THE GOVERNMENT may start selling shares of the Overseas Filipino Bank (OFB) in 2019 to aid in setting up its digital banking system, the Department of Finance (DoF) said.
“I think we will offer a variety of investment opportunities such preferred shares with a fixed return, or common shares I’m not really sure yet. But we want to do this next year,” Finance Secretary Carlos G. Dominguez III told reporters in a recent interview.
He earlier said the DoF is looking to privatize about 50% of the OFB.
“We want to bring it up to profitability. We may have to bring in, to invest in the digital system…investment in cybersecurity — that is a big investment,” he added.
The Finance chief said Land Bank of the Philippines (LANDBANK), the parent firm of the OFB, won’t invest in traditional banking systems anymore and instead “leapfrog” to make the bank a full-fledged digital lender.
Mr. Dominguez added the DoF is looking at the possibility of tapping an international partner for the digital technology and has also asked for the technical assistance of the International Finance Corporation.
“Basically what we want to do is make this bank first of all profitable it has a niche so we can exploit that niche profitably, and offer investment opportunities for OFWs (overseas Filipino workers) as well as local Filipinos to buy shares in that bank,” he said.
“We will probably bring in a partner — a technological partner here who we hope will also invest in the bank so those are the opportunities there…so that we can better serve the requirements of our OFWs and overseas Filipinos such that it will be easier to deposit money with us. Maybe work together with the Insurance Commission about offering insurance products online to our OFWs, maybe we can develop payment of the premiums on a monthly basis. So these are the areas we will be working on,” said Mr. Dominguez.
The DoF in February went to Hangzhou, China in February, in a possibility to tap the financial technology of Alibaba’s Ant Financial Services Group.
Moreover, Mr. Dominguez explained the traditional system of establishing bank branches is “very time consuming” and “expensive” given various approvals it has to secure, as well as the manpower it has to employ.
“The overarching goal aside from exploring the market niche is to increase the value of LANDBANK, to make LANDBANK a more valuable enterprise,” he said.
He said this will enable the state-run lender to offer more loans to small and medium enterprises and farmers.
LANDBANK is also currently eyeing a majority stake in the Philippine Dealing System Holdings Corp.
Since it was launched in January, Mr. Dominguez said that the OFB is having a “slow start.”
“That’s normal for a new operation. They have to first clean up the books of the Postal Bank (Philippine Postal Savings Bank),” he explained.
The bank’s first representative office is located in Dubai, with a second one eyed to be set up in Bahrain. — Elijah Joseph C. Tubayan