Overseas Filipinos ‘hopeful’ ahead of opening of bank that pledges lower remittance charges

President Rodrigo R. Duterte, center left, Land Bank of the Philippines president Alex V. Buenaventura, center right, and from left, labor secretary Silvestre H. Bello III, foreign affairs secretary Alan Peter Cayetano, executive secretary Salvador Medialdea, OFBank president Renato Eje and finance secretary Carlos Dominguez unveil the marker for the Overseas Filipino Bank inauguration on January 28, 2018. (Land Bank of the Philippines)
Updated 20 March 2018
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Overseas Filipinos ‘hopeful’ ahead of opening of bank that pledges lower remittance charges

DUBAI: Marifhe is a nurse at a hospital in Jeddah – she has been for 24 years – while her husband, Noel, has been employed in Saudi Arabia’s retail industry for three decades.
The couple managed to raise and send their three children back home through college during their long stay in the kingdom, regularly remitting money through banks or money exchanges for their children’s tuition and other expenses.
“It has always been like that since we started working in Saudi Arabia. We always go to Al-Balad [where the exchanges and banks are located] to send money home. It would have been better if there was a system that made it easier for us; and the remittance charges were lower so we could send more to our relatives,” Marifhe told Arab News.
The couple has lost track of the time they have spent patiently waiting in long queues just to send money back home or how much they have spent in remittance charges - money they could have saved or put towards their family.
But Marifhe says she is hopeful, like the other millions of Filipinos working and living abroad, that the recent roll-out of the Overseas Filipino Bank (OFBank) will ease her money concerns and also help plan for her financial future.
OFBank, which was launched on Jan. 18, is actually a revamped version of state-owned Philippine Postal Savings Bank, but with its business model dedicated to provide financial products and services tailored to the requirements of over 10 million overseas Filipino workers (OFWs), a good number of them working in the Middle East.
The bank’s establishment was also the outcome of a campaign commitment made by President Rodrigo R. Duterte, whose candidacy during the 2016 elections received overwhelming support from overseas Filipino voters.
It is a good strategy for OFBank to focus on OFWs: personal remittances from overseas Filipinos reached $31.3 billion in 2017, 5.3 percent higher than the $29.7 billion a year earlier, with major remittance sources such as the US, UAE, Saudi Arabia, Singapore, Japan, Qatar and Kuwait. Cash remittances coursed through banks meanwhile reached $28.1 billion, or up 4.3 percent from year-ago levels of $26.9 billion.
The money that OFWs send home provides a major backbone for the Philippine economy, which last year accounted for about 10 percent of the country’s gross national product and has been the traditional fuel for household spending power even during leaner economic periods.
Filipinos send a vast proportion of their incomes home, leaving themselves with barely enough to meet their daily living costs.
“I would like to see how the bank [OFBank] would make remittance costs cheaper, as well as give me more trust in the [Philippine] banking system. I have not much trust in Philippine banks,” Marifhe said.
OFBank – to be run by the government’s Land Bank of the Philippines – will have in its portfolio 15 banking products and services especially suited for OFWs including peso savings, time deposits, checking accounts, loan products, remittance services, payments services as well as investment products such as Unit Investment Trust Funds.
OFBank also plans to offer a non-collateral loan package for Filipinos planning to return to the Philippines to start their own businesses or build their homes, at affordable interest spreads.
“We have developed these products to tailor fit the banking needs of overseas Filipinos,” Alex Buenaventura, the chairman of OFBank, said during the bank’s launch. “OFBank is the only bank in the Philippines with loans, saving and investment products for OFWs.”
But Marifhe, and other expatriate Filipinos in Saudi Arabia, will have to wait for OFBank to have a presence in the Kingdom as the lender plans to have its first representative office located in Dubai, and the second one in Bahrain.
The Philippine government is also looking at the possibility of deploying the digital financial services offered by China’s Alibaba Group for remittances to be processed through OFBank.
Ant Financial’s low-cost mobile payment technology – which helped boost financial inclusion in China – could also be used in the Philippines and help reduce the cost of remittances.
And that is definitely good news for Marifhe who, despite being an OFW for over two decades, still has no plans to go back home in the Philippines and retire.
“I will not earn in the Philippines what I currently earn here [in Jeddah], so while my services are still needed by the hospital I will stay. But I also want to secure myself financially so I hope OFBank can help me with that,” she said.


As worries about populism in Europe rise, investors bet on stock market volatility

Updated 39 min 46 sec ago
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As worries about populism in Europe rise, investors bet on stock market volatility

  • More than 350 million EU citizens will head to the polls between May 23 and 26 to elect a new Parliament
  • The vote will shape the future of the bloc amid a backlash against immigration and years of austerity

LONDON: Investors are betting on heightened political uncertainty and greater volatility in European stock markets ahead of European Parliament elections in May amid growing concerns about rising populism.
In one of the first concrete signs in financial markets that investors are bracing for political instability, VSTOXX futures , which reflect investor sentiment and economic uncertainty, have jumped in recent weeks.
While the classic gauge of fear — known as implied volatility, which tracks demand for options in European stocks — is currently at 15.68, futures that bet on the same thing over the coming months show a pronounced jump.
That’s because investors have piled on trades that bet on big swings in stocks as election day nears.
Implied volatility for futures contracts expiring in May show a pronounced jump to 16.8, compared with 15.35 in April. The contracts measure the 30-day implied volatility of the euro zone STOXX 50 index.
“We are seeing a bit of a kink around May when we have European elections and we have this wave of populism,” said Edmund Shing, head of equities and derivatives strategy at BNP Paribas.

Looming elections
More than 350 million EU citizens will head to the polls between May 23 and 26 to elect a new Parliament, a vote that will shape the future of the bloc amid a backlash against immigration and years of austerity.
Mainstream center-left and center-right lawmakers may lose control of the legislature for the first time, as euroskeptic and far-right candidates build support.
Herve Guyon, Societe Generale’s head of European equity derivatives flow strategy and solutions, said the rise of populism had triggered a recent flurry of speculative trades.
“Political uncertainty might be coming from the EU rather than the United States. We’ve seen investors doing very large trades to benefit from an increase in volatility around these events,” he said.
“We as a bank don’t expect the elections to be a massive game-changer. The populists won’t get enough to disrupt the political system, but we do note some investors did take some positions on this event.”
The implied volatility is still well below levels seen in late 2018 when global stock markets were routed amid worries about rising interest rates, slowing economic growth and the trade war between Beijing and Washington.
In late December, it shot to above 26, its highest since February.
But the flurry of activity suggests investors are seeking out new opportunities after a slide in implied volatility across major asset classes.
Edward Park, deputy chief investment officer at asset manager Brooks MacDonald, said some of the activity may also be due to persistent uncertainty about Britain’s exit from the European Union as the Brexit date of March 29 nears.
This year, volatility across currency, fixed income and stocks markets has plunged as the US Federal Reserve and European Central Bank have taken dovish policy stances.
The Deutsche Bank currency volatility indicator hit multi-year lows this week, while the proxy for fixed income volatility is languishing at all-time lows.
In stocks, the Cboe volatility index, Wall Street’s so-called “fear gauge,” fell to its weakest in six months this week.
“There’s been a cross-asset volatility crash — in euro-dollar, US rates and equities — in the aftermath of (ECB President Mario) Draghi’s and (Fed Chairman Jerome) Powell’s comments and the expectation of lower rates for longer,” said Guyon.