Philippines: Ayala Corp., BPI, Globe Set Up RP’s First Microfinance Bank to Help...

Oct 2008
Makati City, Philippines, October, 31 2008 - Ayala Corp., the country’s biggest conglomerate, and two of its subsidiaries signed on Thursday a deal that establishes the Philippines’ first microfinance bank.

The new bank has an authorized capital of P500 million (USD 10.2 ml).

In a disclosure to the stock exchange, Ayala Corp., Bank of the Philippine Islands (BPI) and Globe Telecom Inc. said a memorandum of agreement was signed on Thursday.

The group will use BPI’s wholly-owned subsidiary, Pilipinas Savings Bank, as the vehicle for the venture.

“The venture will extend wholesale microfinance loans to microfinance institutions and offer other microfinance products in the future, and will use mobile technology to deliver financial services and expand its retail client base,” the group said.

The venture—which will have a subscribed capital of P350 million—is subject to a final set of agreements among the units involved and approvals from the Bangko Sentral ng Pilipinas (BSP) and other regulators.

BPI and Globe would get a stake of 40 percent and Ayala Corp. 20 percent.

BPI is the country’s biggest lender by market value and third largest in terms of assets. Globe is the country’s second-largest telecom company.

“The venture seeks to further enhance the Ayala Group’s participation in building a financial ecosystem within the microfinance community,” the group said in the filing.

BPI has an ongoing wholesale lending program for microfinance institutions, while Globe has a tie-up with a number of rural banks and microfinance institutions involving the use of its innovative G-Cash product, an SMS-based technology, for money transfers and loan collection. SMS is the short messaging service used by mobile phone to send and received text messages.

In 2000 the BSP, mandated by the General Banking Law to recognize microfinance as a legitimate banking activity and to set the rules and regulations for its practice within the banking sector, declared microfinance as its flagship program for poverty alleviation.

Last year the BSP issued a circular supporting the involvement of large banks in microfinance. The circular allowed universal, commercial and branches of foreign banks to serve the needs of nonbank microfinance institutions for wholesale loans to meet the 6-percent mandatory credit allocation to small enterprises.

Source : Business Mirror

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