Launching of OFW Bank Postponed

The proposal to launch a bank owned by overseas Filipinos has hit a snag, its maiden operation pushed back at least three more months later than originally intended in accordance with a regulatory directive, the Land Bank of the Philippines (LandBank) said.

According to LandBank President and CEO Alex V. Buenaventura, the Bangko Sentral ng Pilipinas (BSP) has asked for the revision of the business plan for the proposed lender, specifically pointing out that if it wants to be classified as a bank, it cannot just offer a remittance service but should also be offering loans for its clients.

“We have to revise the business model, we will resubmit,” Buenaventura told financial reporters as he got back from a meeting with BSP officials on the lender’s proposed launching.

He acknowledged that when he presented the regulators with the bank’s proposed business plan, he was told to make revisions: “We have to have loans. To be a bank intermediate [we also have to], accept deposits and we have to lend.”

The directive, Buenaventura said, will cause delays in launching the bank since the revised business plan needs to pass past the BSP, the Philippine Competition Commission (PCC) and finally through the Securities and Exchange Commission (SEC).

He reckoned the BSP review would likely take at least three months, plus another three months at the SEC.

From the original proposed opening in January 2018, the launching had been moved to sometime in April next year instead, in Dubai, according to Buenaventura.

“It looks like April will be the new target,” he reiterated.

As to the required revisions in the business plan, Buenaventura said they must add a loans department instead of just the remittance section, as proposed in the original business plan.

He added the authorized capital of the Philippine Postal Savings Bank Inc. (Postal Bank) of P1 billion will be retained and its shares reclassified into preferred shares of P300 million and common shares of P700 million.

“We will retain the existing authorized capital of the Postal Bank at P1 billion, but we will reclassify [them] into preferred shares of P300 million and P700 million common shares,” he said.

The proposed Overseas Filipino Workers Bank will make available the P300 million worth of preferred shares for subscription to OFWs.

Buenaventura added the loan operations will be conducted only in the Philippines, although the marketing of its remittance services will be made abroad.

The opening of accounts at the bank is subject to the mandatory know-your-customer (KYC) rules of the BSP.

“The KYC requirements will be secured there and sent here. The opening of accounts will be done here. You can use the automated teller machine card anywhere, but from abroad they will have to remit funds so that savings will be credited to their accounts here,” he said.

Earlier this year, President Duterte vowed to establish a bank servicing the transactional requirements of OFWs.

LandBank acquired and converted the Postal Bank into a subsidiary whose capital structure would be owned 30 percent by OFWs. – Business Mirror