the transaction date
or 30 days from date of receipt by the bank's corporate secretary for
registration of the transaction, whichever is earlier, the BSP said.

"It should be accompanied by supporting documents on the suitability of
the transferee-stockholder, including evidences on the integrity,
probity, financial capacity, business experience and educational
background, among others, of the individual stockholders or of the
persons behind the corporate stockholders.

"It should be accompanied by an affidavit attesting that the stockholder
is a bona fide owner of the voting shares of stocks in the bank in
his/its right, and not as a dummy of any other person, whether natural
or juridical," the BSP said.

Bank corporate secretaries are henceforth prohibited from registering
the voting shares in the name of anyone without prior monetary board
approval.

Delays in reporting such changes could result in the recission or even
invalidation of such transactions, the BSP said.

The new rules apply both to issued and unissued voting shares of stocks
as in the case of subscription to new shares or conversion of preferred
shares or debt instruments into voting shares, the BSP said.

Rural bankers want entry of foreign investment

SUNDAY, 01 MAY 2011 19:41
JUN VALLECERA / REPORTER

RURAL BANK executives are moving heaven and earth to have just a line in
the Rural Banking Act amended to reflect a radical shift in policy
favoring the entry of foreign shareholders.

They know convincing members of Congress to act on it will typically
take two and a half years and this was why GM Bank president and chief
executive officer Tomas Gomes IV has started the process of consulting
lawmakers.

At the Bangko Sentral ng Pilipinas (BSP), Deputy BSP Governor Nestor
Espenilla Jr. openly supported the Rural Bankers Association of the
Philippines's (RBAP) bid to have the law amended so that foreign
ownership of rural banks is finally permitted.

"Their entry will not be mandated. Rural bank shareholders can refuse to
be bought or taken over by foreign interests. It's not as if they are
obligated to sell to foreign investors," Espenilla said of the proposal
and of arguments that some of the nation's assets are being sold
wholesale to foreign interests.

It all depends on Congress if its members mind changing the law but
Espenilla believes the proposal is a good idea "so there is flexibility
in expanding the investor base of rural banks."

"Basically they will just be adding to the investor base of rural banks,
so that is potentially large money that could act as catalyst for
consolidation.  Almost all the problems of rural banks concern knowhow.
And because the foreign investor is more disciplined, this will add
discipline to the system," he said.

Gomez, who once headed the RBAP as its president, said the amendment
will align rural bank privileges with those of thrift banks, where
foreign ownership is permitted up to 60 percent of total equity.

Some rural banks are already part owned by foreigners via so-called
holding companies, such as the Rural Bank of Angeles in Pampanga
province through its link with Asia United Bank, whose own equity
structure is partly owned by Singaporeans in Magis Equity Ventures.

Rural Bank of JP Laurel in Batangas is also partly owned by the Rizal
Commercial Banking Corp., which is in turn partly owned by the
International Finance Corp., the private investment arm of the World Bank.

Gomez acknowledged that even without the proposed amendment foreign
interests may still be part owners of rural banks at present, but only
as indirect owners.

Direct ownership is sought because then foreign interests have direct
participation at the governance level, Gomez explained.   

BSP eyes DOSRI cap on banks with NGOs

By LEE C. CHIPONGIAN
May 8, 2011, 10:38pm

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is
tightening the rules on banks' microfinance non-governmental
organizations (NGOs) and related foundations by subjecting loans to
DOSRI (directors, officers, stockholders and related interests) ceilings
in a bid to check and reduce operational, governance and reputational risks.

Sources from the BSP's Supervision and Examination Sector (SES) said a
circular and a memorandum are being prepared to reinforce corporate
governance and to issue guidelines for banks with microfinance
operations and to clarify the business relationships between banks and
their related NGOs/foundations.

The new circular, specifically, will require that banks with related
NGOs/foundations will have to comply with the DOSRI rules. DOSRI
individual limit or ceiling is 10 percent and five percent for unsecured
limits, and aggregate 20 percent limit on loans, other credit
accommodations and guarantees granted by banks to their subsidiaries
and/or affiliates.

The proposed circular will not only redefine what related microfinance
NGOs/foundations mean, but will also prohibit bank officers from holding
any positions that may cause them to be involved in the daily
microfinance operations of related NGOs/foundations, a source said.

It was in 2001 when the BSP allowed banks to establish NGOs/foundations
which are involved in microfinance operations. These NGOs/foundations
are regulated financial institutions. This gave them authority to access
commercial capital and engaged in services such as savings mobilization.

However, sources said this authority resulted to both banks and their
related NGOs/foundations now sharing the same microfinance market, which
has "elevated risks" in its operation and governance.

The BSP is mostly concerned about the common board memberships of banks
and their NGOs/foundations, the improper use of bank resources and
control of loan portfolio. In particular, loans related to the
NGOs/foundations are not considered as part of DOSRI ceilings. The
financial assistance extended by banks' NGOs/foundations falls under
DOSRI loans. "(In fact) any loan accommodations should be (subject) to
DOSRI ceilings," said the source.

By BSP definition, microfinance NGOs/foundations refer to those
NGOs/foundations engaged in microfinance operations which are
incorporated by any of the stockholders, directors and/or officers of
related banks.

The circular will include the definition of banks' microfinance
NGOs/foundations as "related interests".

At the end of 2010, based on BSP data, there are 149 microfinance
engaged banks with exposures amounting to P3.85 billion, of which P1.5
billion are the savings component. Overall, there are 202 microfinance
operations in the

Philippines including micofinance-oriented thrift and rural banks. The
202 have total loans of P6.53 billion lent to 932,622 borrowers as of
December 30.

Monday, May 2, 2011

BSP: Post-crisis PHL banks strong and able

BSP: Post-crisis PHL banks strong and able
05/02/2011 | 07:52 PM

The Philippine financial system proved resilient in the second semester of 2010 as it came out of the global financial crisis strong and able, a Bangko Sentral ng Pilipinas (BSP) report said Monday.

Banks remained profitable for the second half of 2010 as the industry posted a P91.2 billion net profit, 31.4 percent higher than the previous year's figures, it added.

The BSP said this was due to the "brisk trading activities of derivatives and government securities on top of sustained growth in lending-related ventures."

Total resources, in fact, gained 11.6 percent on the back of sustained growth in loans (8.7 percent) and financial assets other than loans (9.5 percent), it added.

Core lending, meanwhile, continued to grow at a rate of 8.7 percent, while the non-performing loans/non-performing assets ratios of the banking system grew better than the minus 4-percent rate before the crisis.

The BSP said there is also ample liquidity in the system, as the liquid-to-asset ratio proved resilient at 59.7 percent, up 7-percentage points from last year's figures.

Deposit base, on the other hand, continued to expand to reach P5,122.2 billion, up 9.6 percent from 2009, "indicative of sustained depositor confidence in the banking system," the BSP claimed.

The country's central bank said the Philippine banking system's figures were so good that it caught the attention of international monetary and credit rating agencies.

"Such resilience received favorable third-party validation from the International Monetary Fund and international credit watchers following an upgrade in sovereign ratings from Standard & Poor's and in sovereign outlook from Moody's in 2010," it said.

Flex regulatory muscles

In order to sustain growth, the BSP advised regulators to renew focus on supervising financial conglomerates since majority of bank assets in the system "were controlled by banks belonging to a conglomerate, or a conglomerate itself."

It said that the Financial Sector Forum, the inter-agency coordinating body of financial regulators, is flexing its regulatory muscles by doing a periodic updating of conglomerate maps and intensifying information exchange among the relevant agencies.

"There is [also] a need to continually develop market niches and nurture the rural economy to provide flexibility in banks' core earning potential," it added.

The BSP said the role of the small market players dispersed across the Philippine archipelago remains ever more crucial, especially in serving the interests of microfinance clients and beneficiaries of overseas Filipino workers, in an effort to "develop a truly inclusive financial system."

There were 758 banks with 8,111 branches operating in the country by the end of 2010, of which 203 representing a total savings component of P3.2 billion were engaged in microfinance. — JM Tuazon/VS, GMA News