OFW Bank to open in 2017 | SunStar

OFW Bank to open in 2017

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OFW Bank to open in 2017

Wednesday, December 21, 2016

Dedicated to the OFWs. The Duterte administration is opening an OFW Bank in the third quarter of 2017. An official from the Cebu Bankers Club said that amid expected competition, private commercial banks still have a huge advantage in terms of network. But if the government establishes remittance centers where these OFWs are, this could certainly affect the private commercial banks. (Sun.Star File)

TIGHTER competition looms in the Philippine banking industry as the national government announced its efforts to pursue the creation of an "OFW Bank."

Cebu Bankers Club immediate past president Maximo Rey Eleccion said while it is still premature to weigh its effects on the banking industry, he said private commercial banks have a huge advantage in terms of their network.

"We cannot say for now but it will be very difficult to compete with us, existing commercial banks, because we already have the network. (We already have in place) correspondent banks and remittance tie-ups that we built throughout the years of our operations," Eleccion told Sun.Star Cebu.

However, should the OFW Bank come out to be aggressive in its expansion, the local banker sees this affecting privately-owned commercial banks.

"If they really go big (and) establish remittance centers where OFWs are concentrated, they would certainly affect us," added Eleccion.

Campaign promise

Finance Secretary Carlos Dominguez earlier said that the Duterte administration is slated to open a bank partly owned by OFWs in the third quarter of 2017. This is part of the fulfillment of President Rodrigo Duterte's campaign promise that he would set up a bank dedicated to OFWs.

The OFW Bank, according to the Department of Finance, will be established through the LandBank’s acquisition of the Philippine Postal Savings Bank, which will be converted into a LandBank subsidiary, where 30 percent of it will be owned by OFWs.

P3 billion capital

In news reports, LandBank president Alex Buenaventura was quoted as saying it would take eight months to accomplish the requirements that would convert Postal Bank into a LandBank subsidiary.

The OFW bank, he said, will be a listed company with an authorized capital of P3 billion and a subscribed capital of P2 billion, of which P1 billion is paid-up by the LandBank. Another P1 billion will be open for subscription to OFWs who can acquire them by buying shares in the bank, the official added.

The LandBank will have to seek clearances from the Governance Commission for Government Owned and Controlled Corporations (GCG) and the Philippine Competition Commission (PCC). In addition, it also needs approvals from the Monetary Board, Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP) for the OFW bank to be operational by Sept. 1, 2017.

Saudi Arabia branch

Also by September next year, Dominguez said the bank targets to open a branch in Riyadh where it can serve 800,000 OFWs in the Middle East.

Starting Jan. 2, the LandBank, with the involvement of the Commission on Audit and the BSP, will begin undertaking due diligence to start the process of converting the Postal Bank into a LandBank subsidiary, said Buenaventura.

Published in the Sun.Star Cebu newspaper on December 22, 2016.

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