The Market Monitor Minding the Nation's Business
By Riza Lozada
Filipinos working abroad can look forward to having a bank dedicated to their needs and a chance to invest in government securities as the Department of Finance (DOF) said a state-owned OFW bank will open in October while at least $500 million worth of US-dollar OFW bonds is being planned for overseas issue next year.
The OFW bond will be the second that the government will issue after the $346 million fixed-rate multi-currency three and five-year debt papers it issued in the country in 2010.
Finance Secretary Carlos Dominguez III said the DOF is completing regulatory requirements for the bond float.
”It will be issued next year because we are just going to acquire that and remake it, restructure it in October,” he said.
Dominguez said they planned to issue the bond in areas where there were large number of OFWs such as in Saudi Arabia and the United States.
National Treasurer Rosalia de Leon said they planned to issue the new OFW bond overseas to allow the OFWs to directly invest in it instead of their families, which what happened in 2010.
”I think there is a market (for the debt paper) given the liquidity of the OFWs,” she said, citing that this debt paper will provide the overseas workers “a safer, more secure, and higher yielding instrument.”
”Of course for their investment appetite we have to make sure what tenors they would like, what would be better – shorter end of the curve or something much longer to serve their investment appetite,” she said. De Leon said regulatory approvals are also needed from governments of the place of issue.
Dominguez added the establishment of the proposed OFW bank is targeted this October. “The target is early October. We’re okay there,” he said.
The Duterte administration eyes to tap state-owned Postal Bank for this purpose.
De Leon added the Land Bank of the Philippines (Landbank), another government financial institution, has done the valuation of Postal Bank and is now preparing to get regulatory approvals.
“Following that we are going to approach already the Postal Corporation and negotiate on the price,” she added.
Dominguez said Landbank has placed the value of Postal Bank at a P580 million loss for government.
“This bank has been struggling for many years but you know that is an internal negotiation between two government agencies, so we will settle it among ourselves,” he said.
“The valuation is not really important. What is important is that we establish a bank that is focused on marketing its services to the OFWs to make their banking transactions easier,” he added.
Earlier, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor Espenilla Jr. said Landbank’s plan to take under its wing Postal Bank, which will be refocused to cater to OFWs, does not need Congressional approval since this process will not involved any change in Landbank’s Charter.
“LBP is set to appoint new directors and key management,” he said, but noted that this “needs BSP approval,” he said.
“They are in close coordination with BSP to expedite transaction. Good progress is being made,” he added.