LBC under receivership.. say what?

LBC Bank placed under receivership

By: Michelle V. Remo
Philippine Daily Inquirer

LBC Development Bank, a unit of the LBC Group, has been placed under receivership of the Philippine Deposit Insurance Corp. (PDIC).

In a statement over the weekend, PDIC said it took over the assets and liabilities of LBC bank after the Monetary Board of the central bank determined that the institution was plagued by liquidity problems.

“All valid accounts and deposit insurance claims will be paid as soon as possible,” PDIC said in a statement.

LBC Development Bank, with head office on JP Rizal St. in Makati City, had 19 branches nationwide.

As of end-June this year, total deposits placed with the bank amounted to P6.09 billion. Of the amount, P3.73 billion is covered by insurance, PDIC said citing bank records.

In terms of number of accounts, there were 321,516 as of June, 99.4 percent of which are fully covered by deposit insurance, said PDIC.

The government insurance agency said the placement of the thrift bank under its receivership would not significantly affect its resources. PDIC noted that the insured deposits with LBC Development Bank made up only a tenth of one percent of total deposits in the country’s banking system.

Under PDIC’s charter, deposits worth P500,000 or below are covered by insurance. Deposits in excess of the amount may or may not be paid depending on the amount to be raised from the liquidation of a closed bank’s assets.

PDIC will conduct forums in areas where branches of LBC are located so that depositors of the bank will know how to claim insurance.

Owners of deposit accounts worth P10,000 or below need not apply for insurance claims. In their case, PDIC will simply mail notices to them and they can withdraw from designated redemption offices, like branches of Land Bank of the Philippines.

The placement of LBC Development Bank under receivership may come as a surprise to the bank’s depositors given the institution’s track record.

LBC Bank was previously awarded the “superbrand” status by Superbrands Philippines Council, which cited it for being one of the most reliable and trusted brands.

http://business.inquirer.net/18321/lbc-bank-placed-under-receivership#disqus_thread

REACTION

For those who do not know how huge the LBC is, well, it is huge. It has many businesses such as courier services, money remittance, and our main topic which is the LBC bank. So, what really happened? Is it a scam? or something tragic happened with the people managing it that they decided to close all 20 branches of their banks? In my opinion, well, you can't really tell. It is said that LBC bank was even awarded the "superbrand" by the Superbrands Philippinine Council. So, basically, it would imply that the bank is something that people would trust to take care of their money. LBC's courier service business and money remittance business was a success, and most of our overseas workers even use LBC services, that most of the Filipinos had also trusted their money with their banks. As a local citizen, I have used LBC's services for years, and had never encountered any problems which made me all of a sudden doubt LBC because of this certain issue. 

Another issue pointed out is that PDIC will return the depositors' money as soon as possible. How long is there "as soon as possible" by the way? After reading some comments from the article, I have found out that PDIC returns half of the money deposited, and the other half has not yet been returned, after 4 years. This made me think that it is easy for organizations or even people to receive such money but so difficult to return them. I even heard my father mentioned that the depositors are all very pitiful because PDIC usually and most likely only returns half of the value deposited in the bank. Say, I have deposited 1 Million Pesos, and the bank that I have trusted my money had closed, PDIC will only return 500,000 pesos to me. Another thing he mentioned is that the small depositors are the most pitiful because with just 50,000 pesos and below that value deposited, PDIC will no longer return them, like the money has just been automatically dissolved. Of course PDIC will not tell the depositors these kinds of things because obviously they will be under fire. PDIC will just make depositors go through such long process until they get tired of doing so, and eventually give up at getting their money back. 

The previously mentioned ideas are just basically opinions. I am not saying that these are true, but I do believe in these things. Whether these things are true or not, the government should take a look at these problems. In that way, it would be corrected and that people will no longer have problems like these. Sayang naman kung madidisolv lang ang perang pinaghirapan hindi lang ng bayan pati na nang mamamayan.

Sweet Sweet Year

Sweet Sweet Year

Agri Dep't Reports Bumper Sugar HarvestBy: Kristine L. Alave

Philippine Daily Inquirer

MANILA, Philippines—It looks like it will be a sweet year for the sugar industry.

The Philippines will export sugar again as the country is enjoying a bumper harvest this year, Agriculture  Secretary Proceso Alcala said.

The country’s sugarcane fields yielded a harvest of 2.39 million metric tons for the crop year of 2010-2011, a 21.3 percent improvement over last year’s volume, the DA said.

Because of the bumper harvest, which was a result of good weather in the canefields, the country is poised to export at least 300,000 metric tons  of raw and refined sugar this year, Alcala said. He noted that the Philippines may cease to import sugar in the future

“We have been making great strides in sugar production the past year. This may very well be the start of the country producing more than enough to meet its domestic requirements and quota obligations, but also to ensure that sugar farmers have a reasonable, sufficient, and ‘livable’ income,” Alcala said.

The agriculture department, he said, is eyeing to sell sugar in Southeast Asia. Recently, countries like Indonesia, China, South Korea  and Japan said they would buy sugar from the Philippines. The Philippines also exports sugar to the United States under a preferential treatment scheme.

Sugar used to be a major export crop of the Philippines. The country was a net sugar exporter, selling as much as two million tons of sugar in the 1970s, according to data from the Philippine Sugar Millers Association. However, production and exports declined in the following decades due to low mechanization and the monopolization of the industry during the Marcos era.

The 300,000-ton export volume eyed by the Department of Agriculture  this year is the highest volume seen since the 1990s. In the last few years, export volumes ranged between 100,000 and 200,000 tons, data from the PSMA showed.

The Philippine sugar industry’s performance mirrored the gains in other crops. Rice and corn, the two main staples of the country, also showed robust recovery in the first half of the year.

Harvests of palay or unmilled rice and corn was at 7.58 million tons and 3.31 million tons, respectively.

The crops subsector — which contributed more than half (51.8 percent) of  total agricultural output — grew by 11.1 percent. Overall, the country’s agriculture sector grew by 5.48 percent  in the first semester of the year

The reserve sugar harvest for export increased not only due to the high yield, but also because of reduced demand.

According to the DA, the supply of raw sugar increased five-fold to more than 623,500 tons. Sugar consumption, on the other hand, dipped to 1.5 million tons this year, from 1.8 million tons  in 2009-10.

This led to a drop in raw sugar prices. According to the DA data, raw sugar fell from a high of P2,480 per 50-kilo bag to P1,300 this year.

Refined sugar demand also declined to 655,840 tons, 31 percent less than last year, leaving a balance of more than 300,000 tons.

“We look forward to build from these gains next year, as more farms are planted and program interventions continue for CY 2011-2012,” he said.

Alcala said the government aims to boost the sugarcane industry to ensure local supply and make the country attractive to bioethanol producers.

He noted that the DA wants to improve the efficiency and productivity of small farms. According to Sugar Regulatory Administration data, about half of the country’s sugarcane fields are less than five hectares.

Alcala also said the DA is planning to build better infrastructure for sugarcane planters and millers such as bigger and automated loading ports, farm-to-mill roads, and irrigation facilities.

http://business.inquirer.net/13781/agri-dep%E2%80%99t-reports-bumper-sugar-harvest

Sweet Philippines

Negros - Philippines

Philippines was once a major sugar exporter, and it is a good news for us that in the present, we are slowly getting back on track. Sugar is one of the main ingredients that Filipinos use in baking, not only baking but also for processing other goods containing sugar. As what we have experienced lately, sugar prices rose which meant higher prices for baked foods such as our famous "pandesal". In my experience, it was during summer where I had just started baking different kinds of sweets, sugar went to a price for about 60 pesos per kilo. When an ingredient becomes expensive, selling prices for final products by the company also increases, and by then becomes really expensive for local buyers because retailers would also sell it for a higher price. I once saw a television news where a reporter was interviewing a local person buying "pandesal" in a bakery, the buyer was complaining that the famous good was once bought for 1 peso per piece, but at that time, pandesal was bought for 2 pesos apiece. Can you imagine how much had the sugar price hike affected the price of the pandesal? How much more had it affected other goods such as breads, cakes, and other processed goods? 

According to an article (http://www.gmanews.tv/story/181417/govt-eyes-sugar-imports-subsidy-after-price-hikes), because there was a shortage in sugar, they imported from other countries, which made the sugar price higher. Going back to my original source article, it said demand for sugar at that time dramatically dropped. For discussion purposes, let us assume that the supply at that time was 50(including imports). Because of the price, demand by food processors dropped at, say, 45. Surely, for local consumers, there are many alternatives for processed foods containing mainly of sugars such as ice creams, cakes, breads, and other foods that people usually buy, which makes consumer demand lower, say, 30. Since most of the consumers had discovered many other alternatives for these kinds of goods, demand stayed at 30.  These made suppliers expect less for how much they would supply their buyers, say, 35. But because of the good weather in their cane fields, supply went higher than expected. They exceeded supply, say 100, and it even further looked that supply exceeded because of the 30 quantity demanded. 

They had enough sugar for exports, and enough supply for local buyers. The article mentioned that if these kinds of improvements will continue, our country will no longer have to import sugar from other countries. If this will happen, in my understanding, it would lessen our imports, increase the exports, and by then increase our country's market value; which of course is a good thing. In my opinion, if we will no longer have to import, and if they would further improve their productivity, we might just become the number one exporter of sugar. This achievement would become a major stepping stone for Filipinos towards progress. As the article stated, it would also make our country attractive for bio ethanol producers. I say, they should invest on that (bio ethanol products) after achieving the number one spot, or if not, at least one of the top spots for sugar exports :). In that way, we might as well just become bio ethanol producers someday.  This would mean, again, progress. 

MANILA, Philippines—The government’s new proposal to cut charges for consumers making calls and sending texts outside their respective networks will cost local telecommunications firms billions of pesos in revenue losses, further cutting profits of an industry already under heavy price pressures.

But Globe Telecom, the country’s second-largest industry player, considers the lowering of interconnection charges as inevitable, saying it has to be done considering that call and text rates in the Philippines are among the highest in the Asia-Pacific region.

The Ayala-led firm formalized on Monday its support for a National Telecommunications Commission (NTC) draft circular to lower interconnection charges, which are paid for by consumers when trying to reach users in other networks.

“We agree with the findings of the NTC that charges in the country are the highest in the region. There’s a lot of pressure to lower this,” Globe counsel Froilan Castelo said, adding that cutting charges would be impossible to avoid.

The NTC wants interconnection charges for voice calls lowered to P1 per minute from the current P4 in three years. Charges for text messages will also be lowered to 15 centavos from the current 35 centavos per message. These are in line with the average charges of countries in Southeast Asia.

Castelo said this would mean a massive reduction in revenues for local companies. “Interconnection fees are a big source of income for companies,” he said. “In this regard, we would like to work with the NTC to find a way to help cushion the blow on our income.”

He estimated that the reduction in company revenues would reach “billions” of pesos if the lower interconnection fees were implemented.

Castelo said the company would ask the NTC to defer the implementation of the proposed rules and would submit its position paper in a week’s time.

Leading carrier Smart Communications questioned the NTC’s methodology in coming up with the lower rates.

Smart counsel Roy Ibay said it was not right for the NTC to compare rates in the country with others in the region due to the different cost structures of companies in different markets.

He said costs in the Philippines have always been higher because local firms usually imported most of their equipment, while other companies in the region produced their own.

Consumer group TXTM8 Consumer Group Tayo Inc., meanwhile, said lowering of interconnection charges had long been overdue.

“The regulation of the rate of interconnection will benefit the industry and the public in at least two ways: It will lower the barrier to entry for small and new operators… and improve market efficiency, which will lead to innovation,” the group said in a statement on Monday.

source:  http://business.inquirer.net/5934/globe-telecom-backs-ntc-plan-to-lower-interconnection-charges

REACTION

In this article, the Globe company supported the NTC's plan on lowering the call and text charges in communicating with other networks, while the Smart company had opposed it. Smart buddy, I think, is the most expensive of all telecommunication companies. In my case, as a student with a limited amount of allowance, prepaid load can be expensive. Most of my classmates are Sun cellular users which means I will have to buy more prepaid regular load, which is expensive, in able for me to communicate with them; such as asking about assignments, and other school related questions. Imagine there are millions of students in the Philippines who are willing to pay 100 pesos of prepaid load just so they can communicate with their classmates who are using other network servers. So it justifies the idea that the article mentioned that once telecommunication firms lower the charges on call and text to other networks, it will result to billions of revenue losses. With this amount of opportunity cost from telecommunication companies, the public will definitely gain so much from it. Example are businessmen. As business people, they would really prefer cheaper costs when dealing with business transactions with their clients. Using different telecommunication networks, they will be able to call and text to their clients who are using different networks without having the thought of losing their prepaid load. They would be able to save more money, and with that saved money they can use it to improve their business. Another group of people that can benefit from this plan would be the students, like me. Say, a student consumes 100 pesos of load weekly. With the NTC's plan of lowering the charges, a student may save, say, 40 pesos a week which means 1,920 pesos in a year. In that 1,920 pesos, students can spend it to other things which are more important, such as tuition fees, books, and school materials, than communication expenses. Families can also benefit from this. Instead of budgeting, say, 10% of their money to prepaid load so they can communicate with each other, they may be able to save up to 3% if NTC's plan is realised. In that 3% of their money, they can just pay it to their other house bills such as water and electricity.  

If the said plan will be implemented, many mobile services will change. I guess unlimited calls and text messaging services will no longer be existent in two reasons. The company had lost billions from this plan and implementing unlimited services will once again become their loss, or consumers will no longer need unlimited services due to lower rates in call and text messaging. As the article said, it will improve market efficiency, well, it will not only improve market efficiency but also the lives of its consumers at least, maybe, in a little way.