Lawmaker urges probe of 'unreasonable fees' charged for ATM transactions

By Jodeal Cadacio
Reporter

 

AN opposition lawmaker on Wednesday urged the House Committee on Banks and Financial Intermediaries to investigate in aid of legislation the imposition of service fees in cross-bank automated teller machine transactions, citing numerous complaints from depositors.

House Deputy Minority Leader Joel Villanueva of the Citizens’ Battle Against Corruption said the panel, chaired by Lakas Rep. Jaime Lopez of Manila, should look into the reasonableness of the fees being charged by banks.

Villanueva said his office was swamped by complaints regarding what the public perceived as “unreasonable fees” charged every time they use ATMs to make withdrawals or even balance inquiries.

“Some banks charge P5 [per transaction], others P12 for every withdrawal. Some even charge P2 for a mere balance inquiry,” an indignant Villanueva said.

“We want to be able to determine if these charges are reasonable, considering all the other charges imposed on each depositor when maintaining a bank account.”

Villanueva’s call for a probe is embodied in House Resolution 1324, in which he noted that in 2003 alone, some P24 billion was generated by banks from fee-based transactions that include ATM service fees.

The amount represented an 11-percent increase from the 2002 level of almost P22 billion based on official documents from the Bangko Sentral ng Pilipinas. There are more than 16 million ATM cardholders who transact business with some 6,285 machines all over the country.

“If we want to help ordinary Filipinos improve their lives, we have to find ways to encourage them to get involved in small- and medium-scale business and transact with banks. But they are being discouraged because of these unexplained and unreasonable fees,” Villanueva said.

He said the policy of imposing service fees has become a burden for depositors. “With many of our people struggling economically, it is unfair that banks would even use the ATMs as a lucrative revenue-generating scheme,” Villanueva said.

http://www.businessmirror.com.ph/eco03.php

Wider investment areas sought

BANK TRUST OFFICERS SEEK B.S.P.
OK TO PUT MONEY IN OVERNIGHTS

 

BANK treasury officials want to be able to invest in more areas than current rules permit and have sought permission from the Bangko Sentral ng Pilipinas to put some of their holdings in the overnight market.

The intent, according to the president of the Treasury Officers Association of the Philippines (TOAP), Ma. Lourdes de Vera, was to give the unit investment trust fund (UITF) managers greater access to liquid assets than is currently possible.

Strict BSP guidelines limit the areas to which UITFs may invest in “only tradable securities,” essentially government securities, deposits and tradable loans.

“We feel the existing permissible areas too limiting and we have communicated this informally to the BSP,” de Vera said in a telephone interview.

The overnight is that portion of the vast financial market where banks and financial institutions find princely sums of money they need to meet reserve or operational benchmarks and avoid the painful monetary penalties that come with noncompliance.

Thus, a reserve-deficient bank may borrow a couple of billions from this facility with the intent of returning the loan in 24 hours. The BSP, for instance, makes available at this market a portion of its vast resources for 9.75 percent.

But this market is off limits to UITFs as part of a phalanx of safeguards the BSP has put in place to keep the integrity of the UITF business intact.

De Vera said the TOAP request was forwarded to deputy BSP Governor Nestor Espenilla Jr. in May when the market was most volatile.

Up to now the regulators have not come back to say the overnight market was a permissible area of investment for UITFs, de Vera said.

De Vera, also senior vice president at the trust banking group of Banco de Oro Universal Bank, appeared cool to an internally suggested proposal allowing UITFs to set aside a portion of their holdings as exempt from the marking-to-market rule.

Marking to market allows fund managers to calculate daily the present or market value of holdings relative to the number of investors, such that each investor can always know whether his investments have inflated or been eroded.

The globally practiced marking to market replaced the accrual method used in computing the value of one’s investments in the now unwinding common trust funds.---J. Vallecera

http://www.businessmirror.com.ph/sfp01.php

Bank risk management rules readied

By LEE C. CHIPONGIAN

The Bangko Sentral ng Pilipinas is preparing a new circular dictating how banks should manage liquidity and market risks, especially banks’ vulnerability on interest rates risk.

"These are supervision guidelines on risk management and what are the BSP expectations (before considering) that a bank is properly controlling its liquidity and market risks including interest rates risk," BSP Deputy Governor Nestor A. Espenilla Jr. told reporters over the weekend. He said the guidelines are not strictly Basle2, but more in line with international best practices.

Espenilla said the draft circular would ensure that financial institutions or FIs are clear about their market risks. "The important principle here is to lay down the oversight responsibility internally, within the organization — from the board to management."

The 20-page draft circular is now circulated for comment. It contains guidelines on market risk management to ensure that financial institutions including trust departments have the knowledge and skills necessary to understand and effectively manage market risk.

"(It is what the) BSP expect (from banks) with respect to the management of market risk (to provide) more consistency in how the risk-focused supervision function is applied to this risk. FIs are expected to have an integrated approach to risk management and to identify, measure, monitor and control risks," the proposed circular said.

Market risks include interest rate risk, foreign exchange risk, equity risk and commodity risk.

"The BSP is aware of the increasing diversity of financial products and that industry techniques for measuring and managing market risk are continuously evolving. As such, the guidelines are intended to be for general application; specific application will depend to some extend on the size, complexity and range of activities undertake by individual financial institutions," the central bank said.

The draft however made it clear that the level of market risk assumed by an FI is not necessarily a concern, so long as the FI has the ability to effectively manage the risk.

"BSP will not restrict the level of risk as long as FI understands, measures, monitors and controls the risk assumed. Adopts risk management practices whose sophistication and effectiveness is commensurate to the risk being monitored and controlled and maintains capital commensurate with the risk exposure assumed," the draft explained.

"If the BSP determines that an FI risk exposures are excessive relative to the FI capital, or that the risk assumed is not well managed, the BSP will direct the FI to reduce its exposure and/or strengthen its risk management systems to an appropriate level," the proposed circular said.

In determining the adequacy and effectiveness of an FI’s market risk management process the BSP will consider:

—The major sources of market risk exposure and the complexity and level of risk posed by the assets, liabilities and off-balancesheet activities of the FI

—The FI’s actual and prospective level of market risk in relation to its earnings, capital and risk management systems

—The adequacy and effectiveness of the FI’s risk management practices and strategies as evidenced by:

—The adequacy and effectiveness of the board and senior management oversight

—Management’s knowledge and ability to identify and manage sources of market risk as measured by past and projected financial performance

—The adequacy of internal measurement, monitoring and management information systems

—The adequacy and effectiveness of risk limits and controls that set tolerances on income and capital losses

—The adequacy of the FI’s internal review and audit of its market risk management process.

 

http://www.mb.com.ph/BSNS2006071068904.html

Inflation slows to 6.7% in June

By Des Ferriols
The Philippine Star 07/06/2006

The nationwide inflation rate slowed to 6.7 percent in June from 6.9 percent in May as pricing pressures eased in almost all key commodities, the National Statistics Office (NSO) reported yesterday.

The figure was at the lower end of the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 6.5 to 7.2 percent for the month and was also sharply lower than the 7.6-percent inflation rate in the same month last year.

For the first half of the year, inflation averaged at 7.1 percent. Core inflation, which excludes selected food and energy prices, eased to 5.8 percent in June from 6.1 percent in May.

"The deceleration from May is consistent with the projected downtrend in inflation and provides support to the recent decision of the Monetary Board to maintain the policy rates," BSP Governor Amando M. Tetangco Jr. said.

Last week, the BSP kept its key overnight rates unchanged for the ninth straight time since October 2005. Its overnight borrowing rate remains at 7.50 percent and its overnight lending rate at 9.75 percent.

Tetangco said prices are still increasing, but not as much as they did earlier in the year and pressures are likely to ease further in the second half.

"The June inflation rate is closer to the lower end of our forecast range for the month," he said. "It provides support to the recent decision of the Monetary Board to maintain policy rates."

The BSP said core inflation and other recent data continue to paint a scenario of limited demand-based pressures while latest BSP forecasts remained suggestive of decelerating inflation in the second half.

However, the BSP cautioned that the balance of risks to inflation was still shifting upwards, tracking the movement in oil prices and the possible adjustment in domestic power costs.

"In the near term, the current high oil price environment is likely to be sustained given a tight demand-supply balance in the international oil market," Tetangco said. Along with likely adjustments in domestic power costs, Tetangco said this pointed to a continuing environment of supply-side pressures.

"Such a prospect increases the risks to inflation expectations and the likelihood of second-round effects, particularly on wage-setting," he said.

Tetangco said the Monetary Board saw that the recent increase in oil prices had tilted the balance upwards and the prospect of continued oil price increases were building up supply-side pressures.

"Managing expectations as well as the risk of potential second-round effects in wage and price-setting thus remains the key policy priority," he said.

Easing inflation concerns could help keep interest rates steady but other factors may come into play, an analyst warned.

"The data in June gives the central bank a lot of leeway to maintain its rates but that is not the only factor to consider," said Jonathan Ravelas of Banco de Oro Universal Bank. – With AFP reports

 

http://www.philstar.com/philstar/news200607060701.htm

Fed hikes US interest rates to 5.25%

By JEANNINE AVERSA

WASHINGTON (AP) — The Federal Reserve hoisted interest rates to the highest point of 5.25 percent in more than five years but also raised hopes that a respite from two years of rate pain may be in sight. Wall Street rallied, breathing a sigh of relief.

The Dow Jones industrial average soared 217.24 points to 11,190.80 on Thursday, its biggest single-day jump in more than three years.

Wrapping up a two-day meeting Thursday, Chairman Ben Bernanke and other policymakers at the US central bank didn’t rule out another bump in rates. But they seemed hopeful that a slowing economy would lessen pressure on prices, leaving open the question of whether more increases would be needed to declare victory in their battle against inflation.

Fed policymakers said "the extent and timing" of any additional rate increases would hinge on how inflation and economic activity unfold.

They also dropped a phrase – contained in a statement issued at their last meeting on May 10 – that further interest rate increases "may yet be needed" to fend off inflation.

That omission – along with observations that economic growth was slowing – was viewed by some investors and economists as the Fed striking a slightly less hawkish tone about the future course of interest rates.

The Fed’s goal is to raise interest rates enough to keep inflation in check but not so much as to hurt economic activity.

To fend off inflation, the Fed unanimously decided on Thursday to increase its federal funds rate by one quarter percentage point to 5.25 percent. It marked the 17th increase of that size since the Fed began to tighten credit in June 2004.

The funds rate, the interest that banks charge each other on overnight loans, affects a variety of other interest rates charged to consumers and businesses and is the Fed’s primary tool for influencing economic activity.

In response, commercial banks raised their prime lending rate _ for certain credit cards, home equity lines of credit and other loans _ by a corresponding amount, to 8.25 percent.

The actions left both the funds rate and the prime rate at their highest points in more than five years.

Analysts had mixed opinions on whether rates would go up again at the Fed’s next meeting, Aug. 8.

"With 17 straight increases now under its belt, is the work of the Federal Reserve finally done? Very possibly," said Bernard Baumohl, executive director of the Economic Outlook Group, a consulting firm. The Fed’s statement "did not rule out another increase, but it did suggest that the economy was clearly slowing and all that was left at this point is to see how quickly it will be followed by lower inflation," he said.

Some economists predicted the Fed might boost rates again in August or maybe again in September, then stop for a while to assess how the economy is doing. Some analysts said they were now far less certain another rate increase would come.

"My sense is that they’ll get more information that the economy is slowing by August and they will pause," said Mark Zandi, chief economist at Moody’s Economy.com.

The economy grew at a brisk 5.6 percent pace in the first quarter of 2006, the fastest in 2 1/2 years. But activity in the current April-to-June period is expected to clock in at about half that pace _ from around 2.5 percent to 3 percent, analysts predict. High energy prices and a cooling housing market figure prominently in forecasts for a slowdown.

 

http://www.mb.com.ph/BSNS2006070168202.html

BSP maintains rates, says inflation on target

Friday, June 30, 2006

By Maricel B. Burgonio, Reporter

SEEING that inflation appears to be well contained, the Monetary Board has decided to keep interest rates unchanged.

“The Monetary Board believed that the evidence on current and expected inflation continues to support the maintenance of policy settings in the meantime,” Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. affirmed Thursday.

However, the risks to inflation outlook remain, mainly due to the movements in oil prices, wage hike and domestic power costs. 

Tetangco also added that rising global interest rates would be closely monitored in view of their impact on capital movements and inflation. 

The United States Federal Reserve is expected today to increase its current 5-percent rate by 25 basis points.

The board, meantime, has decided to maintain BSP’s key policy interest rates at 7.5 percent for overnight borrowing or reverse repurchase (RRP) rate and 9.75 percent for overnight lending or repurchase (RP) rate.

The rates have been in place since October last year despite the series of oil increases and US Fed hikes.

Tetangco explained core inflation and other recent data continue to paint a scenario of limited demand-based pressures, while the latest BSP forecasts remain suggestive of a deceleration in inflation in the second half, leading to within-target inflation in 2007. 

Based on the results of BSP’s surveys among households and private-sector ana­lysts, inflation expectations appear to be well contained.

Tetangco said oil price is likely to be sustained given a tight demand-supply balance in the international oil market. 

“Along with likely adjustments in domestic power costs, this points to a continuing environment of supply-side pressures. Such a prospect increases the risks to inflation expectations and the likelihood of second-round effects, particularly on wage-setting,” Tetangco said. 

The Monetary Board is confident it will reach its 4-percent to 5-percent inflation target for 2007, and stands ready to act upon evidence of escalating risks to the outlook for inflation and to inflation expectations.

In 2006 the BSP expects inflation to reach 7.3 percent to 7.9 percent.  For the month of June, inflation is expected to increase up to 7.2 percent from 6.9 percent in May.

 

http://www.manilatimes.net/national/2006/june/30/yehey/business/20060630bus1.html

Philippines central bank keeps key rates steady

06/29 5:40:53 PM

MANILA (AFP) - The Philippine central bank on Thursday kept its benchmark interest rates unchanged for a ninth straight month despite expectations the US Federal Reserve will hike rates again later in the day.

The Central Bank of the Philippines maintained its overnight borrowing rate at 7.50 percent and its overnight lending rate at 9.75 percent, the same level since a 25 basis-point hike nine months ago.

"The Monetary Board believed that the evidence on current and expected inflation continues to support the maintenance of policy settings in the meantime," a central bank statement said.

It cited central bank forecasts which "remain suggestive of a deceleration in inflation in the second half."

However it also warned that there were still risks to inflation, mainly signs that high oil prices will likely be maintained "in the near-term.

"Rising global interest rates will be closely monitored in view of their impact on capital movements and inflation," the statement added.

The decision comes amid expectations the US Federal Reserve will hike its key target rate by a further 25 basis points to 5.25 percent at the conclusion of its two-day policy meeting later Thursday.

 

http://www.philstar.com/philstar/NEWS_FLASH062920068590_14.htm

BPI seeks new license

The Ayala-controlled Bank of Philippines Islands is seeking a third foreign currency deposit unit license from the Bangko Sentral ng Pilipinas for its thrift bank subsidiary that will focus on Filipino migrant workers’ market.

 

BPI Direct Savings Bank president Raul Dimayuga said the FCDU license would help facilitate remittance flows from Filipino migrant workers and give them the option to maintain a dollar account.

 

BPI and subsidiary BPI Direct Savings Bank said the group’s 24 percent to 25 percent share of the remittance business would grow further with the expansion of BPI Direct Savings Bank.

 

Dimayuga said BPI Direct Savings Bank, the electronic bank of the Ayala-controlled bank, would be repositioned for the Filipino migrant workers’ market.

 

BPI Direct Savings Bank yesterday launched its BPInoy program aimed at the Filipinos working abroad and their beneficiaries, offering a “pabaon” package that bundles a savings account with a credit card and round-the-clock financial counseling services. Eileen A. Mencias

 

http://www.manilastandardtoday.com/?page=business04_june24_2006

PETPlans shifts to financial products

PRENEED firm PETPlans Inc. has taken legal steps to move forward from the preneed industry to the marketing of various financial products and services. The move calls for the conversion of its planholders’ certificates into shares in a professionally managed mutual fund.

Lorenzo Ocampo, PETPlans president, said the move “is the best alternative we can take to protect the interests of our planholders. The present regulatory environment and the continuing rapid decline of the market no longer allow us to assure our planholders peace of mind, which is the whole point of the preneed business.”

Ocampo assured that PETPlans will continue to pay scheduled education, pension and memorial benefits to its planholders even while the plan is awaiting approval by the court.

The company intends to shift its business into what it calls business hubs —the Network Hub will sell life, nonlife, HMO, and memorial park lots; Filipino Workers Overseas Hub will provide money transfer, and document and parcel delivery services; and Financial Hub will provide loans and credit card facilities.

The pooled fund will be managed independently and invested in a sound portfolio by one of the country’s largest and most reputable institutions that is accessible to planholders nationwide.

To satisfy legal requirements that will pave the way for this conversion, PETPlans filed a petition for rehabilitation with the Makati Regional Trial Court yesterday. The firm asked for the court’s permission to convert all outstanding preneed plans and contracts into a professionally managed trust fund.

“Once outside of the preneed industry’s restricted investment guidelines,” Ocampo said, “the trust fund can take advantage of broader investment parameters that allow for better risk management, more realistic asset-liability matches, and higher returns.”

The company will continue to remain in operation but under a new name, PETLink Financial Corp. Since it will no longer be subjected to the “uncertainties and restrictions in the preneed environment,” the company is optimistic that the converted plans will generate reasonable returns for the planholders.

PETPlans will continue to pay planholders whose educational, pension and memorial benefits are due pending the approval of the conversion petition.

In the conversion, planholders will exchange their preneed plans, contracts and insurance certificates with a fund certificate indicating a certain value proportionate to their share in the fund.

All subsequent installments or payments made by amortizing planholders will be deposited directly into the fund, for which additional certificates with the corresponding value will be issued to the planholders.

Once the conversion is completed, holders of fully paid fund certificates may decide to hold on to their investment so that it may continue to grow or may withdraw from their investment.

PETPlans, founded in 1988, has enjoyed a good reputation arising from good service to its planholders to whom it has paid P1.1 billion in benefits over the years. It has trust funds of P2.7 billion with 44 percent liquidity and corporate funds of about P140 million and real estate properties worth P60 million. It is the most comprehensively ISO-certified preneed company.

Amidst the difficulties facing the industry, PETPlans has taken proactive programs, such as being the first to stop selling traditional or open-ended educational plans when tuition was deregulated in 1992; cost-reduction moves including closure and merger of branches, retrenchment, and process improvements that resulted in savings; new products and a restructured trust fund portfolio to generate better returns; and a March this year a voluntary stop to the selling of new plans.

In spite of all these measures, the company has determined that it has to exit from the preneed industry since the regulatory framework of the Securities and Exchange Commission has not changed despite the industry’s serious difficulties, and that the market itself, owing to the closure of several large players and the resulting adverse publicity, continues to shrink at alarming rates.

http://www.manilastandardtoday.com/?page=business02_june24_2006

RCBC sells Bankard to GE unit

By FIL C. SIONIL

Rizal Commercial Banking Corporation (RCBC), owned and controlled by Ambassador Alfonso Yuchengco, has sold for still undisclosed amount its credit card subsidiary, Bankard Inc. to GE Consumer Finance (GECF).

The acquisition by GECF, the financial arm of US-based General Electric Co., through its local subsidiary here, GE Money Savings Bank is an indication of its strong commitment to the Philippines.

GE Money Savings President and Chief Executive Officer Ben Kua has said his institution was aiming to make a dent in consumer banking, one of which is the credit card business, which is one of its strong points.

RCBC has informed the Philippine Stock Exchange (PSE) of this development but sorely missed out on the amount or the total worth of the transaction.

Industry sources believed there could be "certain discounts considering that the credit card firm has been on the red."

"But, definitely not for a song, too," sources said.

For the first three months of the year, Bankard registered a net loss of P247 million from P422.2 million net loss posted for the full of 2005, with total capital expenditures amounting to P11.1 million .

The financial woe of Bankard started in 2004. While it earned some P86 million in 2003, the credit card firm posted its biggest net loss of P577.4 million in 2004.

According to RCBC management, the bank has "accepted the GECF proposal to acquire substantially all of Bankard’s assets and to assume certain liabilities related to its credit card-issuing and cards-present merchant acquiring businesses," the bank management told the PSE, a requirement for any listed firm.

RCBC Executive Vice Chair and Chief Executive Officer Rizalino Navarro issued a statement, saying that the deal is part and parcel of bigger plans to transform Bankard into a more attractive vehicle for groundbreaking and exciting businesses that will result in a more profitable entity going forward."

The transaction with still undisclosed amount will be finalized next month after it has been approved by the Bankard shareholders in its annual stockholders meet scheduled this coming July 28.

Bankard is a 72-percent owned and controlled by RCBC Capital Corp., which in turn is a wholly owned subsidiary of RCBC.

It is a joint issuer of MasterCard, VISA and JCB. It was ranked sixth overall among the local insurers which are mostly commercial banks.

As of end December 2005, Bankard has issued a total of 321,000 credit cards.

 

http://www.mb.com.ph/BSNS2006062467617.html

GE Consumer Finance buys Bankard from RCBC

The Philippine Star 06/24/2006

GE Consumer Finance (GECF) has acquired credit card firm Bankard Inc. following the recent launch of GE Money Bank, a thrift and savings bank.

Bankard is a 72-percent owned subsidiary of RCBC Capital Corp., which, in turn, is a wholly-owned subsidiary of universal bank Rizal Commecial Banking Corp. (RCBC).

The RCBC board of directors reported that it had "accepted the GECF proposal to acquire substantially all of Bankard’s assets and to assume certain liabilities related to its credit card-issuing and cards-present merchant acquiring businesses."

The proposal will be submitted for approval at Bankard’s annual stockholders meeting on July 28.

"This exercise is part and parcel of bigger plans to transform Bankard into a more attractive vehicle for groundbreaking and exciting businesses that will result in a more profitable entity going forward," RCBC executive vice chairman and chief executive officer Rizalino S. Navarro said in a statement.

GECF, a unit of General Electric Co., is based in Stamford, Connecticut, and is a leading provider of credit services to consumers, retailers and auto dealers in approximately 50 countries around the world.

Bankard is a joint issuer of MasterCard, Visa and JCB. It was ranked sixth overall among the local insurers which are mostly commercial banks.

Last year, it registered a net loss of P422.2 million, which was slightly better than the P577.4 million loss in 2004. In 2003, it made profits of P86 million.

After the first three months of 2006, it reported a net loss of P247 million. — Ted Torres

 

http://www.philstar.com/philstar/NEWS200606240708.htm

Think long-term, Citibank advises investors

INQ7MONEY TOPSTORIES

June 23, 2006
Updated 03:13am (Mla time)
Doris Dumlao
Inquirer

INVESTORS in emerging markets like the Philippines will be better off riding out the volatile financial markets than losing sleep over recent sell-offs caused by US interest rate hikes, a Citibank regional official said Thursday.

Citibank Asia-Pacific head of research communications for investments, Lim Ai Meun, who flew in from Singapore for a media briefing, said the apparent shift in risk appetite away from emerging markets was just temporary as US interest rates were not likely to go up significantly.

Lim said the US Federal Reserve’s key interest rates would likely peak at 5.25 percent this year although a further hike to 5.50 percent was possible.

She said Citibank believed that the Fed was unlikely to overdo concerns about inflation, given that interest rates take time to work into the markets.

Given this outlook, she said, global markets will still seek investment opportunities in emerging market assets.

“Despite the broad sell-off in recent weeks, investors should not be tempted to trade in and out of mutual funds as this move can significantly erode their returns,” Lim said.

She said an investor who keeps investments for three years was likely to earn more than one who seeks short-term profits.

“If you believe that the fund will perform over the long term, holding on to your investment will ensure you don’t miss out on the recovery,” Lim said.

She said regional markets in recent weeks were just going back to the historical average levels, in a correction that would continue in the short-to-medium term.

In the meantime, investors can review their portfolios and to limit their volatility, Lim said. She suggested diversifying to other assets, including bonds and equities in developed and emerging markets. With INQ7.net

 

http://beta-services.inq7.net/express/06/06/23/html_output/20060623-6136.xml.html

Thrift banks want a piece of trust business

INQ7MONEY TOPSTORIES

June 23, 2006
Updated 02:24am (Mla time)
Doris Dumlao
Inquirer

THRIFT banks are asking the central bank relax capital regulations on thrift banks that want to engage in the trust business, an industry official said.

Opportunities would open for smaller banks to handle accounts from the insurance sector, said Alfonso Salcedo, president of the Chamber of Thrift Banks (CTB) and of BPI Family Bank.

The CTB has proposed lowering the minimum capital requirements on thrift banks seeking authority to engage in the trust business, particularly trusteeship and fiduciary, to P325 million for those in Metro Manila and P100 million for those elsewhere, from the present P650 million, Salcedo reported to the CTB membership meeting Thursday.

For thrift banks that intend to go into full trust business, the proposal isto maintain the P650-million minimum capital requirement.

The proposal, if approved, will allow thrift banks with capitalization of less than P650 million to accept deposits from insurance companies, Salcedo said.

The central bank, Bangko Sentral ng Pilipinas (BSP), is developing a wider category of trust products, which are differentiated in terms of the trust department’s level of fiduciary responsibility, a BSP official said in an interview.

“Rather than regulate on a per-product basis, the idea is to define very clearly the framework and the categories of the products,” said Nestor Espenilla, BSP deputy governor for bank supervision.

This will make the regulations clearer to the market, Espenilla said.

“It will also facilitate better supervision, so we will no longer have to play a cat-and-mouse game whenever there’s a new product in the market,” he said.

Salcedo said the CTB was also working with the BSP on standardizing contract-to-sell schemes for housing, in an initiative intended to result in lower risk-weighting.

On a requirement for submission of income tax returns and audited financial statements by bank borrowers, Salcedo said the BSP would release amendments to a circular on the matter.

“While the BSP accepted our proposal for the exemption of loans to small enterprises from the requirement, giving this sector a period of two years within which to comply, the BIR [Bureau of Internal Revenue] reportedly denied this request,” Salcedo said.

“In this regard, the CTB and BSP agreed to write formally to the BIR to seek its support for an information drive that will help drive the SME [small and medium-scale enterprise] sector on the new requirement,” he said.

The CTB meanwhile is supporting a proposed “Credit Information System Act” in both houses of Congress, Salcedo said.

“The measure is seen to improve the reliability of credit information lowering overall credit risk and ultimately expand credit capacity,” he said. With INQ7.net

 

http://beta-services.inq7.net/express/06/06/23/html_output/20060623-6124.xml.html

5-year Treasury bond rate rises to 10.63%

this story was taken from www.inq7money.net
URL: http://money.inq7.net/topstories/view_topstories.php?yyyy=2006&mon=06&dd=21&file=4

Posted: 2:07 AM | Jun. 21, 2006
Michelle V. Remo
Inquirer

THE interest rate on five-year Treasury bonds jumped to 10.625 percent at Tuesday's auction, from 8.5 percent recorded at the last auction on March 7, following a rate uptrend in offshore markets.

"Rates are high all over. We cannot be exempted," National Treasurer Omar Cruz said in a press briefing after the auction.

Cruz said the increase in the rates was acceptable, given the big volume of bids.

He said the Bureau of Treasury's auction committee was not inclined to control the movement of interest rates, and that the bureau would allow a rise in rates if coupled with increased demand.

"We do not want to issue [securities] in a market that does not want to buy," he said. "But in this case, you can see that there are tenders."

The offering was for P3.5 billion worth of bonds. Tenders totaled P14.186 billion.

The auction committee accepted P3.5 billion worth of bids.

Cruz said five-year T-bonds were trading at 10.5-10.625 percent on the secondary market, which he said was the auction committee's basis for accepting the rate of 10.625 percent for the new bonds.

He said investors might have been pricing in a likely increase in the US interest rate in their bids.

The US Federal Reserve is expected to make another quarter-point interest rate hike when it meets this month, after Fed Chairman Ben Bernanke said the US central bank would take a tough stand against inflation.

The Fed has been increasing its policy rate since June 2004 to the present level of 5.00 percent.

The rise in US interest rates has been affecting capital markets worldwide, as narrowing rate differentials with US rates make government bonds of other countries less attractive to investors who require higher credit risk premiums.

Cruz meanwhile said the Bureau of Treasury would announce possible changes in its third-quarter domestic borrowing program.

Revisions would take into consideration market appetite in terms of volume of government securities and tenors, he said.

Originally, the bureau programmed P104.5 billion worth of domestic borrowings for this year, consisting of P46.0 billion through T-bills and P58.5 billion through T-bonds. With INQ7.net

 

 

Globe nets P3.5 B in Q1, up 19%

By EMMIE V. ABADILLA

After managing its operational costs and introducing more value offers to subscribers, Globe Telecom Inc. netted P3.5 billion earnings in the first quarter of 2006, up 19 percent from first quarter last year, despite the tripling of provisions for income tax year-on-year to P1.5 billion.

Globe said its wireless subscriber base stood at 13.2 million as of end-March, up 6.5 percent from 12.4 million at end-2005 and 2 percent higher than the year before.

The company’s effective income tax rate increased from 15 percent to 31 percent with higher corporate tax rates and the expiry of the Globe’s tax holiday in March 2005.

If the impact from mark-to-market and foreign exchange changes were to be excluded, the company’s 1st quarter net income would be up 40 percent year-on-year and 19 percent quarter-on-quarter.

Globe’s net service revenues went up 5 per cent at P14.2 billion versus the same period last year, but registered lower by 3 percent quarter-on-quarter with 4th quarter 2005 revenues reflecting peak seasonal demand.

Quarterly Earnings Before Income Tax, Depreciation and Amortization (EBITDA) and EBIT reached historic high points, growing by 23 percent and 39 percent respectively from 1st quarter 2005 levels. EBITDA margins improved to 68 percent from 59 percent in the 1st quarter 2005 and 64 percent in the 4th quarter 2005.

Globe improved its earnings by providing value propositions customized to specific customer segments.

Last February, the company made Globe Text NonStop (under the banner offering Globe UNLIMITXT) a permanent feature to cater to the needs of heavy SMS users.

In March, the carrier extended its per-second offering for local calls into the IDD arena via Globe Tipid IDD kada-segundo, which allows per-second charging of US{{MB:DR(ARTICLE:CONTENT):MB}}.003 to 12 select countries and US{{MB:DR(ARTICLE:CONTENT):MB}}.007 for other destinations.

Globe also made available its Tipid IDD rates of P7.50 per minute call to US and Canada for offpeak hours, and P7.50 per minute for all calls to Hong Kong CSL mobile numbers.

Its Kababayan Program, offered reduced rates to all Globe and TM subscribers making calls to Saudi Arabia and Japan and discounted SMS and voice calls to SingTel Mobile of Singapore were offered. On April 16, 2006, Globe introduced another tariff breakthrough, the P0.90/ text to all networks, the lowest inter-network SMS rate in the market today.

This array of value offerings have helped strengthen Globe’s competitiveness, and provide impetus to subscriber growth. Globe’s total wireless subscriber base reached 13.2 million at the end of 1 st Quarter 2006, 6% higher than the previous quarter’s 12.4 million and 2% better than last year’s 12.9 million.

Net additions of about 0.8 million SIMs reflect a significant turnaround from the previous quarter’s net disconnections of about 6,000.

On the wireline front, Innove Communications, Inc. registered a 2% yearon-year growth in service revenues to P1.6 billion by end-March, spurred by growth in the consumer broadband and corporate data businesses.

This improvement in revenues were also underpinned by a roster of promotions such as free NDD calls from Globelines postpaid subscribers to any Globelines phone, lower IDD rates, the WorldPass Prepaid service that offered reduced internet browsing rates, and various bundled voice and unlimited dial-up and broadband internet services for Globelines subscribers.

"We are delighted by the market’s response to our initiatives and are encouraged by the results of the first quarter," according to Gerardo C. Ablaza, Jr., President and CEO of Globe said.

"While we expect competition to remain intense in the succeeding quarters, we will stay on course and strive to further strengthen our market position," he concluded.(EVA)

 

http://www.mb.com.ph/BSNS2006051664089.html

 

 

SC rules on SSS benefits

By REY G. PANALIGAN

High Court OKs pensions for spouses of retired members

The Supreme Court has declared final its decision that nullified a provision in the Social Security System (SSS) law that denies survivor’s pension and other benefits to a dependent spouse who was married to an SSS member after his retirement.

With the ruling, surviving spouses of SSS members — even if married after the members’ retirement — can now receive survivor’s pension and other benefits from the SSS.

In another decision, the Supreme Court stopped the Sandiganbayan temporarily from proceeding with a graft case filed by the Office of the Ombudsman against Henry T. Go, former president and chairman of the Philippine International Air Terminals Co., Inc. (PIATCO), in connection with the nullified contract over Terminal 3 of the Ninoy Aquino International Airport (NAIA).

In a temporary restraining order (TRO) dated June 15, the SC’s First Division chaired by Chief Justice Artemio V. Panganiban said:

"Acting on the prayer of petitioner for the issuance of a temporary restraining order and/or writ of preliminary injunction, the Court further resolves to grant the same and to issue the temporary restraining orderprayed for effective as of this date and continuing until orders.

"Now, therefore you (Fifth Division of the Sandiganbayan and the Office of the Special Prosecutor), your officers, agents, representatives,and/or persons acting upon your orders or in your place or stead, are hereby enjoined, ordered, commanded and directed to desist, until further orders from this Court, from proceeding with the pretrial conference, pre-trial proper and trial of Henry T. Go in Criminal Case no. 28092…."

The Sandiganbayan’s Fifth Division was directed to comment on Go’s petition in 10 days.

In its decision on the SSS, the Supreme Court nullified the phrase "as of the date of retirement" in Section 12-B (d) of Republic Act No. 8282, which states that "upon the death of the retired member, his primary beneficiaries as of the date of his retirement shall be entitled to receive the monthly pension."

Because of this phrase, the SSS has been denying the applications for survivor’s pension filed by spouses whose marriages to SSS members were contracted after the members’ retirement.

Section 12-B (d) of RA 8282 was challenged in a petition before the SC by Elena Dycaico after her application for survivor’s pension was denied by both the SSS and the Social Security Commission (SSC).

Bonifacio Dycaico had been a selfemployed member of the SSS since 1980 until his retirement in 1989 when he started receiving monthly pensions. During this period, he was not married to Mrs. Dycaico.

A few months before Dycaico died in 1997, he married Mrs. Dycaico. After the death of her husband, Mrs. Dycaico applied for survivor’s pension but was denied by the SSS and the SSC due to Section 12-B (d) of RA 8282.

Resolving Mrs. Dycaico’s petition, the SC last Nov. 30, 2005, declared void the provision"as of the date of his retirement" in Section 12-B (d) of RA 8282 as violative of the due process and equal protection clauses of the Constitution. Both the SSS and the SSC filed motions for reconsideration.

The SSS told the SC that the court’s Nov. 30 decision "if not corrected, poses a strong threat to the financial viability of the SSS" and "the SSS anticipates the possibility of some unscrupulous members who might contract spurious marriages after the retirement to enable their spouses to claim the benefits under RA 8282 upon their anticipated death."

The SSC, on the other hand, said that the provision "as of the date of his retirement" does not violate the equal protection clause of the Constitution because it is applied uniformly and equally to all dependent spouses of SSS members who contracted their respective marriages after the latter’s retirement.

"The viability of the Social Security Fund is the single most valid argument against the declaration of unconstitutionality of the proviso ‘as of the date of his retirement,’" the SSC added.

The SC, however, upheld its Nov. 30, 2005, decision, declaring: "The proviso ‘as of the date of his retirement’ violates the equal protection clause of the Constitution because it impermissibly discriminates against those dependent spouses whose respective marriages to the SSS members were contracted after the latter’s retirement."

It added: "The due process clause of the Constitution is infringed by the proviso because it outrightly deprives those dependent spouses who married the SSS members after their retirement of the survivor’s pension, a property interest, without giving them an opportunity to be heard."

The High Court said it "does not subscribe to the scenario envisioned by the SSS of ‘the possibility of some unscrupulous members who might contract spurious marriages after the retirement to enable their spouses to claim the benefits under RA 8282.’ This view reveals a rather cynical and disdainful attitude towards the men and women who diligently toil and contribute a portion of their monthly earnings to the fund in order that they, as well as their beneficiaries, would have some relief in the event of disability, illness, death, and other contingencies resulting in the loss of income,"

In the case of the Dycaicos, the court said, "There is no question that the petitioner was the dependent spouse of Bonifacio who was likewise his legal spouse entitled by law to receive support from him. Accordingly, as Bonifacio’s primary beneficiary at the time of his death, the petitioner is entitled to the survivor’s pension under RA 8282."

In the other case involving the PIATCO, Go and former Transportation Secretary Vicente Rivera were charged with graft by the Office of the Ombudsman in connection with the 2003 nullification of the PIATCO contract over NAIA’s Terminal 3.

They sought the dismissal of the charges against them, but the Sandiganbayan denied their plea in a resolution dated Dec. 6, 2005. They elevated the case to the SC.

In denying their motion to dismiss the charges, the Sandiganbayan noted that the documents and other information submitted to it have established probable cause to charge them with graft over the NAIA Terminal 3 contract.

The criminal charge sheet stated that Go and Rivera allegedly conspired to bind the government in a "grossly disadvantageous" contract on Nov. 26, 1998 over the construction of NAIA’s Terminal 3.

In 2003, the Supreme Court declared null and void PIATCO’s contract after finding that Paircargo Consortium, predecessor of PIATCO, did not possess the requisite financial capacity when it was awarded the NAIA’s Terminal 3 contract, and that the agreement was contrary to public policy.

Last Jan. 31, the SC declared final its Dec. 19, 2005, decision that allowed the government to take over NAIA’s Terminal 3 but only after payment of an initial R3.002 billion to PIATCO representing the proffered value of the state-of-the-art facilities.

"Wherefore, the motion for partial reconsideration of the petitioners (Executive Secretary Eduardo R. Ermita, the Department of Transportation and Communications, and the Manila International Airport Authority) is denied with finality," the SC said in a 14-page full court resolution written by Justice Dante O. Tinga.

At the same time, the Supreme Court denied the motions for partial reconsideration filed by two Japanese firms – Takenaka Corp. and Asahikosan Corp. – and the motions for reconsideration-in-intervention filed by Rep. Salacnib Baterina.

In its Dec. 19, 2005 decision, also written by Justice Tinga, the SC ruled that within 60 days from the finality of its decision, the Pasay City regional trial court (RTC) shall determine the just compensation to PIATCO for the construction of Terminal 3.

 

http://www.mb.com.ph/MAIN2006061967204.html

Consumers expect their family income, spending to decline

By Des Ferriols
The Philippine Star 06/15/2006

Consumers expect their family income and spending to decline this year but overall economic prospects are anticipated to improve in 2007.

The latest Consumer Expectations Survey (CES) of the Bangko Sentral ng Pilipinas (BSP) indicated that although there was a slight improvement in outlook, sentiments are still pervasively negative when consumers were asked about their prospects for the third quarter of the year.

The CES is conducted by the BSP every quarter in an attempt to measure the pulse of the consuming public and anticipate their spending intentions over a period of 12 months going forward.

The survey is part of the BSP’s efforts to anticipate movements in prices of basic commodities and consumer durables and whether there would be a measurable increase or decline in consumer demand.

The BSP said in the second quarter CES report that when asked about their prospects for the third quarter of the year, more consumers saw a downturn in income and spending although not as many as the previous survey.

The so-called CES diffusion index rose in the second quarter survey but remained negative at -38.7 percent. This meant that over half of consumers surveyed by the BSP did not feel good about their prospects for the current quarter as well as the next.

However, the slight decline in the number of pessimists, according to the BSP, indicated that consumer expectations were improving although not fast enough to overcome the overall negative attitude.

The BSP said respondents attributed their better economic and financial outlook to the expected increase in income arising from better business condition; expectations of more family members working; savings in the family; and expected decrease in prices of goods.

On the whole, however, the CES results indicated that respondents’ outlook on the level of family income declined.

By income class, the CES showed that consumer sentiment in the second quarter improved across all income groups although the biggest improvement was observed in the outlook index of the high income group defined as those earning a monthly income of P30, 000 and over.

Despite the improvement, however, the diffusion index remained negative at -11.3, indicating that sentiments were predominantly negative.

The index for respondents from the lowest income level (less than P10,000) improved by 5.1 index points to but still overwhelmingly negative at -46.3 percent while the middle-income group (P10,000 - 29,999) was at -35.9 percent for the same period.

"While survey results on consumer outlook remained negative, more household respondents believed that the economic conditions would improve in the third quarter," the BSP said in the survey results, adding that the improvement was significant enough, rising 33.1 index points from the previous survey to -5.6 percent.

Respondents anticipated that their family expenditures for basic commodities in the third quarter of 2006 would decrease slightly by an average of 0.8 percent.

Contributing to this decline, the CES reported, was the reduction in family purchases of the following products and services: communication, education, hotel and restaurant, clothing and footwear, transportation, medical care, house rent, fuel, and personal care and effects.

Respondents, however, still expected their expenditures on food and electric bills to increase in the next quarter.

While respondents expected a decline in their basic expenditures, consumer sentiments on buying conditions for assets became more favorable during the current quarter compared to the previous quarter. Consistent with the improving consumer outlook and the anticipated increase in family income in the next 12 months, the CES said consumers were more keen on buying assets in the next 12 months. The CES reported that the buying intention index in the next 12 months went up by 3.7 points to 32.0 percent in the second quarter survey. This increase in purchases was expected primarily for consumer durables.

Households cited increase in income, easy installment terms, form of investment (in the case of housing), usefulness in business and convenience to family members (in the case of motor vehicle) as factors that would encourage them to buy assets.

On the other hand, majority of the respondents who indicated "not to buy" in the next 12 months cited high prices, low/insufficient income and higher priority for food and other basic needs.

 

http://www.philstar.com/philstar/NEWS200606150703.htm

Bankable banks of Mindanao

this story was taken from www.inq7money.net
URL: http://money.inq7.net/topstories/view_topstories.php?yyyy=2006&mon=06&dd=15&file=14

MINDANAWORLD
Posted: 2:16 AM | Jun. 15, 2006
Joji Ilagan Bian
Inquirer

WHEN WE assess the economic performance of Mindanao, the health of its banking sector is one of the best indicators of growth.

Put simply, more banks means more business.

Over the last three years, the Mindanao banking sector has displayed a significant increase in the number of banking offices.

From the report generated by the Mindanao Economic Development Council (Medco), there was a 2-percent increase in the number of banks operating in Mindanao, from 877 in 2003 to 896 in 2004.

Data as of 2004 showed that Region 13 or Caraga posted the biggest increase in the number of offices, with seven more bank branches put up. Region 11 had four, and Regions 9 and 12 had three new banks. Region 10 had two additional banks, while the Autonomous Region of Muslim Mindanao is still waiting for its first.

From 2003 to 2004, the number of quasi-banks in Mindanao, mainly pawnshops, increased by 8.5 percent with 1,713 institutions registered with Bangko Sentral ng Pilipinas (BSP) as against 1,578 in 2003.

Pawnshops provide an alternative source of funds for the farmers and the small businessmen.

In the 2004 regional distribution report released by the BSP, Region 11, which is the center of trade and services in Mindanao, has the most number of quasi-banks with 486 financial institutions, comprised mostly of pawnshops.

With the increase in the number of banks, the consolidated loan portfolio of Mindanao banks also increased to P61.645 billion in 2004 from P60.817 billion in 2003. Northern Mindanao or Region 10, accounted for P19.632 billion, followed by Southern Mindanao or Region 11 at P16.904 billion and the lowest at P3.4 billion at Caraga.

Most of the loans were provided by commercial banks, accounting for 71 percent. But the rural banks' portfolio more than doubled from 2003 and 2004, as the majority of the farmers in Mindanao rely on rural banks for their capital needs.

The increase in the rural banks' loan portfolio could also be attributed to the growing microfinance services given to small and medium scale entrepreneurs.

Based on 2005 reports from the Rural Bankers Association of the Philippines, out of the 428 towns and cities in Mindanao, there are 286 RB offices servicing the island.

Savings deposits in commercial, thrift and rural banks increased from P337.46 billion in 2003 to P354.26 billion, which is good news for us because savings again indicates that the agriculture sector is doing well.

The top savers were Region 10 with a P4.48-billion increase, closely followed by Region 11 with a P4.46 billion, and lastly Region 9 with P2.47 billion.

The increase in deposits may also be due to the increased awareness of the market on the importance of saving for the future and also the robust economic activities in the communities where the banks operate.

Microfinance has helped many banks grow their assets and loan portfolio. This indicates the micro-entrepreneurs' growing confidence in getting access to microfinance programs as a means to start a small business or expand their operations.

There are now over 15,000 SMEs present in Mindanao who get capital from banks.

To give you a better picture, let's take a look at how rural banks are strengthening their operations and are likewise strengthening the financial condition of the SMEs through micro-credit systems.

From the August 2003 report filed by the USAID-funded project Microenterprise Access to Banking Services or MABS, micro-loan portfolio of 37 MABS participating banks nationwide "surged to P291.65 million in August 2003, up from P282 million in the previous month. The number of micro-borrowers also swelled from 32,306 in September 2002 to 43,226 at the end of August. Micro-savings deposits also rose from P205.4 million in July to P228.98 million in August."

The microfinance systems of banks and other financial institutions are developing new Filipino entrepreneurs and are helping marginalized sectors in the community shape their financial future. This is largely benefiting the poverty-stricken Mindanao regions.

(Joji Ilagan Bian is an advocate for Mindanao; chair, Mindanaworld Foundation Inc.; ConCom and Charter Change Advocacy Commission Member; chair of the Mindanao TVET; Mindanao Rep., Export Development Council; chair, Joji Ilagan Foundation; former chair of the Mindanao Business Council. E-mail comments to jojibian2@yahoo.com)

 

SSS to sell Union Bank stake only at best price

By Ted P. Torres
The Philippine Star 06/14/2006

The Social Security System (SSS) is open to the sale of its holdings in Union Bank of the Philippines (Union Bank) "if there is a serious offer," its top executive said yesterday.

SSS president and chief executive officer Corazon de la Paz said that like all of its major and profitable holdings in private firms, the state pension fund is always open to selling its stake if it would result in huge benefits to its members.

"It is a very good investment, and we will sell if there is an equally good offer," de la Paz said.

The SSS has an equity stake of 26.87 percent in Union Bank. The two other major stakeholders are the Aboitiz Group of Companies with 49.629 percent and Insular Life Assurance Co. Ltd., controlling 18.75 percent.

Last year, the bank’s net income registered at P2.7 billion from P2.2 billion in 2004.

Investors said Union Bank must be open to new investors for greater transparency, as well as opportunities for fresh capital. Ninety-five percent of the bank’s equity is already held by the three major stakeholders, leaving very little for new investors.

On the other hand, the government pension fund is looking for different forms of investments to strengthen its reserves as well as lengthen its actuarial life to meet the increasing demand of its members.

Total disbursements for sickness, maternity, disability, retirement, death and funeral benefits increased by 5.2 percent to P12.46 billion for the first three months of the year compared with P11.84 billion in 2005.

"The base of retirees and other beneficiaries is growing faster than our ability to expand the actuarial life of the fund," the SSS president said.

Actuarial studies show that the SSS will be able to extend its actuarial life by 12 years from 2015 to 2027. But strong collection performance and rise in its investment income may extend it further to 2031.

Earlier, the SSS wanted to sell its stake in Equitable PCI Bank, the country’s third biggest leader, to Banco de Oro Universal Bank. However, several quarters including legislators, questioned the deal, resulting in a civil case pending before the Supreme Court.

The Supreme Court ruled that as long as it has not not decided on the case, a "status quo" condition will remain in the case of the SSS stake in Equitable PCI Bank.

 

http://www.philstar.com/philstar/NEWS200606140706.htm