MANILA -- The Philippine government plans to establish a lender dedicated to and owned by overseas Filipino workers by next year, the Finance department said Tuesday.
The state thrift bank Philippine Postal Savings Bank, which is being purchased by government-controlled lender Land Bank of the Philippines, will be transformed into OFW Bank once regulatory clearances are secured.
After the completion of the purchase by the third quarter of next year, Land Bank will list OFW Bank on the stock exchange, with a third of the 3 billion peso ($60 million) authorized capital stock planned to be offered for subscription by overseas workers.
"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," Land Bank President Alex Buenaventura said.
While in the process of creating OFW Bank, Land Bank will open a representative office in Riyadh, where 40% of the 800,000 OFWs in Saudi Arabia reside.
John Leonard Monterona, convenor at the United Overseas Filipinos Worldwide, cheered the announcement. "It will be a game-changer if the OFW Bank's objective is mainly to provide access to funds so that OFWs can pursue enterprise of their own once they've decided to stay for good in the Philippines," he said.
An OFW-centered bank, an idea that has been around for years, was one of the campaign promises of President Rodrigo Duterte, who has told Filipino migrant workers during his trips abroad to come home.
Jeremaiah Opiniano, executive director at the Institute of Migration and Development Issues in Manila, said the planned OFW Bank should build an advanced IT infrastructure and wide remittance network, if it intends to make a difference. It should also project a viable business model if it wants investments from OFWs.
Land Bank was the nation's fourth-largest lender by assets as of September, while Philippine Postal is a tiny thrift bank with around 30 branches.
BDO Unibank, the nation's largest lender by assets, and Ayala Corp.-led Bank of the Philippine Islands, as well as other major banks have services tailored to the needs of OFWs, such as remittance offerings, Opiniano added.
With a 10 million-strong overseas workforce sending around $25 billion in remittances annually, OFWs have become an attractive market for real estate and financial services companies.