State banks await concrete plan on OFW bank

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State banks await concrete plan on OFW bank
Posted: 9:25 PM Jun. 11, 2006
Doris C. Dumlao
Inquirer

Published on page B4 of the June 12, 2006 issue of the Philippine Daily Inquirer

THE STATE-OWNED BANKS EYED to participate in the Malacañang-backed P1-billion Overseas Filipino Workers (OFW) Bank are awaiting a concrete proposal on the project from the government before making any investment decision.

"We're still trying to see what Postal Bank can offer us in terms of infrastructure and distribution. At this point in time, unless there's a concrete proposal on the table, we'll just continue with what we're doing," said Development Bank of the Philippines president Reynaldo David.

David announced plans to invest P300 million to beef up its own OFW remittance business. The bank has signed up correspondent banks to boost its cash transfer operations in key offshore markets.

It was earlier reported that DBP and Land Bank of the Philippines were planning to jointly acquire up to 70 percent of the proposed OFW Bank to be created out of niche lender Philippine Postal Bank.

DBP and Landbank were eyed to provide the seed capital needed by OFW Bank, with equity infusion of P350 million each. PostalBank, for its part, will contribute P300 million out of its existing resources to meet the proposed capitalization of P1 billion.

The original plan had the Overseas Workers Welfare Administration shouldering the entire P1-billion capitalization but there were legal questions on the plan.

The alternative scheme was for government banks to infuse the P1 billion, while OWWA would contribute another P1 billion later by subscribing to preferred shares.

When everything was ready, David said DBP could fold into the new bank the state bank's remittance operations and its people could also be consolidated.

"We're amenable, there's no doubt about it. We feel they have the distribution capability. But it's a long way to go," David said.

Government banks were invited to invest in the proposed OFW Bank. The banks were asked to pool their resources under one entity that will be focused on serving the interest of migrant Filipino workers.

Landbank and DBP were expected not only to provide fresh capital but also transfer their existing remittance operations to OFW Bank. The state banks will have the management control in the new bank.

Last March, Malacañang announced the transformation of Postal Bank into an OFW Bank.

Press Secretary and Presidential Spokesperson Ignacio R. Bunye said: "Given the vital role that OFWs play in strengthening the peso and shoring up international dollar reserves, it is only fitting that they are given access to a bank that will attend to their special needs."

President Macapagal-Arroyo wants the OFW Bank to charge less service fees in handling remittances of Filipino workers abroad.

The Philippines has 8.5 million workers deployed abroad, of which three million are permanent residents. The five million non-permanent resident workers represent 14 percent of the country's labor force.