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Getting additional funds

Roy — Thu, 23 Jun 2011 02:42:56 +0000

Most employees who rely on their twice a month salary often find it hard to make both ends meet. More often than not, they avail of payday advance from their company, if such privilege is available to them. Which is better, because most companies do not charge interest on those advances and the employee does not incur additional expenses in the form of finance charges.

Unfortunately, not all companies provide that benefit to their employees that is why workers rely on outside lenders which charges interest on money loaned. It is inevitable, unfortunately, that the regular wage earner would go to money lender sometimes.

Some finance companies have websites that allows processing of loans online and the proceeds would either be credited to the employee’s bank account or picked up at their office, saving the borrower time going to and from, just following up.

Other lenders take a couple of days to process the loan while some provide same day loans processing and releases. This is especially true if the borrower already has a record with them.

But while money lenders, finance companies, and the like, are always there to help in your times of needs, always remember that these have costs. They carry interests, finance charges and other processing costs. The key is to be prudent, as much as possible, to avoid resorting to them. And if it cannot be avoided, make sure that the money borrowed will go to their intended use.

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DTI to bring SME Caravan to Antique

Roy — Sun, 15 May 2011 17:43:22 +0000

The Department of Trade and Industry (DTI) will bring business caravan to Antique. The DTI has chosen the province to be one of the sites for the Small and Medium Enterprises (SME) caravan which is slated on the 26th and 27th day of this month.

The trade department is encouraging businesses falling under the category of small and medium enterprises to take part in the said business caravan as it could be of great help for them because they would gain knowledge and skills in the field of their specialization.

The Micro, Small and Medium Enterprises (MSMEs) sector are considered by the national government as the backbone of the country’s economy. They contribute to employment and generate output for the economy. The government considers this sector as a vital link in dispensing new industries to the countryside and providing gainful employment. With this in mind, the government initiated a comprehensive and integrated strategies in sustaining the growth and development of the MSME sector, one of them is the SME Caravan.

Through the SME Caravan, the MSME’s could gain improved access to government and private sector services, particularly in areas where the provision of business services are limited. The caravan also aims to create awareness of SME’s various business development services that are available to them, both from the government and private sector.

During the business caravan, there would be resource speakers who will cover different business topics like Access to Markets, particularly Product Development and Marketing the Business, Packaging and Labeling, Product Costing and Pricing, and How to Participate in Trade Fairs.

For the finance said of business, the Access to Finance module will cover Business Plan Preparations, while the session on Productivity and Efficiency will cover topics such as Good Manufacturing Practices and Food Safety. The module on Entrepreneurship will cover Entrepreneurial Mindset and Opportunity Seeking lectures.

The seminars are free and DTI published information materials on MSMEs will be provided to each seminar participant.

Supporting the DTI in business caravan are different agencies and organizations like the Land Bank of Philippines, Development Bank of the Philippines, Provincial Government, TESDA, OPA, PPDO, DAR, the Sangguniang Panlalawigan and Non-Government Organizations.

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Chinatrust applies for unibank license

Roy — Mon, 02 May 2011 07:30:07 +0000

The Chinatrust Commercial Bank Corp. is seeking to upgrade its current status and authority from a commercial bank to a universal bank. Chinatrust made a request to the Bangko Sentral ng Pilipinas (BSP), asking it to convert its banking license to “unibank” at the end of last year to allow it to implement globalization plans.

With a unibank license, it will be possible for the bank to have a bigger role in onshore capital market through corporate issuances underwriting and the distribution of securities to institutional investors. Aside from having an authority to operate as an investment house, unibanks are also allowed to invest in non-allied enterprises, such as infrastructure projects.

According to the BSP, Chinatrust is planning to have a more active role in debt and equity underwriting. The bank currently operates 24 branches in the Philippines and they plan to use their branch network for the distribution of securities.

A subsidiary of Taipei-based Chinatrust Commercial Bank Ltd., Chinatrust (Philippines) is targeting top-tier clients, such as conglomerates and companies into utilities and power-generation, and some middle-income industries such as the business process outsourcing (BPO) sector.

The request for the banks license upgrade has been forwarded to the Monetary Board for approval as Chinatrust is qualified and meets requirement. The foreign-affiliated bank has a capital base of P5.26 billion, exceeding the minimum capital requirement. The BSP requires all unibank to have a minimum capital of P5 billion and for commercial banks, the minimum capital requirement is at least P2.5 billion.

Established in 1995, Chinatrust is listed in the Philippine Stock Exchange. The BSP, before granting it a unibank license, wants the bank to offer at least 10 percent of the required minimum capital for public offer before December 31 of this year.

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Nograles resigns as PDIC head

Roy — Sun, 17 Apr 2011 18:07:11 +0000

At the height of the controversy surrounding the closure of the Aguire-led Banco Filipino Savings & Mortgage Bank, Philippine Deposit Insurance Corp. (PDIC) president Jose Nograles has resigned from his post as head of the state-run deposit insurer.

Sources were quick to clarify that the decision of Nograles to quit was not in any way connected to the issue of Banco Filipino that was ordered closed by the Bangko Sentral ng Pilipinas (BSP) and placed under PDIC receivership last March 17.

Reports say he submitted his resignation letter to the President, citing “differences in policies,” through Finance Secretary Cesar Purisima last Friday. He will stay in office until end of May this year only. He has gone on a 2-week leave from the agency. Nograles term would have ended in 2012.

According to some reports, the PDIC chief has been reportedly unappreciated by some members of the president’s economic team. He was also unseated earlier this year as director of the United Coconut Planters Bank (UCPB).

Under his stewardship, the PDIC became an ISO-certified agency for claims settlement operations, which a first in its history. Nograles is also credited for a number of policy and strategy innovations in the agency, such as amending the agency’s charter that strengthened its regulatory powers over banks, as well as increasing the maximum deposit insurance coverage to P500,000 from P250,000 per depositor.

During his term, the PDIC was able to ensure the stability of financial system from the aftermath of the global financial crisis in 2008, which resulted in a number of bank closures. The most notable of which was PDIC’s handling of the Legacy bank fallout.

Before his term as PDIC head, he was a senior executive vice-president of Land Bank of the Philippines. Nograles was an appointee of former President and now Pampanga Rep. Gloria Macapagal-Arroyo as PDIC president in 2008. He is the brother of former House Speaker Prospero Nograles who used to head the House contingent in the Commission on Appointments.

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DoJ forms panel to investigate BSP and Banco Filipino counter-charges

Roy — Thu, 14 Apr 2011 03:57:25 +0000

The Department of Justice (DoJ) received charges filed by Bangko Sentral ng Pilipinas (BSP) and Banco Filipino Savings and Mortgage Bank against each other. To conduct a preliminary investigation on the said charges, Justice Secretary Leila de Lima formed a three-man panel lead by Senior State Prosecutor Rosanne Balauag, and members Assistant State Prosecutors Bernardo Parico and Agapito Fajardo Jr.

Formed under Department Order No. 282, the immediate task of the panel is to consolidate the two complaints. Both BSP and Banco Filipino are embroiled in litigation after the BSP’s Monetary Board and the Philippine Deposit Insurance Corp. seized the bank’s real estate assets and placed it under receivership.

Banco Filipino accused the BSP and Monetary Board officials of violating Section 3 (e) of RA 3019 (Anti-Graft and Corrupt Practices Act) when it denied the grant of emergency loans needed by the bank under an emergency situation, and when it eventually ordered the bank’s closure and receivership. The bank said it has been seeking P25-billion worth of financial and regulatory relief as well as P19 billion in compensation for its alleged illegal closure in 1985.

The BSP, on the other hand, filed a counter-complaint seeking prosecution of the bank’s directors for alleged willful refusal to file audited financial statements from 2002 to 2007. BSP also accused BF president Teodoto Arcenas Jr. and directory Perfecto Yasay Jr. of falsification and issuance of false statements to hide the true financial condition of the bank; willful refusal to report loans; 26 counts of violation of BSP laws and directives and willful refusal to cease conduct of unsafe hazardous and unsound bank practices.

Banco Filipino also has a pending petition to the Court of Appeals seeking the nullification of MB Resolution No. 372-A which placed the bank under receivership and barred it from continuing its business operations in the country.

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BSP said Banco Filipino ran a ‘Ponzi’ scheme

Roy — Wed, 06 Apr 2011 09:34:49 +0000

The Bangko Sentral ng Pilipinas (BSP) said in its 170-page opposition filed before the Court of Appeals that Banco Filipino Savings and Mortgage Bank was operating using the fraudulent “Ponzi” or pyramiding scheme. BSP filed the said report to justify its closure order and place Banco Filipino under the receivership of the Philippine Deposit Insurance Corp. (PDIC).

In the Ponzi scheme, named after Italian Charles Ponzi who earned notoriety for the technique in the 1920s, a company pays out returns to investors not really from its own profits, but from the investors’ own money, or those paid by subsequent depositors. The BSP said Banco Filipino lured its depositors by offering an interest of 6 to 14 percent for special savings while other banks were only giving 1.8 to 3.3 percent. The BSP alleged that the investments received were used to pay the interest of old deposits and fund its day-to-day operations.

The BSP also said that Banco Filipino owner Albert Aguirre and other directors, officers, and so-called interests of the bank borrowed P2.2 billion of the depositors’ money and never paid them back. It added that the only recourse left was to place under receivership of PDIC to protect the bank’s depositors, creditors, and the public in general.

The central bank also noted that Banco Filipino paid its officers and consultants P250 million, and that P245 million in legal fees were handed out last year to former Securities and Exchange Commission chairperson and Banco Filipino vice chairperson Perfecto Yasay, and lawyer Harry Roque. The BSP said Banco Filipino also violated the caps and limits set.

“Banks are not created for the benefit of its directors or officers. Instead Banco Filipino was being run to the extreme prejudice of its depositors since it was violating various laws and BSP regulations, including its refusal to submit periodic financial statements for the few years to hide its true financial weakness,” the BSP said.

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New guidelines for BIR’s authorized agent banks

Roy — Thu, 31 Mar 2011 19:52:57 +0000

New guidelines for all authorized agent-banks have been issued by the Bureau of Internal Revenue (BIR) as part of preparations for the 2010 income tax filing season. The new guidelines is requiring all authorized agent-banks to be open for two Saturday immediately prior to April 15 of every year and extend their banking hours from 3 p.m. to 5 p.m. from April 1. This year though, the banks were required to operate last Saturday, March 26, instead to the nearest Saturday before April 15 (April 9), because it was a national holiday.

The BIR also simplified some tax filing and payment procedures of the authorized agent-banks starting April 1 to 15. Banks are required to stamp an acknowledgement receipt only to three copies of income tax returns (ITRs). For corporations and juridical persons, banks are instructed to stamp “Received” in at least two extra copies of the attached audited financial statements for filing with the Securities and Exchange Commission (SEC).

Photocopies, electronic and computer-generated BIR forms and returns should also be accepted by banks, provided however that they were “originally filled up” and signed by the taxpayers or their duly authorized representative. BIR also mandates banks to assign additional personnel, tax payment counters and to provide equal treatment to the tax filing and paying public. The bank are also reminded not refuse accepting tax payment from taxpayers who are already within the bank premises and to accept check payments after their cut-off time.

The revenue agency also allowed some government official and employees to file their ITRs with all their authorized agent-banks and BIR Revenue District Office (RDO) other than those where they are registered or “out-of-district” ITRs without penalties or sanctions imposed from March 18 to April 15 only. Members of the Armed Forces of the Philippines (AFP), Philippine National Police (PNP), and public school teachers, professors and instructors need only to present their government ID or other proof to show that they are members of the said government organizations to any authorized agent-banks or BIR office.

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BDO denies reports on compromised ATM cards

Roy — Thu, 31 Mar 2011 15:32:02 +0000

There was a buzz circulating in social media Twitter and Facebook that the 11,000 ATM accounts Banco de Oro Unibank Inc. (BDO) where compromised. However, BDO belied this report and said there is no truth to this rumor.

The buzz was several Twitter users reported on Thursday the 11,000 BDO ATM cards were compromised Wednesday evening, and the banks security features automatically disabled the cards for the protection of the account holders.

It was said to be the first hand experienced of blogger Jayvee Fernandez who tried to use his card on the automated teller machine (ATM). He tweeted that the bank told him that there was “nothing stolen” but the cards have been deactivated. They will be replaced by BDO without charge to the depositors.

Fernandez later tweeted that the bank representatives told him there was “bank fraud attempt” on MasterCard and Visa ATM cards, but the attempt was thwarted. In coordination with other Twitter users, it was found out that there was a consistent story across some BDO branches about the thwarted fraud attempt.

Fernandez also tweeted that he was even shown a bank memo on the incident. Unfortunately, he was not allowed to copy the same for public use.

But the Corporate Affairs Office of BDO said that the bank is “not aware” of any such incident, and said it might be ploy on its customers. “The bank is not aware of any incident. It may just be another scheme to victimize the public at the expense of companies doing business the right way. We hope this can be addressed the soonest time possible. Thank you,” the bank said.

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High risk game did it for Banco Filipino – BSP

Roy — Thu, 24 Mar 2011 12:39:06 +0000

The Bangko Sentral ng Pilipinas (BSP) said that Banco Filipino Savings and Mortage Bank was engaged in high-risk, high-yield schemes to attract depositors. But when the withdrawals started getting heavy, the bank failed to meet its obligations.

“As long as people were putting in money, then the music continued for them,” BSP Deputy Governor Nestor Espenilla Jr. said. “With other banks, the interest rate on deposits was 1, 2 or 3 percent, but Banco Filipino offered 14 percent… the problem is, people forgot the risks involved,” he added.

He also said that BSP had the authority to close banks offering excessively high-risk products. Taking note of the full-page advertisement of Banco Filipino on the newspaper claiming it had P30 billion in assets, Espenilla said that if indeed it had adequate resources, the bank should not have stopped servicing the withdrawals.

“If you are a bank, and you get deposits from the public, then you should have the resources to pay those deposits,” he said. “If the bank did not bring those funds elsewhere, then why was it not able to pay its depositors?”

In its full-page advertisement, Banco Filipino claimed it had inventory of valuable real estate properties which were acquired through foreclosures in the 1980, “These properties are coveted by many groups,” the advertisement claimed.

Listing some of its prime properties, the bank mentioned the following on the advertisement: 84 hectares in Daang Hari in Cavite; 78 hectares in Quezon City; 102 hectares in San Jose Del Monte and Norzagaray, Bulacan; 42 hectares in Naga City; 38 hectares in Pagudpod Beach, Ilocos Norte, and assets in Las Piñas and Parañaque.

“These assets have aggregate value of at least P30 billion. Total deposits are only P15 billion,” the bank said. “The Monetary Board and the Bangko Sentral are fully aware of the valuable assets held by the bank, which are worth much more than its liabilities.”

The Philippine Deposit Insurance Corp. (PDIC), which is the bank’s receiver, will convert these assets into cash to pay the bank’s deposits and creditors.

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PDIC begins inventory of Banco Filipino assets

Roy — Wed, 23 Mar 2011 16:28:51 +0000

While it is still processing the payment of deposit insurance to its depositors, the Philippine Deposit Insurance Corp. (PDIC) also started in its inventory of the assets of the closed Banco Filipino Savings and Mortgage Bank.

Officials of the closed bank, however, insists that it is not insolvent. It even went into having full-page advertisement in newspapers claiming that it has an inventory of valuable real estate properties that were acquired through foreclosures from way back in the 1980s.

The list of bank’s properties include:

an 82-hectare prime property along Daang Hari
a 78-hectare property in Quezon City
a 102-hectare property in San Jose Del Monte and Norzagaray areas
a 42-hectare property in Naga City
a 38-hectare property in Pagudpod Beach in Ilocos Norte
and several properties in Las Piñas and Parañaque.

Banco Filipino said that the BSP’s Monetary Board (MB) was fully aware of the valuable assets held by the bank that is worth more than its liabilities. “These assets have an aggregate value of at least P30 billion while total deposits are only P15 billion,” the bank said in its notice.

The bank also claims that all of its loans granted to its clients are fully secured by real estate properties whose aggregate values are much more now than at the time the loans were drawn. It said, “The Monetary Board had no basis for its action which caused the heavy withdrawals. The bank had enough collateral to cover the bank’s immediate requirement and the situation should not have been magnified.”

Banco Filipino was ordered closed by the BSP last March 17 and placed it under receivership by the PDIC after it failed to reopen for three straight days as the liabilities of the overwhelmed its assets by P8.4 billion.

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Banco Filipino seeks help from the Court of Appeals

Roy — Mon, 21 Mar 2011 19:52:58 +0000

The Bangko Sentral ng Pilipinas (BSP) issued closure order last for Banco Filipino Savings and Mortgage Bank and put it under receivership by the Philippine Deposit Insurance Corp. (PDIC) due to its capital deficiency.

Banco Filipino on Monday asked the Court of Appeals to the closure order of BSP. Perfecto Yasay, BF vice chairman and former chair of the Securities and Exchange Commission said they filed a petition for certiorari with the Court of Appeals to declare the BSP order as illegal.

Yasay said Banco Filipino is questioning the legality of the order issued by BSP against them. He pointed out that there is a preliminary mandatory preventive injunction already issued by the Makati City Regional Trial Court Branch 66 which orders BSP to implement the BSP and Monetary Board approved business plan. “We are asking the Court of Appeals to issue a temporary restraining order and/or preliminary injunction against the BSP order,” he said.

The BSP said that Banco Filipino has insufficient realizable assets to meet its obligation with its net realizable value at -P8.4 billion. This was contested by Yasay who maintained that they are not insolvent and has assets worth P25 billion.

A decision made by the Makati RTC in 2009 ordered the BSP and the MB to immediately implement BF’s approved business plan by releasing without delay, the P25-billion financial assistance and a package of regulatory relief. This was affirmed by the Court of Appeals last year.

Banco Filipino was first closed by the then Central Bank of the Philippines headed by the late Jose “Jobo” Fernandez Jr. as its governor and chairman of the MB. The Supreme court declared the closure “arbitrary and with grave abuse of discretion” in 1991, which became final in 1992.

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BSP said banking system in the country is stable

Roy — Mon, 21 Mar 2011 07:52:31 +0000

The Bangko Sentral ng Pilipinas (BSP) said that despite the closure of Banco Filipino Savings and Mortgage Bank last week, the country’s banking industry remains sound and stable. BSP Governor Amando M. Tetangco Jr. said they have not monitored any negative impact on the banking industry sine Banco Filipino was ordered closed by the Monetary Board (MB) last March 17.

“As we said in our statement, the banking system remains sound and stable. We have not observed any negative impact on the rest of the banking system,” he stressed.

Monetary authorities believe that 2010 was a banner year for the Philippine banks contributing largely to the country’s stronger-than-expected economic growth. Bank deposits went up by 9.8 percent to P5.1 trillion last year while banks’ loans posted a double-digit growth of 11 percent to P2.314 trillion as of January.

Income of Philippine banks doubled to about P4.1 billion as of end-June last year from P20.5 billion as of end-June 2009. The total assets of the banking system rose by 7.2 percent to P6.7 trillion as of end-September last year from P6.2 trillion as of end-September 2009.

The BSP reported that the banking system posted a capital adequacy ratio of 15.23 percent on solo basis and 16.21 percent on consolidated basis as of end-June last year. This ratio was well above the 10 percent minimum requirement of the BSP and the 8 percent standard ratio of the Basel Accord.

The implementation of BSP Circular 639 or the implementing regulation on the International Capital Adequacy Assessment Process (ICAAP) this year would further strengthen the country’s financial sector. And to add to that, BSP also raised the minimum capital requirement for new entrants in the banking industry to boost their competitiveness and further strengthen the country’s banking system.

From the P325 million, the BSP raised the minimum capital requirement for thrift banks to P1 billion for those with head offices in Metro Manila. For those whose head offices are in Cebu and Davao, the capital requirement was raised from P52 million to P500 million. In other areas, minimum capital requirement for thrift banks was also raised to P250 million from P52 million.

This capital requirement will be implemented on new thrift banks, those converting their existing banks to a thrift bank, and those relocating their head office in areas of higher classification.

The minimum capital requirement for rural banks was also raised by BSP last November. For those with head offices in Metro Manila, it is now P100 million from the previous level of P26 million; for those whose head offices are located in Cebu and Davao, it was increased from P13 million to P50 million. Those in municipalities belonging to first to fourth class, it was raised to P10 million from P6.5 million, and those in the fifth to sixth class municipalities, it was raised P5 million from a previous P2.6 million.

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Initial schedule of Depositors’ Forum set by PDIC

Roy — Sat, 19 Mar 2011 10:58:08 +0000

After taking over the operations of Banco Filipino Savings and Mortgage Bank upon the order of Bangko Sentral ng Pilipinas (BSP), the Philippine Deposit Insurance Corp. (PDIC) has already started processing payment of deposit insurance to the bank’s depositors.

First to be paid out are those whose balances do not exceed P5,000. These depositors need not file any claim, and PDIC will send their payments through mail in the form of postal money order (PMO) which can be encashed at postal offices or Land Bank of the Philippines branches.

For those with balances of P5,000 and above, including those with loan balances and whose records are not updated with the bank, PDIC will hold a Depositors’ Forum to discuss the procedures and requirements for filing claims. The Claim Forms will also be distributed to depositors during the forum.

PDIC sets the initial schedule of the forums on the following dates:

March 22

PDIC Chino Roces Avenue, Makati City, at 9:30 a.m., for Banco Filipino head office depositors

PDIC Chino Roces Avenue, Makati, at 3 p.m., for BF Guadalupe branch depositors

March 23

PDIC Chino Roces Avenue, 10 a.m., for BF JP Rizal branch depositors

PDIC Chino Roces Avenue, 1:30 p.m., for BF Makati Avenue/Benavidez branch depositors

Lazatin Library Museum, Angeles City, Pampanga, 1 p.m., for Angeles City branch depositors

March 24

San Juan Gym inside Elementary School, San Juan City, 9 a.m., for BF Mandaluyong, San Juan and Greenhills branch depositors

March 30

Pamana Hall, City Hall compound, San Pablo City, Laguna, 10 a.m., for BF San Pablo branch depositors

Schedules of the forums for other branches will be announced later.

For those who may not be able to attend the forums, they may get Claim Forms at their branch of account or download it from the PDIC website at www.pdic.gov.ph.

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PDIC to process payments to Banco Filipino depositors

Roy — Fri, 18 Mar 2011 07:47:26 +0000

After ordering its closure, and putting it under the receivership of the Philippine Deposit Insurance Corporation (PDIC), the next order of business is how to give back the money to the bank’s 177,652 depositors of Banco Filipino Savings and Mortgage Bank. BSP Deputy Governor Nestor Espenilla Jr. said that from the total number of depositors, 97 percent are considered small depositors and covered by the deposit insurance of P500,000 each.

Espenilla said that PDIC immediately took over the head office of Banco Filipino in Makati City on Thursday afternoon in order to secure vital records and documents, as well as prevent further dissipation of the bank’s assets. “The BSP is coordinating closely with PDIC so that deposit insurance can be paid out as soon as possible. In this connection, the condition, coverage, and quality of the records and document of Banco Filipino will be material in ensuring immediate service to depositors,” he said.

The first to be issued payments are depositors with balances of P5,000 and below, which account for about 53 percent of the total account holders. The BSP said these depositors no longer have to file their deposit insurance claims. The PDIC would immediately process and mail payments within the week.

Depositors would be receiving their money in the form of postal money order, which they can convert to cash at postal offices or at branches of Land Bank of the Philippines.

Meanwhile, those with balances above P5,000 will have to file their claims and they will still have to be validated.

“For depositors with account balances of more than P5,000, claim forms will be distributed during Depositors’ Forums to be conducted nationwide next week. During the forums, procedures, instructions and requirements for filing claims will be discussed. The schedule for claims receiving will be announced shortly after the examination of bank records,” PDIC president Jose Nograles said in a statement.

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BSP ordered closure of Banco Filipino

Roy — Fri, 18 Mar 2011 02:02:13 +0000

After closing its doors last Monday, “temporarily” as it claimed, Banco Filipino Savings and Mortgage Bank was shut down by the Bangko Sentral ng Pilipinas (BSP).

BSP ordered the closure of Banco Filipino yesterday for insolvency after its liabilities overwhelmed its assets by P8.4 billion, prompting monetary authorities to prepare charges against the board of directors and officials of the bank.

BSP Deputy Governor Nestor Espenilla Jr. said the seven-member Monetary Board (MB) decided to place Banco Filipino under the receivership of the Philippine Deposit Insurance Corp. (PDIC). With its net realizable value at -P8.4 billion, he said Banco Filipino will not be able to meet its obligations

Espenilla added that the MB took note of the failure of Banco Filipino’s board of directors and management to restore its financial health and viability despite the considerable amount of time given to them. The BSP extended P3.5-billion worth of emergency loans to the bank in 2002, P2.6 billion of which remains outstanding.

The MB rejected on Monday, another request from the bank for a P3-billion emergency loan to cover its huge “overdraft” amounting to over P900 million. “It has therefore decided to prohibit Banco Filipino from doing business in the Philippines and to place its assets and affairs under receivership,” Espenilla said, citing section 30 of Republic Act 7653 or the New Central Bank Act. The decision, he said, would provide immediate relief to the bank’s 177,652 depositors.

Espenilla said the MB authorized the filing of appropriate cases against the directors, officers, and other individuals who may be found liable for violation of banking laws and BSP rules and regulations that led to the bank’s financial woes. He revealed Banco Filipino lost around P2 billion a year from 2007 to 2009, and P277 million monthly in the first nine months of 2010.

He added that aside from the interest payments amounting to P1 billion a year, the bank incurred huge expenses, like P500 million for compensation, which was 2.5 times its gross income; and legal fees amounting to P131 million or about 61 percent of its gross income, which are way above industry levels.

The MB also noted that more than half of Banco Filipino’s outstanding loans amounting to P4.1 billion went to directors, officers, stockholders and related interest (DOSRI).

Meanwhile, Banco Filipino vice chairman and former Securities and Exchange Commission chairman Perfecto Yasay Jr. said he would file necessary charges against BSP, which he said earlier was to blame for the bank’s predicament.

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Banco Filipino closed doors to depositors “temporarily”

Roy — Wed, 16 Mar 2011 01:59:29 +0000

Banco Filipino Savings and Mortgage Bank branches in the country were closed yesterday after experiencing heavy withdrawals from its depositors worried about its financial health. The thrift bank has 62 branches in the Philippines, with a total of P17 billion worth of deposits.

Banco Filipino vice chair Perfecto Yasay assured depositors that they bank is still in operation, denying reports that it had taken a unilateral bank holiday. Since Monday, there were talks that some Banco Filipino branches in provincial areas had not opened and that their manager’s checks had bounced.

The bank also blames the Bangko Sentral ng Pilipinas for its financial woes, citing the non-implementation of a rebuilding plan that would require P25 billion in liquidity infusion from the banking regulator. Yasay said the P25 billion infusion was part of the BSP obligation to the bank.

Banco Filipino was shut down by the then Central Bank of the Philippines, which was BSP’s predecessor, during the Marcos regime in the 1980s, but was reopened in 1994 after the Supreme Court ruled its closure as arbitrary.

The BSP said it already asked Banco Filipino to clarify its financial situation, following reports that it had declared a voluntary “bank holiday.” The banking confirmed that it had received reports and complaints from the bank’s depositors from various parts of the country. “Accordingly, we have sent a letter addressed to the management of Banco Filipino asking them to explain the bank’s status to its clients and to the BSP. We are now waiting for their official response,” BSP said.

Amidst the requests for explanation, Yasay reiterated the need for the BSP to immediately implement the approved P25-billion business plan as ordered by the Makati Regional Trial Court. He also said that the court has prohibited the BSP and the Monetary Board, its officials and agents, from committing any act prejudicial to the operations of the bank.

He assured the depositors and the public in general, that as soon as they receive official notice on the action taken by the BSP and Monetary Board, that they will be advised.

Meanwhile, Philippine Deposit Insurance Co. president Jose Nograles that their office has the mandate to take over the operations of Banco Filipino, but as of date, they have not yet received any order from the BSP to do so.

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Coffee Fund to finance coffee production to be set-up

Roy — Sun, 13 Mar 2011 16:36:46 +0000

To meet the local coffee demand of 64,000 metric tons (MT), a Coffee Fund to finance production is being set up by the Land Bank of the Philippines and (LBP) and coffee grower Corporate Holdings Management Inc. (CHMI).

President Noel S. Gonzales of CHMI said, “Any business will not survive without funding from banks. We can’t finance 100 percent of the equity for our production which is why we’re setting up a Coffee Fund with Land Bank for the Industry.” CHMI is now the largest coffee grower in the Philippines with 200 hectares of coffee plantation.

The template for financing coffee production being set up by CHMI with LBP will standardize financing for the coffee industry, according to Gonzales. He said this will attract commercial banks and other financiers to accommodate coffee growers. Usually, they veer away from this because of the industry’s many inherent risks, like calamity threats, production inefficiencies, and lack of markets.

Gonzales also said that there must be a guarantee loan fund to be set up by the government for agricultural production. “We will also need a guarantee from the government so that banks will lend without collateral. The government can guarantee 85 percent of the loan. The rest is still taken as a risk,” he said.

For its part, LBP, through its vice-president Liduvino S. Geron, said they have a mandate to prioritize agricultural production, especially coffee. “Among the crops, coffee is the nearest to Land Bank. It’s one of the high value crops. We have launched the Food Supply Chain program to promote value chain financing. We’re trying to link producers with millers, processors, and markets, and we’ll provide loans for these. We are prepared to finance post harvest, irrigation, transport, and warehousing facilities to ensure the produce and commodities reach markets.”

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Why time deposit is still a viable investment option

Roy — Mon, 28 Feb 2011 14:44:59 +0000

Jesus Vicente-Garcia, executive vice-president and branch banking head of Philippine Veterans Bank, believes that time deposit remains to be one of the simplest, safest and most rewarding investments . Despite the many investment options available in banks, Garcia explained that a time deposit is a sound option to grow one’s investment because it enjoys higher interest rates.

Compared to a regular savings account, a time deposit is assured of a maximized return. Garcia illustrated a P500,000 investments on Veterans Bank’s Maxi-Return Time Deposit as an example. In their time deposit, a monthly compounding interest rate of six percent will net for the depositor an interest amount of about P174,000 at the end of five years. The actual interest amount will depend on the date the time deposit was opened.

The bank EVP was quick to add that the interest rate isn’t the only reason why a time deposit is a viable option. He said, “Aside from the high interest rate that you’ll get on your time deposit, it’s also a safe way to grow your money. Your investment is intact from the start as a time deposit is not driven by market factors like investment in stocks, or in mutual funds, or UITFs (unit investment trust fund).”

Garcia also added that time deposits are covered by the Philippine Deposit Insurance Corp. (PDIC) guarantee. Being a traditional bank product, they guaranteed up to P500,000 per depositor. UITFs are not covered by PDIC guarantee.

Short term time deposits are advisable for entrepreneurs who would like to get higher interest rates than a regular savings account, yet allow them flexibility to have the funds available should they need them in their business. A long term time deposit, on the other hand, is best for those who can afford to have money tied up for a long time, and without immediate need. Longer terms obviously would higher interest rates.

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World Bank acknowledges Philippine’s growth potential

Roy — Sat, 26 Feb 2011 08:49:20 +0000

Based on World Bank’s (WB) assessment, the Philippines have the potential of generating more investment this year, as well as next year. The World Bank cited recent reports about improving business sentiments that could fuel economic growth faster than its previous estimates. It has set its growth forecast for the Philippines at 5 percent this year and 5.4 percent for 2012, adding that these figures could be exceeded if the improving sentiment would translate to actual investments.

Bert Hofman, country director of the World Bank for the Philippines, stated in their latest “Philippines Quarterly Update,” that “Strong private investment in the fourth quarter of 2010 and bullish business confidence are encouraging signs that the economy can attract investments needed to boost potential growth and generate more jobs.” He also said that the county was poised to generate more income from exports its continuing efforts to diversify its markets.

The Philippine government, however, has a projection of 7 to 8 percent growth for 2011 and 2012, respectively. The country’s actual growth last year was 7.3 percent. The World Bank said that the lower growth rate it gave for this year and 2012 was because they considered that the robust growth last year was partly due to base effects, as the economy had slowed down in 2009. But it said the country has a chance to grow faster than projected, in its latest quarterly report.

Eric Le Borgne, World Bank’s chief economist for the Philippines, said, “Government efforts to improve the investment climate, tackle corruption and weak governance, along with more credit rating upgrades could boost investor confidence and attract more private investments in the next few years.”

The World Bank also cited business process outsourcing (BPO) and tourism, as the two industries that could generate more investments and therefore register the fastest growth this year. The bank’s report also stated the risks that could affect the country’s ability to grow faster, these are extremely bad weather condition which could disrupt food supply, and increases in the prices of oil and other commodities in the world market.

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BSP issued circular increasing bank’s SBL

Roy — Sun, 13 Feb 2011 09:54:20 +0000

A new circular containing the guidelines on the additional single borrower’s limit (SBL) for exposures of banks to proponents of major infrastructure or development projects, oil companies and trust corporations. According to BSP Governor Amando M. Tetangco, Jr., the new guidelines amended the regulation on SBL under the provision of the Manual of Regulation for Banks and the Manual of Regulation for Non-Bank Financial Institutions.

The circular stated that the total amount of loans, credit accommodation guarantees may be increased by an additional 10 percent of net worth of such bank as long as the additional liabilities are adequately secured by trust receipts, shipping documents, warehouse receipts or other similar documents transferring or securing title covering readily marketable, non-perishable goods which must be fully covered by insurance.

The BSP governor noted an additional 25 percent SBL for exposures of banks to infrastructure and development projects qualified under the Public-Private Partnership (PPP) program of the Aquino government. The total exposure of the bank to any borrower pertaining to such PPP infrastructure and development projects, Tetangco said, should not exceed 25 percent of the net worth of such bank and the same will only be allowed for a period of three years.

Aside from the PPP projects, the circular also provided an additional 15 percent SBL to be granted to finance oil importation of oil companies that are not subsidiaries or affiliates of the lending bank engaged in the energy and power generation. The credit risk concentration arising from total exposures to all oil companies should be considered by the bank in its internal assessment of capital adequacy relative to its overall risk profile and operating environment. It should also be incorporated in the internal capital adequacy assessment process (ICAAP) document.

Before the new circular was issued, each bank’s exposure to a single borrower was limited only 25 percent of its capital. BSP however decided to ease the requirement to ensure there is adequate supply of oil and petroleum products in the country, as well as to support the major infrastructure and development projects under the Aquino administration’s PPP scheme.