Barring hitches, the Overseas Filipino Bank (OFB) that will exclusively serve millions of overseas Filipino workers (OFWs), as promised by President Duterte in a campaign speech, will open its doors in the second quarter.
The OFB is currently awaiting approval from the Department of Foreign Affairs (DFA) so it could establish representative offices in various embassies and consulates to promote its products and services to Filipino migrant workers.
A wholly owned savings bank subsidiary of the Land Bank of the Philippines, the OFB was created following the signing of Executive Order (EO) 44 approving LandBank’s acquisition of Philippine Postal Savings Bank, which became the Overseas Filipino Bank.
The OFB will offer 15 banking products and services, including time deposit, peso savings, loans, investment products, and remittance services to OFWs and their beneficiaries, among others.
OFB President and CEO Renato G. Eje said they are awaiting the green light from the DFA to officially start establishing the bank’s presence in embassies and consulates, with Dubai being eyed as pilot area.
“We are waiting for the documents [from DFA]. We hope the original target date of second quarter will be met. Otherwise, it will be on the third quarter,” Eje told the BusinessMirror.
LandBank President and CEO Alex V. Buenaventura said Dubai, Bahrain and Abu Dhabi are being eyed for OFB representative offices, which will be opened within the year.
At least two bank representatives will man the OFB offices in Philippine embassies to promote the bank’s products and services.
“These representatives will have no banking or commercial transactions. They will just be promoting and providing information to overseas Filipinos about OFB products and services,” Buenaventura said.
Based on the 2016 survey on overseas Filipinos by the Philippine Statistics Authority (PSA) released in May last year, around 2.2 million OFWs worked abroad at anytime during the April-to-September 2016 period.
The survey showed that Middle East countries were the top destinations for OFWs, accounting for 85 percent. Broken down, those who worked in Saudi Arabia comprised 23.8 percent; the United Arab Emirates, 15.9 percent; Kuwait, 6.4 percent; Qatar, 6.2 percent; Hong Kong and Singapore have 5.6 percent each; and other countries in Asia with 21.5 percent.
During the survey period, total remittances sent by OFWs reached P203 billion. These include cash sent home at P146 billion, cash brought home at P45.7 billion and remittances in kind at P11.1 billion, the PSA said.
It added that a majority of OFWs sent their remittances through banks, at 60.3 percent, while the rest through agencies or local offices at 2.4 percent. Door-to-door delivery accounted 1.2 percent, through friends or coworkers at 0.3 percent, and through other means at 35.8 percent.
Earlier, Finance Secretary Carlos G. Dominguez III said the OFB, which will cater to the needs of an estimated 10 million overseas Filipinos, is the ideal vehicle for the Philippines to “leapfrog” to the digital economy.
He noted the bank could be the starting point for the country’s jump into the data-based economy, so that instead of setting up physical branches across the globe, the bank could just rely on digital-technology applications to serve as many overseas Filipinos as possible.
The finance chief added that to leapfrog to the digital economy, the first concern that should be addressed is to ease financial regulations that stymie the growth of electronic commerce in the country.
The OFB could be transformed into a virtual bank, where bank tellers and managers would be replaced by information-technology (IT) experts who have the knowledge to manage large amounts of data and operate the OFB using cutting-edge technologies.
“It’s not going to be a branch because when you get a branch overseas it takes a long time, it’s just an information campaign first. We will work through the embassies, there is a big meeting of the ambassadors in the Middle East and Europe sometime soon in Milan, and the secretary of foreign affairs has invited the OFB to make a presentation,” Dominguez said.
Apart from fulfilling the President’s campaign promise, the conversion of Postal Savings Bank into the OFB also saved the lender from bankruptcy.
The President’s EO 44 in September last year ordered the Philippine Postal Corp. and the Bureau of the Treasury to transfer their PostBank shares to LandBank at zero value.
The EO further stated that the former PostBank will be converted into the “Overseas Filipino Bank,” which will be a “policy bank dedicated to provide financial products and services tailored to the requirement of overseas Filipinos” and will focus on delivering “quality and efficient foreign remittance services.”
Dominguez added that a key feature of the OFB will be its provision of remittance service for OFWs and a loan program for Filipinos planning to return to the Philippines to start businesses or build houses.
Image credits: Paul Hilton/Bloomberg News, Philippine Information Agency