Rollout of OFW bank pushed back to next year
THE ESTABLISHMENT of President Rodrigo R. Duterte’s promised bank for overseas Filipino workers (OFWs) will be pushed back to January next year due to processing delays, according to state-run Land Bank of the Philippines (Landbank).
“September was the original [target]. Pero medyo nade-delay kami sa schedule (But we’re experiencing some delays). I was the one who made the timetable, but in the government, it takes longer than private, so I thought we can do it in six months, hindi pala (it turns out we can’t),” Landbank President and Chief Executive Officer Alex V. Buenaventura told reporters on the sidelines of its Gawad Punla awarding ceremony last Friday.
“We will, in effect, start operations of the OFW bank in January. Hindi na ma-achieve yung September (We can’t start by September),” he said.
The bank, which will be called the Overseas Filipino Bank, will have two pilot headquarters — the first one in Dubai, which will start operating by January next year, and the second one in Bahrain, targeted to be established by April. It will also be using existing Landbank branches overseas to service OFWs’ banking requirements.
“[It] will have marketing officers located at consular offices abroad to service the banking requirements of overseas Filipinos. But the officers are going to be selling to the overseas Filipinos remittance products of Landbank,” said Mr. Buenaventura.
After the pilot testing phase, which may take about a year, the OFW bank will also be rolled out in countries that are home to many overseas Filipinos such as the United States, Japan, Middle East, and Hong Kong, the official said.
“Those are only the priority (countries), but we will really go to all areas where there are many OFWs. The rollout probably may be in 2019. But the rollout is easy. The product development, pilot testing, yun ang matagal (that’s what takes a long time to do),” Mr. Buenaventura said.
Landbank will be operating the said OFW lender through its acquisition of the Philippine Postal Savings Bank (Postal Bank) to be its remittance marketing arm.
Mr. Buenaventura had said the takeover will be a “zero-value” transaction, given Postal Bank’s negative valuation of about P480 million, as decided by LandBank’s board of directors chaired by Finance Secretary Carlos G. Dominguez III.
The state lender will present today the purchase agreement to Governance Commission for Government-Owned or -Controlled Corporations, before securing approval from the President and the Monetary Board.
The Overseas Filipino Bank will have about a P1 billion capital infusion to cover for the negative valuation.
Asked how the bank will compete against other remittance services abroad, Mr. Buenaventura responded: “Well it’s kind of a big challenge. It’s a very big challenge, but I have designed a very good marketing strategy.”
He said they are looking to offer a lower rate compared to competitors. “The President wanted very minimal or low remittance fees so we may have to go that track. Then maybe just make money out of other products like deposit loans and all that,” the official added.
“It will be cheaper than all our competitors… So that’s what we’re looking at. But of course, in competition there may be a price war… So we are very careful about lowering…,” added Mr. Buenaventura.
Landbank, the country’s fourth largest bank in terms of assets, currently has a base of OFW account holders in the US, Asia Pacific, Europe, and Oceania, taking about 5% market share of the remittance business. This compares to BDO Unibank, Inc.’s current 40% market share.
With the establishment of the OFW bank, Landbank aims to increase its share of the pie to about 25% by 2022.
“By the end of my term and also coterminous with the President, we are [hoping] that we will have around 25% of the remittance market. It’s high. I don’t know if we will reach it but the targeting should be ambitious,” said Mr. Buenaventura. — Elijah Joseph C. Tubayan
