Deal struck to contain eurozone debt crisis

Banks to absorb 50% losses on Greek bonds

Philippine Daily Inquirer
2:17 am | Friday, October 28th, 2011 

 

50 PERCENT CUT Greek Finance Minister Evangelos
Venizelos speaks at Finance ministry during a news
conference in Athens on Thursday, Oct. 27, 2011. EU
leaders Thursday reached a landmark deal which
requires banks to take on 50 percent losses on
Greeks bonds. Eurozone countries and the
International Monetary Fund will also provide an
additional 100 euro billion ($140 billion) in rescue
loans as a second bailout package for Greece. AP
Photo/Petros Giannakouris

BRUSSELS—Eurozone leaders struck a deal with private banks and insurers on Thursday for them to accept a 50-percent loss on their Greek government bonds under a plan to lower Greece’s debt burden and contain the two-year-old eurozone crisis.

The agreement was reached after more than eight hours of hard-nosed negotiations involving bankers, heads of state, central bankers and the International Monetary Fund. It aims to draw a line under spiraling debt problems that have threatened to unravel the European single currency project.

Under the deal, the private sector agreed to voluntarily accept a nominal 50-percent cut in its bond investments to reduce Greece’s debt burden by 100 billion euros, cutting its debt to 120 percent of GDP by 2020, from 160 percent now.

At the same time, the eurozone will offer “credit enhancements” or sweeteners to the private sector totaling 30 billion euros. The aim is to complete negotiations on the package by the end of the year, so Greece has a full, second financial aid program in place before 2012.

The value of that package, EU sources said, would be 130 billion euros—up from 109 billion euros when a deal was last struck in July, an agreement that subsequently unraveled.

“The summit allowed us to adopt the components of a global response, of an ambitious response, of a credible response to the crisis that is sweeping across the eurozone,” French President Nicolas Sarkozy told reporters afterwards.

As well as the deal on deeper private sector participation in Greece—which emerged after Sarkozy and German Chancellor Angela Merkel engaged in negotiations with bankers—eurozone leaders also agreed to scale up the European Financial Stability Facility, their 440 billion euro ($600 billion) bailout fund set up last year.

The fund has already been used to provide help to Ireland, Portugal and Greece, leaving around 290 billion euros available.

Around 250 billion of that will be leveraged 4-5 times, producing a headline figure of around 1.0 trillion euros, which will be deployed in a variety of ways.

Leaders hope that will be enough to stave off any worsening of the debt problems in Italy and Spain, the region’s third and fourth largest economies respectively.

Riskier assets across the board rallied in Asia, with stocks outside Japan up nearly three percent at 0600 GMT in response to the agreement. The euro hit a seven-week high.

Jose Manuel Barroso, president of the European Commission, said the final details on the Greek package, which follows a program of 110 billion euros of loans granted to the country last year, would only be worked out by year-end.

“The key is implementation. This is the key. It is not enough to make commitments, it is necessary now to check if they are really implementing,” said Barroso.—Reuters

One Network Bank to set up 5 micro offices

Posted on October 24, 2011 09:20:12 PM

DAVAO CITY -- One Network Bank is establishing five micro-banking offices (MBOs) in this city next year in a bid to reach more customers without having to make high investments on full-blown branches.

 

The MBOs, the bank said in a statement, will provide services to smaller accounts. Among these services are cash deposits and withdrawals, check deposits, loan windows for micro-finance accounts, other microfinance products, and purchase of foreign currencies of up to $300 per client.

The central bank issued Circular 694 in September last year, allowing banks to establish MBOs in cities and municipalities. The smaller offices are an alternative to full-blown branches that are more expensive to set up.

The bank’s MBOs will be located in Catalunan Grande, Cabantian, Bunawan, Sasa and Piapi, all remote districts of Davao City.

One Network Bank is spending about P4.17 million to put up the five offices, which will extend the following services: automated teller machines, point-of-sale debit bills payments, electronic foreign remittance, online inter-branch cash transfer and Internet banking.

“The only limitation... is that only micro deposits of not more than P15,000 and only micro loans of not more than P150,000 are allowed by the (central bank) to be serviced by (these offices),” the bank said.

It added that the establishment of these offices will allow the bank to reach more microfinance clients in growth centers.

“Inclusive banking is the general strategy,” it added.

The bank has already 81 branches after it absorbed the Rural Bank of New Corella located in New Corella, Davao del Norte last month. Its assets have grown to about P22 billion, while its paid-up common shareholdings are about P1.45 billion.

One Network Bank also reported loans went up by 39% during the first three quarters of the year to P8 billion. This was driven by the continued patronage of public school teachers as loans extended to them went up by 28.9% to P4.54 billion.

The bank not only reduced the interest rate on loans to teachers to 7.5% per year from 12% per year, but also doubled the maximum loan to P300,000 per borrower. The bank also increased the loan term to three years from two years. -- Carmelito Q. Francisco

http://bit.ly/tTqDyr

Financial literacy

Speaking Out

By ATTY. IGNACIO R. BUNYE

October 9, 2011, 11:39pm

 

MANILA, Philippines — Financial literacy: What is it and how is it important to us Filipinos?

Financial literacy, or awareness of basic financial concepts, is one of the advocacies of the Bangko Sentral ng Pilipinas (BSP).

The BSP has taken a proactive stance in embarking on a consumer education program that seeks to improve the Filipino public’s basic financial literacy.

At present, the BSP conducts a series of activities under its Economic and Financial Learning Program (BSP-EFLP).

The BSP-EFLP consolidates the BSP’s outreach educational activities under one flagship program. This program consists of a series of learning sessions and activities which seek to promote greater awareness and understanding of essential economic and financial issues.

The learning sessions and activities are expected to help the people make wise financial decisions.

The program is also an embodiment of BSP’s goal to promote economic and financial education among its stakeholders, who can more effectively become the central monetary authority’s partners in maintaining the efficiency of monetary policy and ensuring a stronger and safer banking and payments system.

The BSP-EFLP has the following component programs: The “Be up to SPeed on BSP,” which explains the role of the BSP in the economy; the “Paghahanda sa Kinabukasan” Financial Learning Campaign for Overseas Filipinos and Their Beneficiaries; and the Financial Education Expo, which targets the Filipino work force and students.

The “Be up to SPeed on BSP” covers topics on recent economic developments and the role of the BSP in the economy, with special emphasis on the three pillars of central banking: Price stability, financial stability, and efficient payments and settlements system.

The Public Information Campaign (PIC) also discusses The New Generation Philippine Currency in one of its sessions. It targets a broad audience, including students, faculty and other members of the academe, businesses, government agencies, and members of the media.

The “Paghahanda sa Kinabukasan” Financial Learning Campaign for Overseas Filipinos and their Beneficiaries (FLC-OF), on the other hand, is organized in coordination with the Overseas Workers Welfare Administration (OWWA).

It aims to educate participants on the importance of using remittances to build up savings and to invest in financial products and business ventures.

Through this special learning campaign, the BSP hopes to help overseas Filipinos and their beneficiaries attain financial independence and security, bring them into the fold of the formal financial system, and allow them to participate more meaningfully in the country’s economic development.

BSP officials, as well as officials from the Department of Trade and Industry (DTI) and the Department of Agriculture (DA), have been invited to give lectures on topics such as the importance of remittances, financial planning, investment and business options, and agri-business opportunities.

Lastly, the Financial Education Expo offers various financial education activities for students, employed individuals, and professionals.

It features learning booths with audiovisual presentations, graphic displays, and interactive activities that explain the importance of financial education, the Philippine financial system, basics of budgeting, saving, investing and borrowing, financial planning for life-cycle events, and credit card awareness.

The expo aims to help participants become self-reliant in promoting their financial welfare.

http://www.mb.com.ph/articles/337188/financial-literacy