The Land Bank of the Philippines (LandBank) board of directors have agreed to acquire the Philippine Postal Savings Bank (Postal Bank) at zero value and turn it into a bank for overseas Filipino workers (OFWs), with the proposal to be presented to the Governance Commission for Government-owned and -Controlled Corporations (GCG) for approval on Tuesday.
In June this year Finance Secretary Carlos G. Dominguez III said the Postal Bank was valued by the LandBank board at a negative P580 million, with total assets at the end of 2016 at P11.66 million. The Postal Bank is the thrift bank unit of the government-owned Philippine Postal Corp.
According to LandBank President Alex V. Buenaventura, the LandBank board will be presenting its position on the acquisition of Postal Bank on Tuesday before the GCG. The submission will also be simultaneous with that of the Monetary Board. Once approved, it will then be forwarded to the Office of the President.
“We are going to present the position to the GCG on Tuesday for approval. The proposal is for LandBank to acquire Postal Bank at zero value. If GCG endorses it, it will be forwarded to Malacañang for approval by the President, simultaneously, we will have to get approval from the Monetary Board,” Buenaventura told financial reporters.
The Postal Bank will then be renamed as the Overseas Filipino Bank, which will be the remittance-marketing arm of the LandBank, according to Buenaventura.
“It will just be a remittance marketing subsidiary of LandBank to service OFWs. We will have to book premium to cover the negative amount, then we will have to infuse maybe a billion pesos to capitalize it,” he added.
In line with the President’s promise to provide a bank to service the financial requirements of OFWs, the overseas Filipino bank will be pilot-tested in Dubai, with January 2018 being eyed as the target date.
“We will pilot this in Dubai, we hope to launch it in January . We will be holding office in the Dubai consular office, so that is one advantage of being a government bank,” he said.
He added that, after Dubai, the government is planning to create an OFW bank in Bahrain. The target date for the Bahrain branch is April 2018.
In terms of remittance rates, the OFW bank will strive to offer cheaper rates than the private banks in the area, according to Buenaventura. Dubai average rates were at 12 Bahrain dollars per transaction coming from the sender’s side.
“Well, in marketing, the rate is always the most important factor. We want to be cheaper. It will be cheaper than all our competitors. I spoke with OFWs there, and they said that, if LandBank will price it at 10 Bahrain dollars, they would shift to LandBank, so that is what we are studying,” he said.