4 big banks waive fund transfer fees below P1,000

 

BY LEE C. CHIPONGIAN

Nov 1, 2023 06:14 PM

  

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There are now four big banks or universal and commercial banks that have heeded the central bank's call to waive fund transfer fees on small transactions with the addition of government-owned Land Bank of the Philippines (Landbank).

Landbank said it has removed the fees for online fund transfers below P1,000 via InstaPay and PESONet as of Wednesday, Nov. 1.

Landbank also said that it has reduced the interbank fund transfers of more than P1,000 to a fixed transaction fee of P15 from the previous P25. 

The bank president and CEO, Lynette V. Ortiz, said they are waiving transaction fees for small-value online fund transfers to other banks as a Christmas season perk.

“This is our holiday gift to our valued customers, as we continue to promote safe and convenient digital transactions,” she said.

Landbank is hoping that in waiving transfer fees, this will “help clients send money to loved ones in a safe, secure, and convenient manner” which will promote financial inclusion in the country.

The waived transfer fee is given to clients for the first three online fund transfers and transactions in a day via the Landbank Mobile Banking App (MBA), and the bank’s online retail banking channel, the iAccess, it said.

Meanwhile, fund transfers of Landbank and its digital bank Overseas Filipino Bank, regardless of the amount, remain free of charge.

“The latest move (supports) the call of the Bangko Sentral ng Pilipinas (BSP) to promote cashless payments by removing the fees on small-value fund transfers,” said Landbank.

In July, the government bank increased the daily aggregate amount limit of fund transfers via InstaPay from P50,000 to P100,000 and via PESONet up to P500,000 and P1.5 million.

“Daily transaction limit for fund transfer and bills payment has been removed, allowing customers to perform an unlimited number of transactions per day,” said the bank.

BSP Governor Eli M. Remolona Jr. has been urging all banks especially big banks such as Landbank to waive transfer fees on small online transactions.

Remolona admitted that for the moment, in the absence of a formal payments framework or other regulations that will compel banks to remove or reduce fees on small transactions, all the BSP could do is make an appeal using moral suasion.   

With Landbank, there are now four big banks that have removed fees on small transfers up to P1,000 since February when BSP started to talk to banks and non-banks about cutting online transfer fees. The other banks are Ayala-led Bank of the Philippine Islands, the Ty-controlled Metropolitan Bank and Trust Co., and the Aboitiz-owned Union Bank of the Philippines.

Remolona said BSP is also talking to non-banks with digital payments such as GCash and Maya, formerly PayMaya.

Some banks and non-banks offer free InstaPay service while others charge a rate of P8 to P25 per transaction.

Currently, there are 82 InstaPay participating BSP supervised financial institutions (BSFIs) and 106 BSFIs in PESONet as of end-September this year.

Peso is ‘more stable’ now – BSP

BY LEE C. CHIPONGIAN

Sep 13, 2023 03:08 PM

  

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Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila Jr. said the peso at mid-P56 versus the US dollar is "much more stable" today compared to same period last year.

Dakila said the BSP’s aggressive nine straight rate hikes that brought the key rate to 6.25 percent as of March this year has done enough to stabilize the exchange rate.

“There was intervention by the BSP in the market to calm the foreign exchange market (in late 2022) and also adjustments in the policy interest rate has implied that the peso has now become much more stable,” he said. Dakila is currently in Dubai, United Arab Emirates. He and the administration’s economic team held a Philippine Economic Briefing last Sept. 12, its first in the Middle East. 

The BSP official assured investors and market traders that the central bank will continue to allow the peso to be influenced by market sentiments, and that its hawkish stance is good for the peso.

“We have remained committed to market determination of the peso,” he said.

He also stressed that the BSP “has only participated in the foreign exchange markets when the peso became volatile and post risks to inflation. Such was the situation in the third quarter last year when the Fed (US Federal Reserve) began to aggressively adjust the Fed policy rate.”

The BSP’s key rate remains at 6.25 percent for the past three Monetary Board policy meetings in a row, but the BSP always signals its hawkish stance. From May 2022 until March 2023, the BSP raised its benchmark rate by a cumulative 425 basis points, partly in response to the US Fed’s own aggressive policy actions to battle its inflation problems. 

Policy rate actions have an impact on the exchange rate. A cut in rate can lead to a weak peso, for example, while a rate hike could do the opposite. A peso depreciation can also directly affect inflation since it will increase the price of imported commodities.

To avoid extreme and substantial changes in the exchange rate, the BSP intervenes in the spot market to strengthen the peso by releasing US dollar liquidity. It withdraws from the country’s international reserves to do this.

In 2022, the BSP unloaded $15 billion to defend the peso against speculative attacks and to prevent it from breaking past P60. So far, the peso’s record-weakest level is P59 vis-à-vis the US dollar which was in September and October last year.

Last month, BSP Governor Eli M. Remolona said BSP’s tightening bias is good for the peso-US dollar rate because it props up the local currency despite some volatility.

At the P56 level, the BSP considers the peso movement as stable because it moves in both direction, either to appreciate or become stronger than the greenback, or it depreciates or closing weaker versus the US dollar at the end of the trading day. The BSP call this a normal exchange rate day, driven by business operations.

Since the BSP uses a flexible and free-floating exchange rate policy, it remains market-determined. The BSP therefore does not target a peso level versus the US dollar nor do they announce forecasts. But as a consequence of a higher BSP rate though, it will help alleviate pressures off the peso which in turn, will curb inflationary impulses due to steep global commodity prices. 

As of its opening trade on Wednesday, Sept. 13, the peso was at P56.68 to the US dollar. This was weaker from its last close of P56.65 on Sept. 12.

BSP’s polymer bill wins ‘Banknote of the Year’ award

BY LEE C. CHIPONGIAN

  

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For the first time, the International Bank Note Society (IBNS) has picked the Bangko Sentral ng Pilipinas (BSP) to win the “Banknote of the Year” award for its P1,000 polymer bill.

The BSP circulated the dirt-free, water-resistant polymer bill last April 2022. It was printed by Note Printing Australia, a subsidiary of the Reserve Bank of Australia.

According to its website, IBNS chose the Philippine Eagle-featured banknote among 100 other new banknotes for the 2022 award.

“From the onset of voting, the Philippines’ 1000 Piso note was the overwhelming favorite,” said IBNS, adding that polymer “represents a dramatic shift from the cotton and abaca material previously used.”

Highlighting the “critically endangered” Philippine Eagle which is sometimes called the monkey-eating eagle, and the holographic national flower, the Sampaguita, in the polymer front design, IBNS said the “Philippines successful design in eye-pleasing blue combines an endangered species with an environmental motif.”

The back design, meanwhile, is similar to its paper-based counterpart which also featured the Tubbataha Reefs Natural Park (UNESCO World Heritage Site), the South Sea pearl and the T'nalak weave design of the T’boli people of the Philippines.

The IBNS said the 100 new banknotes design that competed was further trimmed to just 19 nominations. The close runners-up to the BSP’s P1,000 polymer were Northern Ireland’s Ulster Bank’s 50 pound note and Bank of Scotland’s 100 pound bill. Other finalists were banknotes from Algeria, Barbados and Egypt.

IBNS is a global non-profit organization that recognizes exceptional banknotes issued each year on the basis of artistic merits, such as design and use of colors, as well as high-quality security features, said the BSP in its own statement.

“The BSP hopes that the design of the polymer banknote will remind Filipinos of the importance of environmental preservation and the need to ensure a sustainable future for all,” the central bank said on Thursday, May 4.

Last January, the BSP said about 92 percent of all automated teller machines or about 17,304 ATMs across the country, are now dispensing polymer banknotes as of end-December 2022.

The polymer banknotes, which are only available in P1,000 denomination, will have a circulation of 500 million pieces this year, of which around 39 million was released last year.

The BSP is gradually releasing the polymer banknotes to allow banks and the public time to get used to plastic-based bills. It will also allow the BSP time to assess the benefits and costs associated w

P150 banknote is fake – BSP

by Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP) said on Thursday, Feb. 2, that they have not issued a new banknote in the denomination of P150 and warned the public of reports about the fictitious bill circulating in social media.

In an advisory, the BSP denied such reports of a new banknote and is encouraging the public to report persons involved in the manufacture and distribution of counterfeit currency to the BSP Payments and Currency Investigation Group at email address pcig@bsp.gov.ph or through telephone numbers +63-2-8988-4833 and +63-2-8926-5092.

“(BSP) has not released a 150-Piso denomination banknote featuring Dr. Jose Rizal. Images of the said banknote circulating on social media are fictitious,” the BSP said. 

Fictitious P150 banknote (BSP photo)

“The public is advised to always check the legitimacy of information found on social media and other channels regarding Philippine banknotes and coins. To verify, visit the Notes and Coins section of the BSP’s official website www.bsp.gov.ph,” it added.

There are only five banknotes in circulation. These are the P50, P100, P200, P500 and P1,000. Since April 2022, the polymer version of the P1,000 is also in circulation.

The BSP since 2020 — when amid the height of the pandemic, counterfeit money became more rampant – has been aggressively going after perpetrators of fake banknotes production. With law enforcement agencies such as the National Bureau of Investigation, the BSP has been actively conducting joint anti-counterfeiting operations. 

Under Republic Act No. 10951, those convicted as counterfeiters are slapped with a maximum P2 million in fines and imprisonment of up to 20 years.

The BSP has been working with both the Lower House and the Senate to impose a more rigid package of penalties and sanctions against currency counterfeiting and to criminalize the stockpiling of large amounts of coins.

The BSP is hoping that their proposed measures will further strengthen its currency operations such as production, distribution, deposit-taking from banks, authenticity verification, anti-counterfeiting operations, and retirement.

From 2010 to 2021, the BSP has conducted 110 law enforcement operations and arrested 179 suspects. It has seized 12,400 pieces of counterfeit banknotes worth P7.8 million and more than 14,300 pieces of counterfeit US dollar banknotes worth more than $92.5 million.

 

Remittances up 3.1% end-Oct

by Lee C. Chipongian

Overseas Filipinos sent home $26.74 billion of cash remittances in the first 10 months of the year, up by 3.1 percent from same period last year of $25.93 billion, according to the Bangko Sentral ng Pilipinas on Thursday, Dec. 15.

Cash remittances are funds transferred via the formal banking system and it is data easily captured by the BSP. The other remittances data is personal remittances which the central bank defines as the sum of the net compensation of overseas Filipinos, as well as personal transfers and capital transfers between households. 

For the month of October, cash remittances totalled $2.91 billion, which was 3.5 percent higher than same period last year of $2.81 billion.

“The expansion in cash remittances in October 2022 was due to the growth in receipts from land-based and sea-based workers,” said the BSP.

Land-based workers’ remittances rose by 3.6 percent year-on-year to $2.33 billion compared to $2.25 billion same time in 2022. Sea-based workers’ fund transfers amounted to $580 million from $560 million or up by 3.6 percent. 

Bulk of remittances came from the US with 41.7 percent of the total. Singapore accounted for seven percent, Saudi Arabia with 5.9 percent and Japan with five percent of the total.

The US will naturally be reported as a big source of remittances because of the common practice of remittance centers using correspondent banks located in the US. “Remittances coursed through money couriers cannot be disaggregated by actual country source and are lodged under the country where the main offices are located, which, in many cases, is in the US,” said the BSP.

As of end-October, the BSP said personal remittances increased by 3.1 percent to $29.72 billion from $28.82 billion last year.

For the month of October alone, personal remittances went up by 3.5 percent to $3.23 billion from $3.12 billion same month in 2021.

Land-based workers with work contracts of one year or more remitted $2.53 billion, up by 3.5 percent from $2.44 billion last year. Sea- and land-based workers with work contracts of less than one year, meantime, transferred $640 million which was higher by 3.6 percent from $620 million last year.

By end-2022, the BSP expects cash remittances to grow by four percent year-on-year, unchanged from previous years’ projections, including pre-pandemic. 

In 2021, cash remittances went up by 5.1 percent year-on-year to a record high of $31.42 billion.

Peso appreciates to P56-level

by Lee C. Chipongian, MB

The peso strengthened vis-à-vis the softer US dollar on Wednesday, Nov. 23, at P56.94, appreciating by P0.43 from its close of P57.37 the day before.

This is the first time the peso was back at the P56-level since the first week of July this year.

Based on Bankers Association of the Philippines data, the peso closed at its strongest on Wednesday, after hitting a low of P57.33, but still better than the previous close.

PH peso/Manila Bulletin article photo

The spot market’s weighted average rate was P57.203 versus P57.394 last Tuesday. Total volume stood at $687.85 million from $684.40 million.

The US dollar has been weakening in the last month following the US Federal Reserve’s pronouncements of lesser rate increases in the next quarters. The tamer US inflation which was still decades high, is also contributing to the softening of the greenback.

When the US dollar was its strongest, the peso depreciated to P59 on Sept. 29, the lowest exchange rate on record. The previous record was P56.45 in 2004.

The Bangko Sentral ng Pilipinas (BSP) in its latest Monetary Policy Report said the exchange rate could remain above the P55-level until next year and possibly in 2024.

The inter-agency Development Budget Coordination Council (DBCC) has an exchange rate assumptions of P51 to 53 versus the greenback for 2022, and P51 to P55 for 2023 and 2024. The DBCC approved the exchange rate assumptions last July 8, when the peso was at P56.

The BSP said the projected exchange rate reflects “the continued depreciation of the peso as well as higher outlook for US interest rates” and that it was “consistent with cumulative policy rate hikes by the Federal Reserve of 425 bps (basis points) in 2022 and 50 bps in 2023.”

Since June this year, the strong US dollar has caused the peso to sharply depreciate. It fell to P53 on June 10, P54 on June 17, P55 on June 29, P56 on July 7, P57 on Sept. 6, P58 on Sept. 21 and P59 on Sept. 29.

The country’s exchange rate policy supports a freely floating exchange rate system where the BSP leaves it to market forces to dictate the exchange rate level. The BSP will only enter the spot market to ensure “order and temper destabilizing swings” in the peso-US dollar rate.

BSP to hike policy rates again in Dec.

by Lee C. Chipongian

BSP to hike policy rates again in Dec.

By Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP) is expected to go for another policy rate hike of 50 basis points (bps) on Dec. 15, lifting the overnight borrowing rate to 5.50 percent. 

BSP Governor Felipe M. Medalla said they will keep a tightening mode and maintain a decent interest rate differential between the BSP and US Federal Reserve funds rate to stabilize exchange rate pressures.

The BSP chief, however, has not yet signalled by how much the Monetary Board will increase the policy rates next month, but the possibility of again matching the US Fed action is high.

BSP Governor Felipe M. Medalla

Medalla is also ruling out a pause in the immediate future. “The forex (foreign exchange) market is expected to remain very sensitive to the interest rate differential. A 50 (bps) by the US Fed in December can’t be met by a pause by the BSP,” he told Manila Bulletin. 

He has said before that interest rate differential should be at least a 100 bps. As of Nov. 2, the US Fed rate stood at 3.75 percent to four percent versus the BSP’s five percent as of Nov. 17.

On Friday, Nov. 18, the peso vis-à-vis the US dollar closed stronger at P57.26 compared to P57.36 on Nov. 17, the day the BSP announced its expected BSP rate hike.

In a press briefing after the Monetary Board meeting, Medalla said they cannot let the interest rate differential to fall back at this time.

“We don’t really have a model that says if the interest rate is this, the exchange rate will be this, because there are so many things that cause the exchange rate to move. However, what we do know is if the interest rate differential is too small especially during times when the US economy is the only game in town, then the peso” will tend to behave abnormally, he said.

“This is the reason why right now, the US policy rate is a bigger influencer of our policy rate than normal,” Medalla added.

Weeks before the Nov. 17 Monetary Board policy meeting, Medalla has communicated early on that they will raise the reverse repurchase rate or the RRP by 75 bps. 

Medalla on Thursday said this will probably be the last time that the BSP will do a big rate increase. The recent 75 bps rate adjustment is the second one, the first was an off-cyle move last July.

The BSP has jacked up the rates by a cumulative 300 bps to battle high inflation and exchange rate pressures. As of end-October, the inflation rate averaged at 5.4 percent. For the rest of the year, the BSP forecasts inflation to exit at 5.8 percent. Medalla said inflation will peak in November or December but it will not likely breach eight percent. In October, inflation climbed to a 14-year high of 7.7 percent from 6.9 percent in September

The last time the RRP rate was at five percent was on Jan. 29, 2009, before the interest rate corridor system was implemented in 2016, which adjusted the monetary policy transmission to bring market rates closer to the BSP rate.

Medalla said the US Fed is now signalling that they could increase funds rate in smaller doses after four 75 bps in a row. This could temper the US dollar’s strength in favor of regional currencies, especially the peso which has lost P8.1 or 15.7 percent last Sept. 29 when it depreciated to its record lowest of P59 versus the end-2021 closing rate of P50.99.

The last two rate increases on Sept. 22 and Nov. 17 were essentially responses to what the US Fed did.

The BSP initially increased the rates gradually from a two percent flat rate since November 2020. It started with two 25 bps adjustment on May 19 and June 23, followed by a surprised 75 bps off-cycle move on July 14. The fourth and fifth rate hikes were 50 bps each on Aug. 18 and Sept. 22, followed by a 75 bps increase on Nov. 17. The next and last Monetary Board policy meeting for the year is on Dec. 15.

Since price stability is a key BSP mandate, the six in a row policy rate increases are intended to bring back the inflation path to within the two percent to four percent target range by 2024.

The BSP expects inflation will stay above-the-target in the near term amid broadening price pressures and second-round effects but will be closer to three percent than four percent by the second half of 2023.

PH reserves down to $95-B

by Lee C. Chipongian, Manila Bulletin

In defending the peso vis-à-vis the strong US dollar, the country’s foreign exchange reserves has fallen to a 30-month low of $95.014 billion as of end-September this year, the Bangko Sentral ng Pilipinas (BSP) reported over the weekend.

Based on BSP data, the gross international reserves (GIR) has lost $5.84 billion since June 1 when the local currency started to rapidly depreciate from P52.4 to P55.02 versus the greenback by June 30.

The GIR is BSP’s war chest against speculative attacks against the peso. Speculative attacks on currencies occur when there is excessive, large volume of foreign exchange selling in the hope that the central bank will run out of reserves and thus a currency crisis will ensue, and speculators with a foreign currency hoard will be able to dictate market price.

Bank teller counting P1,000 bills/Bloomberg photo

It was in July when the GIR first dropped to below the $100 billion level after peaking at $108.79 billion in December 2021.

In July and August, the BSP recorded the exchange rate at P54, P55 and P56. The peso broke its 2004 record low of P56.45 in September. It was also in September when the peso also breached P57, P58 and P59 which was its new all-time low.

The BSP insisted it does not target an exchange rate but it will intervene in the spot market to ease pressures off the peso. The Monetary Board has already raised the policy rate by a cumulative 225 basis points (bps) to smoothen exchange rate volatilities.

Along with the BSP rate hikes, the central bank has been releasing foreign reserves to curb further peso depreciation. However, the central bank’s exchange rate policy continue to support a freely floating exchange rate system where the BSP leaves it to market forces to dictate the exchange rate level.

The BSP will only enter the spot market to ensure “order and temper destabilizing swings” in the peso-US dollar rate. And, if needed, the BSP will release US dollar liquidity to supply legitimate demands for foreign currency.

After dropping to below the $100 billion level in July, the GIR continued to decline to $97.44 billion in August and $95.01 billion in September.

The current GIR was $11.58 billion lower compared to same period in September 2021.

At $95.01 billion, the BSP still consider this level as “more than adequate external liquidity buffer” which was equivalent to 7.6 months’ worth of imports of goods and payments of services and primary income. It was also about 6.8 times the country’s short-term external debt based on original maturity and 4.1 times based on residual maturity.

From August’s GIR of $97.44 billion, the reserves declined by $2.43 billion month-on-month. According to the BSP, the month-on-month decrease “reflected mainly the National Government’s payments of its foreign currency debt obligations and downward adjustment in the value of the BSP’s gold holdings due to the decrease in the price of gold in the international market.”

The GIR is composed of BSP’s reserve assets as foreign investments, gold reserves, foreign exchange, reserve position in the International Monetary Fund or IMF, and special drawing rights.

In September, BSP’s managed foreign investments amounted to $80.62 billion, down from August’s $82.73 billion and from same period last year’s $89.70 billion.

Gold holdings also dropped to $8.33 billion in September versus $8.53 billion previously, and from $8.85 billion same time in 2021. The foreign exchange component of the GIR in September totaled $1.67 billion, down from the previous month’s $1.77 billion.

Last Sept. 16, the Monetary Board approved revised external accounts to reflect the latest developments in the international environment.

The BSP revised the GIR projection lower to $99 billion in 2022 from its previous estimate of $105 billion.

Basically, the GIR is BSP’s foreign assets invested in foreign-issued securities, monetary gold, and foreign exchange. The emerging 2022 GIR is equivalent to 7.5 months import cover, lower than the previous forecast of eight months of import cover.

BSP wants stronger email cybersecurity for banks, non-banks

by Lee C. Chipongian, Manila Bulletin

The Bangko Sentral ng Pilipinas (BSP) has issued recommendations for all its supervised financial institutions (BSFIs) to reinforce email security controls to effectively block persistent cyberthreats such as business email compromise (BEC), spam, phishing, ransomware and other malware attacks.

In a memo (Memorandum No. M-2022-043), signed by BSP Deputy Governor Chuchi G. Fonacier last Oct. 7, the BSP wants banks to adopt six recommendations for a “robust and layered security controls” as well as industry best practices already laid out in existing BSP rules and regulations on cybersecurity.

But to further enhance email security, Fonacier said BSFIs should adopt, as warranted, the security controls and best practices in safeguarding both incoming and outgoing emails.

In addition, she said BSFIs are expected to promptly report to the BSP any major email-related cyber incidents and crimes as per BSP’s rules on event-driven report and notification (EDRN) and report on crimes and losses (RCL). “In certain instances, BSFIs may need to seek assistance and cooperate with appropriate law enforcement authorities for prompt resolution of cybercrime cases, especially if cases involve public safety and security, pursuant to the Cybercrime Prevention Act of 2012 and other relevant laws and regulations,” said Fonacier.

The BSP recognizes that in the digital transformation initiatives, email is the primary means of communication in core business operations from marketing and sales, and customer support services, to logistics and supplier contracting, among others.

Fonacier said email is also used as one of the main verification and authentication factors linked to a bank, financial, or e-payment account in providing electronic payments and financial services (EPFS).

“Given the central role of email in digital communications, cyberthreats ranging from spam, phishing, ransomware and other malware attacks targeting email platforms and communications continue to confront BSFIs,” said Fonacier.

BEC has been identified as the “most prevalent and costly cyberattacks for financial clients globally”. BEC is a type of cyberattack that utilizes seemingly legitimate email accounts from another organization to fraudulently trick employees of another business into giving their credentials, money, personal information, financial details or other sensitive data, said the BSP.

According to Fonacier, most BEC attacks leverage on spoofing of a corporate or individual’s identity whereby the email address of the legitimate sender is impersonated to mislead the recipient on the sender of the email, thereby making the fraud attempt more effective.

To counter BEC and other email-related cyberattacks, the BSP recommends BSFIs to adopt the following email security controls such as “to identify and cascade whether a virus or malware infection may spread by just opening or selecting an email.”

“While this is not true for most email clients, an assessment should be conducted on the current email platform and version used especially if it enables scripting or automatic downloads and execution, which may heighten the risk of infection,” said the BSP.

Another recommendation to all BSFIs is to always inspect the email header information such as: “Received from (sender) and By (receiver)”; the “From” information which shows the sender’s name and email address; the “Reply-To” which refers to the email address that will receive replies to the email; and “Return-Path” defines where bounced emails will be processed.

The BSP also strongly advises to scrutinize the content of the email. “Phishing emails oftentimes have generic greetings and contain unfamiliar links or attachments or unsolicited requests for personal information. These emails are also unexpected and usually contain a sense of urgency that pushes the recipient to act quickly. It is advisable not to click any attachments or links unless the communication is verified,” said the BSP.

The central bank also recommends the strict adoption of the following email security controls: contact the sender of the message through a different/trusted channel to verify the validity of the email; provide guidance on how to report and handle suspicious or malicious emails based on the entity’s policies; and conduct regular phishing simulations or exercises.