Banking and Finance Industry

[Dvorak]

40K lang pala maximum annual contribution.. pag individual eh 20K lang.. eh halos pareho lang nang SSS yun ahh.. 18K maximum annual sa SSS eh..

AN ACT
TO ESTABLISH A PROVIDENT PERSONAL SAVINGS PLAN KNOWN AS THE
"PERSONAL EQUITY AND RETIREMENT ACCOUNT"

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Title. - This Act shall be known as the "Personal Equity and Retirement Account (PERA) Act of 2001."

SEC. 2. Declaration of Policies. - It is declared the policy of the State to promote and encourage individual and personal savings, investments and retirement plans supported by government incentives.

SEC. 3. Definition of Terms. - For purposes of this Act, the following terms are defined as follow:

a) Retirement Account or the Trust refers to the trust created or organized by an individual, known as "trustor", for his exclusive use and benefit upon and during his retirement, in which said trustor retains only the equitable ownership of the funds he deposits therein as savings, as well as in the income thereof from investments of said fund;

b) Trustee is a bank accredited by the Bangko Sentral ng Pilipinas (BSP) designated by the trustor to administer and manage the retirement account and hold legal title to the trust until the retirement of the trustor or the termination of the trust as provided in this Act;

c) Trustor is the contributor or depositor to the fund creating or organizing a retirement account, as well as the funds annually or regularly increasing and augmenting the deposited capital as authorized under this Act;

d) Year means every taxable year under the National Internal Revenue Code;

e) Notify means to send notice in writing;

f) Portfolio refers to the record or list of investments made by the trustee for and in behalf of the trustor;

g) Tax refers to the income tax as defined under the National Internal Revenue Code;

h) Penalty means the sum to be paid by the individual contributor for early withdrawals of any part of the account held by the trustee-bank;

i) Tax Code refers to the National Internal Revenue Code;

(j) Beneficiaries mean all the heirs and assigns who shall succeed to all the rights, under the law, acquired by the contributor in and through his retirement account.

SEC. 4. Opening of Retirement Account. - An individual person of legal age may create, organize or open a retirement account with a trustee, or a bank accredited by the Bangko Sentral ng Pilipinas, with an initial deposit or contribution of not more than Twenty thousand pesos (P20,000.00).

A married couple may create, organize or open a joint retirement account with an initial deposit of not more than Forty thousand pesos (P40,000.00).

No individual or married couple may open a joint retirement account with an amount more than what is required under this Act.

SEC. 5. Qualifying Investment Rules. - Funds deposited in a retirement account shall be qualified for investment only in

(1) securities including ordinary shares of stocks, not being shares in an investment trust, issued by a company which is incorporated in the Philippines and quoted in the official list of a recognized stock exchange in the Philippines or dealt in on the unlisted securities market; or

(2) cash which the trustee is entitled to hold for investment under the rules of the account.

SEC. 6. General Investment Rules. - Investment of funds held in the retirement account shall observe the following rules:

(1) All transactions, whether by way of sale, purchase or otherwise, handled by either the trustor himself or the trustee-bank, shall be made at the price which those investments might reasonably be expected to fetch in the open market;

(2) Investment made by a trustor shall be supervised by the trustee;

SEC. 6. General Investment Rules. - Investment of funds held in the retirement account shall observe the following rules:

(1) All transactions, whether by way of sale, purchase or otherwise, handled by either the trustor himself or the trustee-bank, shall be made at the price which those investments might reasonably be expected to fetch in the open market;

(2) Investment made by a trustor shall be supervised by the trustee;

(3) A trustor's cash contribution and any other cash by way of interest, income and others held by the trustee shall be held in pesos and other legal tender in the Philippines and deposited in the account of the trustor;

(4) The trustee shall account for any amount representing income, penalties and taxes applicable on the contribution of the trustor in accordance with the provisions of this Act and the National Internal Revenue Code;

(5) Investments may be only by way of cash or shares of stocks;

(6) An investments portfolio shall be presented to the trustor by the trustee whenever necessary;

(7) No part of the trust fund shall be invested in life insurance contracts; and

(8) The trustee shall notify the trustor of every investment made and income earned on the letter's behalf.

SEC. 7. Maximum Annual Contributions. - The maximum annual contribution or deposit of capital to a retirement account shall in no case be more than Twenty thousand pesos (P20,000.00) in the case of an individual trustor or Forty thousand pesos (P40,000.00) in the case of a married couple.

SEC. 8. Income Tax Deductibility. - The contributions made per taxable year shall be One hundred percent (100%) deductible from the taxable income if they fall within any of the following qualifications:

(1) An individual member or any or both of the working spouses are not covered by an employer-sponsored retirement;

(2) Both spouses are covered by an employer-sponsored retirement plan, but their joint adjusted gross income is Three hundred thousand pesos (P300,000.00) or less and One hundred fifty thousand pesos (P150,000.00) for individuals; and

(3) Only one spouse is covered by employer-sponsored retirement plan but the combined adjusted gross income is not more than Three hundred pesos (300,000.00).

SEC. 9. Benefits Upon Retirement. - No tax shall be imposed and collected from funds withdrawn from a retirement account created or opened at least five (5) years earlier by any trustor who has reached the age of fifty-five (55) years.

All interest of a trustor in a retirement account and/or funds withdrawn from said account shall not be subject to levy on attachment or execution as security or for the satisfaction of any judgment against the trustor or his spouse.

SEC. 10. Tax on Early Withdrawals. - If any withdrawal is made from a retirement account before the retirement benefits vests in favor of a trustor as aforestated, a tax equivalent to twenty percent (20%) of the amount withdrawn it part of the income of the retirement account, or ten percent (10%) of the amount withdrawn if part of the principal amount deposited, shall be imposed on the withdrawal: Provided, That no tax shall be imposed on any withdrawal of any fund -

(1) used toward the purchase of a first family home for the trustor himself or for any member of his immediate family;

(2) used to pay for certain qualified college expenses;

(3) used to pay for medical expenses;

(4) for a trustor who has been disabled or otherwise become physically incapacitated to earn income for his subsistence; and

(5) the member has become unemployed for a period of at least three (3) months and uses the money to put up capital for small business.

SEC. 11. Separability Clause. - If any provision or part hereof, is held invalid or unconstitutional, the remainder of the law or the provision not otherwise affected shall remain valid and subsisting.

SEC. 12. Repealing Clause. - Any law, decree, order, rules and regulations or part thereof which is inconsistent with this Act is hereby repealed or modified accordingly.

SEC. 13. Effectivity Clause. - This Act shall take effect after fifteen (15) days following its publication in the Official Gazette or in two (2) newspaper of general circulation in the Philippines whichever comes earlier.

Approved,

NOTE: CONSOLIDATED INTO HB#6001

[jgacis]

Interesting. A government-sponsored defined-contributions retirement plan for filipino citizens.

The most important aspect of this (if it will allow the masses to start investing) is EDUCATION. How will the person know which investment securities are best for him/her? Everyone has their own risk tolerance and needs, so I forsee more finger-pointing if this program doesn't address educating the masses about these investment securities. Here in the states, 401k plans had some legal problems a couple of years ago because people were complaining not being informed adequately of their investments (which many saw their portfolios drop significantly). How much more problems would this cause for filipinos where the majority don't even know how to save, yet alone invest...

Can the trustor let a fund manager (trustee) do the investing for him/her?

Is there any sort of "prospectus" for these investent securities? This would provide at least some sort of financial transparency. What are the legal liabilities for both parties if a matter needs to be addressed?

This is like a 401K plan or mutual fund here in the U.S.A.

The big difference in the Philippines though is that investment securities in the Philippines are regulated differently and have different equity-risk factors among financial institutions there when compared to the states. The American SEC (Securities Exchange Commission) is very strict in financial transparency among U.S. corporations, and the Federal Reserve Bank provides the necessary cohesion to balance our economy (via rate adjustments and capital liquidity for banks). Our pension plans are also watched/monitored by the FTC (Federal Trade Commission) and regulated by state and federal laws.

I hope the Philippines learns to develop their financial infrastructure in a smart/progressive way.

I say this program is good, but the financial infrastructure in the Philippines still needs to improve (like a reliable credit-rating system for all filipinos) before it starts implementing programs such as these....

[kevinb]

PNB, Allied Bank merger a ‘done deal’
Banks just waiting for SC decision on ill-gotten wealth suit

By Michelle V. Remo

Philippine National Bank and Allied Bank, both controlled by taipan Lucio Tan, have agreed to merge.

PNB president Omar Byron Mier told reporters that officials of PNB and Allied Bank have reached an agreement that a merger would be beneficial to both banks as this would create a much stronger bank.

Mier said the only hurdle to the merger was the pending legal dispute between Allied Bank and the government, which is running after a block of shares held by Tan in the belief that it was ill-gotten.

The Supreme Court ruled earlier that the shares being questioned were owned by Tan, but the government challenged this with a motion for reconsideration.

Mier said the planned merger could not push through until the Supreme court has decided on the motion for reconsideration.

“Between the two banks, the merger is already a done deal. But we don’t know how long it will take the Supreme Court to make a decision,” Mier told reporters in an ambush interview.

The PNB official said the two banks were already in the process of discussing the terms of the merger, which he said could be done immediately after the Supreme Court issues a ruling.

He said the banks would consult their stockholders as to who should be the surviving entity. But Mier added that the merging entity would not drop the “Philippine” and “National”, saying no bank is likely to ever again get such a name that is representative of the country.

PNB is the country’s sixth-largest bank in terms of assets, and a leader in servicing overseas Filipino workers with the huge volume of remittances sent through it.

On the other hand, Allied is a commercial bank whose services are geared mainly at affluent Chinese-Filipino customers.

A merger between the two banks will create the fourth-biggest bank in the country in terms of assets. As of the first quarter, combined assets of the two banks were estimated at P397.3 billion.

PNB earlier announced that it has paid the P6.1 billion worth of outstanding liabilities it had with Philippine Deposit Insurance Corp., formally completing its rehabilitation program.

PNB went under a rehabilitation plan in late 2000 due to liquidity problems. PDIC extended a P25-billion financial assistance to the bank to cover huge withdrawals.

Mier said that following its exit from rehabilitation, PNB’s goal now was to sustain growth in its income and improve its return on equity to between 15 and 20 percent.

In the first quarter, PNB reported a net income of P308.3 million, 60 percent higher than that of the same period last year. PNB targets to hit a net income of P1 billion this year, Mier said.

The PNB president said the bank has about P12 billion worth of non-performing loans, translating into an NPL ratio of 10.8 percent. He said the bank expects to sell anywhere between P4 billion and P5 billion worth of NPLs this year to reduce its NPL ratio to a single-digit level.

Philippine Daily Inquirer
Business Section - B2
July 5, 2007

[kiretoce]

Self-service banking gaining interest from major RP banks

Self-service banking is slowly but surely getting interests from major Philippine banks, which are continuously looking for ways to improve customer service and increase revenue streams, banking solutions company NCR Corp. said.

NCR executives from the Asia Pacific region in a banking conference in Singapore also said self-service banking goes beyond transactions that are conducted over the ubiquitous automated teller machine (ATM).

While the Philippines may lag behind its more affluent Asian neighbors which are heavily into technologies that support self-service banking, major Philippine banks including BPI, Banco de Oro, MertroBank and Chinabank, among others are now studying ways to improve their services through self-service banking, NCR said.

Servillano H. Batac III, NCR Philippines country manager for financial solution division, said one of the key problems of major local banks is queuing, which he said, can be eliminated by self-service kiosks that offers more than the usual banking transactions such as withdrawals, account balance, and to some extent, deposits.

"Queuing has always been one of the major problems that local banks have to deal with. But there are solutions that can eliminate queuing," Batac said.

The executive said local banks are looking at "intelligent" ATMs as a means to address the problem of queuing.

Intelligent ATMs, according to NCR, will cater to customer requirements and services beyond those that are delivered to the usual ATM.

These services include local language support, 24 hr. availability, location, and privacy.

NCR said along side these services, intelligent ATMs will also handle bill, credit card, loan repayments, and a host of more complex customer relationship management services.

Self-service banking and intelligent ATMs will also virtually extend banking hours, although NCR emphasized that these solutions are not designed to replace traditional person-to-person banking.

Intelligent ATMs will also be able to determine customer preferences and in the course of an ongoing transaction, can offer a wide variety of bank services and run advertising campaigns for the bank.

NCR said for example, an intelligent ATM can ask a customer "Would you like to receive your bank statements by e-mail?"

But Batac said the mass adoption of self-service banking, as well as intelligent ATMs will "take time," particularly in a market such as the Philippines.

The executive said some of the services offered by intelligent ATMs for example will need regulatory clearances, particularly in the area of security and privacy.

"The good thing is Filipinos are willing to adopt," Batac said, noting that the adoption of ATM cards also took significant time before being embraced by the mass market.

Batac further said NCR will soon release a host of self-service solutions on a region-wide basis, although plans for the rollout of these products and services, remain under wraps.

[portludlow]

Local banks have no exposure to subprime assets –

http://www.abs-cbnnews.com/storyPage.aspx?storyId=89135
By DES FERRIOLS
The Philippine Star

In the wake of the panic over the US subprime credit market, the Bangko Sentral ng Pilipinas (BSP) said it has examined the exposure of banks in similar instruments and found only insignificant amounts in collateralized debt instruments as a whole.

BSP Governor Amando Tetangco Jr. told reporters over the weekend that the banking industry’s minimal exposure in collateralized debt obligations (CDOs) accounted for only 0.2 percent of its total assets.

CDOs are a type of asset-backed security and structured credit product that gain exposure to the credit of a portfolio of fixed income assets.

CDOs divide the credit risk among different tranches: senior tranches (rated AAA), mezzanine tranches (AA to BB), and equity tranches (unrated).

According to Tetangco, the banking industry’s CDO portfolio consisted only of senior and mezzanine tranches and no subprime assets.

"We didn’t find any exposure in subprime assets," Tetangco said. "The CDO assets currently held by banks are A-rated and higher, indicating no risk of a direct impact on the banking sector."

Monetary officials have been trying to calm the market, saying that the fall-out from the problems in the US credit market is likely to have only a minimal impact on the Philippines.

Tetangco said the BSP is expecting only an indirect impact and since the market had sufficient domestic liquidity, this would limit the effects of the global selloff spurred by jitters over the US subprime market.

"More fundamentally, the increased availability of longer term funding in pesos has also reduced the country’s vulnerability to adverse external market developments," Tetangco said.

Central banks in Asia have made moves to inject extra cash into banking systems to join the global effort by monetary officials to calm the panic in the credit markets.

Tetangco said that because there was ample liquidity in the system, the BSP had less need to do this than other central banks, particularly the European Central Bank which pumped a record amount of cash into Europe’s money markets to make sure that their banks had adequate short-term funds.

The market has been spooked by fears that the fall-out from the meltdown in the US subprime market would be worse than originally projected.

Although Asian economies have grown less dependent on the US economy for growth and momentum, experts nevertheless said the crisis in confidence in the US subprime market would continue to be felt across markets in Asia.

[Lili]

Oh my. Good to read this thread. I found out from @Rene Ybardolaza's posting that there is a one year redemption period for foreclosed properties. My sister and I have been meaning to buy a foreclosed property in Pinas pa naman.

My question is, given that the banks hold on to these repossessed properties for quite some time instead of selling these "non-performing assets" right away, would it be safe to assume that once they have foreclosure sales that the one year redemption period has already lapsed?

Also, I think it is not only a "cultural belief" that "property value cannot go below the original value when the loan was created" because experience has shown that real property prices always go up in the Philippines. Am I wrong to presume that?

Anyway, on @portludlow's posting, it's good to know that the subprime mortgage fiasco here in the US has no direct risk impact on the banking sector of the Philippines. It remains to be seen how things will pan out based on its indirect impact. But this posting may assuage some fears about the stability and liquidity of the Philippine banking sector.

[Rene Ybardolaza]

Lili, I don't think the bank will or can sell a property that hasn't been through its one year redemption period. During that period, the borrower can bring that loan current by just paying the delinquent amount. That would leave someone like you in a very difficult situation if you bought a bank-owned (?) property that suddenly became current.

One challenge that I don't have any knowledge of in the Philippines is the eviction process. Here in California, when a delinquent borrower refuses to leave his home after being served notice by the bank, the Sheriff takes over and locks the borrower out of his house. After the lockout, if he cooperates, he is given a day to move his household items. At that time, that's when an angry and vengeful borrower gives the bank a few licks by kicking a few holes on the wall, rip out appliances like air conditioners, destroy pool pumps and uproot the remaining vegetation.

[Lili]

Thanks for the clarification @Rene.

Funny snippet on an angry evictee's way to get back at the bank.

I would presume that the bank takes care of the eviction proceedings in a foreclosed property so that the new buyer can take possession of the property free of prior occupants or any other claimants?

[Rene Ybardolaza]

I sure hope so..... a pissed off Pinoy will most likely have a gun and I wouldn't want him taking pot shots at me while I'm hauling my sofa into his recently foreclosed house.

[kiretoce]

More Filipinos join ranks of banks’ well-heeled clients

MANILA, Philippines – If you have $80,000 (P3.6 million) to play with, why not join a growing group of well-heeled clients that banks like HSBC, Citibank, Standard Chartered and Bank of the Philippine Islands woo? No need to line up, miss lunch to check up on your portfolio, or pay remittance fees to move funds from one country to another. Chances are, the branch manager would even buy you pizza as you wait for your checks to be prepared.

In the Philippines where half of the population lives below the poverty line, growing this clientele base would at first seem tough. Not quite, say some bankers who work in the wealth management industry.

Nicholas Winsor, head of HSBC’s personal financial services in the Asia-Pacific, says the British bank has seen a compounded 25 to 26 percent growth in this area for the last couple of years. He expects continuous growth in the coming years, in tandem with the bank’s consumer banking services, as disposable incomes rise, with special facilities in as far as Davao in Mindanao.

“We are seeing a regional shift in focus from traditional savings to mutual funds, tax planning and equities investments through managed funds,” Winsor said.

Citibank’s Judith Go, wealth management director for Citigold, says Citibank also continues to attract high net worth individuals and manages a growing portfolio.

Wealth management is not the same as private banking – a service most global banks offer to the wealthy elite that includes portfolio management and wealth planning. It’s a notch below, and aims to eventually graduate clientele to private banking.

Citibank and HSBC both offer personalized services – no cookie cutter type of financial advice. Instead, there are specialists assigned to individual clients to determine risk profiles, sophisticated software to determine investment strategies, research information not just on Philippine markets but also global markets, and travel rewards systems among others.

“When the unit investment trust fund market experienced some volatility, we were the least hit among all industry players, as our Citigold clients were prepared for such an eventuality and knew that the market correction will not affect their long-term gains,” Go said.

Winsor says financial advisors focus more on relationships rather than the transaction, to attract the kind of clientele for whom they have designed wealth management products.

On top of these perks, some clients said they liked the prestige that goes with being a wealth management client. “We get better rates too,” said two entrepreneurs who requested not to be named.

Despite the growth, however, the Philippines is still not be in the league of Hong Kong, Singapore, Taiwan and especially China where the number of well-heeled clients shot up in the previous years.

“In other markets like Singapore, Korea, Taiwan, HSBC’s focus is much more on the wealth business, even accounting for 50 percent of the bank’s income. But in the Philippines, I see more of a balance between wealth management opportunities and consumer banking. I see both growing,” Winsor said in an interview.

It’s also a good way to grow your career, especially if you are a certified public accountant, but a CPA is definitely not a requirement, Winsor said.

“Our financial advisors are very trained and well-paid. They are from all walks of life, often from the best universities and often wealthy in their own right,” he said.

[-TC-]

http://business.inquirer.net/money/b...icle_id=104182

DBP offers hedging facility to OFWs
By Doris Dumlao
Inquirer
Last updated 05:32am (Mla time) 12/01/2007

MANILA, Philippines -- The state-owned Development Bank of the Philippines is offering a facility to help overseas Filipino workers (OFWs) and their households to hedge their foreign currency earnings against the sharp rise of peso against the US dollar, the central bank said.

“We have approved the DBP’s hedging facility for OFWs,” Governor Amando Tetangco Jr. of the central bank, Bangko Sentral ng Pilipinas, told reporters.

Tetangco said the Monetary Board had authorized DBP to offer various derivative instruments such as US dollar non-deliverable forward contracts, US dollar and peso currency options, and US dollar outright forward contracts.

A derivative is a sophisticated financial instrument whose value is derived from the value of an underlying good or index, like the exchange rate, interest rate or stock prices.

A forward contract is an agreement to buy or sell a specified amount of foreign currency at a specified exchange rate and is settled at a specified future date. A non-deliverable forward contract does not require actual delivery of the currency, and only the differential is paid upon maturity. An option is a right to buy or sell a particular commodity at a specified price within a set time.

“It’s an expansion of the hedging facility we offered exporters, [this time] to help OFWs,” said DBP president Reynaldo David.

DBP plans to market the hedging instruments through the manning agencies that deploy Filipino workers abroad.

The state-owned bank’s outstanding hedging contracts with exporters now amount to about $200 million, rising from scratch in October when the exchange rate broke into the level of P42 to the dollar.

[sugarboy]

Originally Posted by Rene Ybardolaza

I sure hope so..... a pissed off Pinoy will most likely have a gun and I wouldn't want him taking pot shots at me while I'm hauling my sofa into his recently foreclosed house.

@Lili/Rene, by the time a property is on the list of assets which the bank needs to dispose of, it is deemed that the 1 year grace period to redeem the property is over with, and the property currently titled in the name of the bank.

There was this situation recently wherein my wife and I spotted a good buy in Mandaluyong listed among the assets to be disposed of by a big bank. The property was already titled under the name of the bank and good to go so to speak. Upon meeting with the bank officer in order to discuss further details on the purchase, the officer disclosed a caveat in that a few days prior to our meeting, a case was filed by a former owner of the property versus the bank and the owner/borrower who had lost possession of the property to the bank. Hence, we would have to buy the property "at our own risk".

The good thing about it was that since my wife is a prosecutor in Mandaluyong, we easily located the case number and in which court the case was filed. After examining the docs, we felt that it was a "no-go" for us as the elements of the case pointed to a truly sticky situation.

As of last check, the property was taken off the list of assets to be disposed and after confirming with the officer, the Bank had decided not to put up the property for sale until such time that all legal hindrances were cleared.

[laze]

Hi folks,

I will be in Manila January 2008. How do I open a savings/checking account in either PNB or any local bank? What are the requirements for a former Filipino Citizen who do not have a permanent Philippine address? will be buying a condo hence the need for a bank account.

Thank you.

[jgacis]

You can open an account with your passport and home address (always check with the banks for their own policies and regulations).

I already did this with RCBC when I bought a condo in Makati, and I was not a former filipino citizen.

[kiretoce]

Filipinos have low financial IQ

MANILA, Philippines -- Lacking confidence that his savings can cover emergency needs or support a comfortable retirement, the average Filipino has a "financial intelligence" of only 47.8, less than half the maximum score of 100, according to Citibank.

The score was derived from the American banking giant's Fin-Q survey, a study across the Asia-Pacific designed to measure the financial quotient or financial intelligence of consumers aged 18 to 40, who have at least a bank account or a credit card.

The survey, whose main findings were released at a press briefing on Thursday, showed that 62 percent of Filipino respondents belonging to the middle-income working class had a score of less than 50.

The survey, administered online and conducted in the last quarter of 2007, polled 400 Filipino respondents across the country earning an average of P30,000 per month.

About 30 percent of the respondents were earning under P100,000 a year, while 34 percent belonged to the P100,000-P300,000 income bracket.

About 28 percent were earning more than P300,000 while 8 percent refused to reveal their income bracket.

"Based on the Fin-Q results, only oner out of 10 Filipino respondents is consciously saving up for this retirement. The rest have some savings but don't know if it will be enough. Others have no idea at all how much they need or have not started planning," said Agustin Davalos, Citibank Philippines' retail bank director.

"If they lost their jobs tomorrow, or suddenly fall ill and cannot work, their savings would last only for nine weeks (about two months) before they run out of money," Davalos said.

The benchmark for a comfortable buffer in case of a sudden sickness or loss of job is to maintain liquid savings equal to three to six months worth of current earnings.

The survey also showed that almost seven out of 10 Filipino respondents own insurance but only half of this number felt that the coverage was enough to protect them and their families.

Conducted by Australia-based CxC Consulting, the survey rated respondents on 11 different questions closely related to financial well-being, with a maximum possible score of 100 each -- much like grading a student based on performance on individual subjects like Math, Science or English.

The questions ranged from their optimism about their financial future to approaches to budgeting and saving to whether they have a formal financial plan and an up-to-date will.

The study also incorporated separate attitudinal and lifestyle questions. The better the financial position was in one particular area, the higher the points garnered.

In credit card payment patterns, for instance, a respondent who wipes out the entire credit card monthly debt (and thus avoids costly financial charges) gets the full 10 points while one who pays only a slightly higher amount than the required minimum payment gets 5 points. If he pays only the bare minimum, he doesn't get any point.

"If you look at the areas where we need to improve on, that would be the state of our financial savings, having a formal financial plan and having an up-to-date will, which in turn should also ultimately improve our satisfaction with our quality of life and our confidence in financial future," said Citibank research specialist Abby Chan.

"While the Fin-Q score may be disappointing, the good news is that more than half of the surveyed population believes in the importance of saving.

The problem lies in having the discipline to do so, which could be due to lack of resources or financial know-how," Davalos said.

The survey also reflected Filipino's sunny outlook, as 64 percent said they were satisfied with their current quality of life and 77 percent were optimistic about their future.

"But it's telling to see that you have 36 percent who said that they are not satisfied (with quality of life) and these are probably the people who sort of dragged down the Philippine score in this area," Chan said.

"When we grilled down the people who are not satisfied, the saying that `money can buy happiness’ seems to work because those not satisfied are those who are significantly lower in terms of income, those who have not yet prepared for their retirement savings, and those who are not that secure about their current jobs," Chan said.

[Raven83]

That is not something new, add our religious practice in which keeping money is almost an act of selfishness, no wonder from a simple street level pinoy's to big corporations to our national government all have huge amounts of debts

[red_jasper]

BSP poised to cut interest rates for 5th time in 6 mos

By Enrico dela Cruz
Thomson Financial
First Posted 13:57:00 01/25/2008

MANILA, Philippines -- The Bangko Sentral ng Pilipinas, the country’s central bank is expected to slash key interest rates for the fifth time in six months at its meeting next week.

But economists and analysts appear split on how far policymakers will go this time after the US Federal Reserve's emergency rate cut of 75 basis points this week to avert a recession in the US, the biggest market for Philippine exports and labor.

The widely-anticipated rate cut by the BSP on January 31 will be the third in three months and follows a quarter percentage point cut on December 20.

The closely-watched overnight rates now stand at 15-year lows of 5.25 percent for borrowing and 7.25 percent for lending.

Economists have been betting, even before US policy-makers' unprecedented intra-meeting cut last Tuesday, that the BSP would extend its easing bias until this year, given a strong peso, cooling money supply growth and the Fed's policy moves.

After announcing its aggressive policy measure to stimulate the economy, the Fed indicated Tuesday that further rate reductions were likely to encourage people and companies to start spending again.

The Fed holds its regular policy meeting on January 29-30, with another cut of 25 to 50 basis points on the cards, according to some economists. Read Full Article

[Weina]

Return to FATF blacklist for RP?

A SUPREME COURT decision requiring the need for notice and hearing prior to the issuance of bank inquiry orders could mean the Philippines being returned to a money-laundering blacklist, the Office of the Solicitor General said.

In a motion for reconsideration, Solicitor General Agnes VST Devanadera said: "Any legal structure that emasculates the Anti-Money Laundering Council from effectively pursuing its legal mandate ... creates serious repercussions to the country’s standing as a nation compliant with the international standards set forth by the Financial Action Task Force (FATF)."

"Worse, such global perception may revert the Philippines to the dreaded FATF list of Non-Cooperative Countries and Territories, a situation that needly causes prejudice to the country’s financial transactions, including those involving much valued foreign remittances of overseas Filipino workers from abroad," she said.

In a February 14 decision, the high court ruled that the AMLC could not "ex parte" inquire into the accounts of former Transportation Secretary Pantaleon Perez and Philippine International Air Terminal Co., Inc.’s Cheng Yong and his wife. Authorities had wanted to check the financial trail surrounding the Ninoy Aquino International Airport-Terminal 3 contract, which had been ruled as anomalous.

In simple terms, ex parte means a government agency can file an application to examine a bank account without having to notify the bank or client involved.

The high court noted that Republic Act 9194 or the Anti-Money Laundering Act, as amended, is silent on such. The law was only categorical on ex parte proceedings with regard to the issuance of freeze orders.

The OSG, acting in behalf of the AMLC, begged to disagree.

It said the law provides that "notwithstanding the requirements of the [Bank Secrecy Law] ... the AMLC may inquire into or examine any particular deposit or investment ... upon order of any competent court." This was the intent of the legislators when they drafted the bill to remove the Philippines out of the FATF blacklist, it said.

The law was created in 2001 in answer to the FATF assessment that the country was a dirty money haven. It was finally ticked off the list in 2005.

In having named the country as a "Non-Cooperative Countries and Territories", the FATF had noted that local bank records were protected by excessive secrecy provisions.

The law specifically answered this concern through ex parte proceedings, the OSG said.

"A prior alert to the account holder of an impending inquiry would result in the removal or concealment of the funds deposited therein," it said, adding that "The government would be dragged to a protracted litigation."

The high court decision, it said, opens the country up to "countermeasures" from other foreign governments. — IPP

[Weina]

Gov’t planning to securitize P40-billion obligation to BSP

THE GOVERNMENT is planning to create a special purpose trust that will securitize the state’s obligation to fund the central bank.

Under the New Central Bank Act of 1993, the government was to provide P50 billion in capital to the Bangko Sentral ng Pilipinas, of which only P10 billion was forwarded.

Officials said the remaining P40-billion requirement — which should have been released in 1994 — now needs to be funded given central bank losses arising from foreign exchange fluctuations.

BSP Deputy Governor Diwa C. Guinigundo told reporters last week that the special purpose trust will allow the government to turn its P40-billion obligation into a financial instrument that can be sold to investors.

The proceeds will go to the Department of Budget and Management, which will give the central bank P4 billion yearly for 10 years until the P40-billion obligation is serviced.

As of November last year, the BSP posted a deficit of P62.46 billion. In particular, expenses arising from forex fluctuations hit P84 billion.

Mr. Guinigundo said the securitization of the government’s multi-year obligation could commence within the year. — GSDP

[kc5169]

What they REALLY need here in the philippines is a credit rating system like what they have in the US. Gloria Arroyo was talking about implementing one. Without the credit rating system, loans are huge risks. Without the rating system is the reason why interest rates are extremely high and default loans are outrageous. In the US there are three of them, why can't there be one here? Does everyone know what a credit rating system is? If not i'll explain it.....