BSP EASES RULES ON $ INVESTMENTS
MANILA, January 26, 2004 (STAR) By Des Ferriols - The Bangko Sentral ng Pilipinas (BSP) has agreed to allow foreign investors to recover their dollar investments in the stock market by liberalizing its rules on foreign portfolio investments.
The Monetary Board has approved a policy allowing investors to convert the peso proceeds of their stock investments into dollars provided the original stocks were bought with dollars. According to the BSP, the decision to liberalize its rules is expected to attract more portfolio investments into the local equities market. BSP Deputy Governor Amando Tetangco Jr. told reporters over the weekend that the MB has also decided to allow investors to convert peso-denominated dividends into dollars.
Analyst, said the BSPís decision to ease up on the outflow of dollar investments from the stock market would make foreign portfolio investments more volatile and ultimately make the peso more vulnerable to speculative attacks. According to Tetangco, however, the new policy would make the local stock market more attractive since there were no longer any restrictions on the outflow of dollars from the stock market. "Over the long term, this would generate more volume and encourage investments to come in," he said.
Tetangco said, the BSPís decision was prompted by repeated requests from the PSE. Under existing rules, foreign investors are allowed to buy Philippine-listed stocks at the Philippine Stock Exchange (PSE) known as Class A common shares. Foreign investors are also free to unload these stocks but BSP rules prohibit them from using the proceeds to buy dollars from the spot market. The rules are intended to prevent hot money from going in and out of the stock market and causing instability in the peso-dollar exchange rate.
"But now, we decided that it would be better in the long run to liberalize these rules and allow investors to recover their investments in dollars, Tetangco said.
Three-way merger to give rise to biggest rural bank in RP By Ted P. Torres Star 01/26/2004
The Bangko Sentral ng Pilipinas (BSP) has approved a three-way merger that will result in the formation of the biggest rural bank in the country.
Wilfredo B. Domo-Ong, director of the BSPís Supervision and Examination Department, said the Monetary Board through Resolution 1865 approved the consolidation of Network Rural Bank (Davao del Sur) Inc., the Rural Bank of Panabo (Davao del Norte) Inc., and the Provident Rural Bank of Cotabato (North Cotabato) Inc. into a single bank called One Network Rural Bank Inc. The BSP also approved the grant of incentives such as exemption from the branch expansion bank. One Network Rural Bank will be allowed to directly participate in the Philippine Clearing House Corp. (PCHC) and act as a money changer for foreign exchange provided it will open a foreign currency deposit with commercial banks. One Network will be the second rural bank granted permission to operate as money changer, and the first to actually operate as such.
The consolidated rural bank will also be allowed to open a foreign currency deposit unit (FCDU) as long as it raises its paid-up capital to P650 million or more. Network Bank president Alex V. Buenaventura said that dealing directly with PCHC not only speeds up and expedites clearing of its own checking account. "It also unlocks two-thirds of the reserve deposit block with the commercial bank which served as our clearing bank," Buenaventura said. "That would thus allow that amount to be relocated for lending."
The BSP has allowed the consolidated bank to open six additional regular branches in areas where there are only three existing branches or officers of other banks. It still has two unused branch licenses. However, it has to open an office in Metro Manila "solely for the purpose of serving as headquarters for its designated clearing representative to deliver and receive checks/supporting statements and other documents relative to clearing operations."
Reported by: Sol Jose Vanzi
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