Govt establishing OFW Bank
State-run Land Bank of the Philippines will acquire Philippine Postal Savings Bank and transform it into OFW Bank by September 2017, Finance Secretary Carlos Dominguez III said Tuesday.
Dominguez said OFW Bank, which would be 30-percent owned by overseas Filipino workers, would have an authorized capital of P3 billion. The bank will be eventually listed in the Philippine Stock Exchange.
He said while the requirements and procedures to establish the OFW Bank were still being completed, LandBank would begin setting up a representative office in Saudi Arabia to cater to the banking needs of 800,000 Filipino workers in that country.
Dominguez said the OFW Bank would be established through LandBank’s acquisition of Postal Bank, which would be converted into a LandBank subsidiary. OFWs will own 30 percent of the bank, he said.
“The acquisition of the Postal Bank will be completed by the third quarter of 2017, after all required procedures are completed and approvals are secured. The LandBank has sufficient resources to complete this transaction,” said Dominguez, who chairs the LandBank board of directors.
LandBank was the country’s 4th largest commercial bank with a total capital of P90.9 billion and assets amounting to P1.3 trillion as of end-September.
“A bank dedicated to the needs of OFWs is one of the promises of President Duterte to Filipino migrant workers,” the Finance Department said.
LandBank president Alex Buenaventura said it would take eight months to accomplish the requirements that would convert the Postal Bank into a LandBank subsidiary.
“The OFW bank will be a listed company with an authorized capital of P3 billion and a subscribed capital of P2 billion, of which P1 billion is paid-up by the LandBank. Another P1 billion will be open for subscription to OFWs who can acquire them by buying shares in the bank,” Buenaventura said.
LandBank needs to seek the approval of the Governance Commission for Government Owned and Controlled Corporations, the Philippine Competition Commission, Bangko Sentral’s Monetary Board and Securities and Exchange Commission to make OFW Bank operational.
“We are going to do focus group discussions with representatives of our target markets to determine where and what services are needed, and what name and logo to adopt for the bank,” Buenaventura said.
Dominguez said for the meantime, LandBank “will seek to establish a unit in Saudi Arabia to assist the OFWs there,” while the OFW Bank was being established.
Buenaventura said LandBank decided to open the Saudi unit in Riyadh because 40 percent of OFWs based in that country were residents there.
“The LandBank unit will be opened near the Philippine labor office or near a place where OFWs usually converge and meet,” he said.
Buenaventura said the Riyadh unit would initially offer financial education and investment counseling services to OFWs.
He said that starting Jan. 2, LandBank, with the involvement of the Commission on Audit and Bangko Sentral, would begin undertaking due diligence to start the process of converting the Postal Bank into a LandBank subsidiary.
LandBank would also have to draw up a purchase agreement and amend its articles and bylaws to formalize its acquisition of Postal Bank.