Partnership With Commercial Banks
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POWERING INNOVATIONS IN MICROFINANCE conference on microfinance July 24 - 25, 2008 * Asian Development Bank, Manila, Philippines
Edited by Foxit PDF Editor Copyright (c) by Foxit Software Company, 2004 - 2007 For Evaluation Only.
CONCURRENT WORKSHOP SESSIONS Friday, July 25, 2008
11:00 a.m. - 12:30 p.m. Emerging Partnerships between Commercial Banks and MFIs
Auditorium Annex 1 & 2
In previous years, wholesale loan funds for retail microfinance institutions in the Philippines were largely provided by government financial institutions such as People’s Credit and Finance Corporation, Land Bank, Small Business Corporation and the Development Bank of the Philippines. Lately, a few commercial banks have designed and opened a window for MFIs to access wholesale loan funds. While these banks are ready and able to do a respectable volume of business with MFIs, the loan applications and actual volume of loan releases remain way below the expectations of the banks. The session will deal on the early experiences of two commercial banks that have loan windows for retail MFIs. Representatives of the two banks will discuss the challenges they have experienced at the field level, including insights, learnings and peculiarities of doing business with MFIs. Resource speakers: Josaias T. Dela Cruz Vice President for Microfinance, BPI Remigio Tito C. Tirones, SVP & Group Head, SME Banking Group, Planters Development Bank
Facilitator: Edgardo Garcia Microfinance Council of the Philippines, Inc. Documenter: Laila Deles, Pinoy ME
1
• Over 34M (40%) of our population live below the poverty line
Why Microfinance? Why Microfinance?
943
2
3
4
Over the last 25 years, microfinance in the Philippines has doubled every 5 years into a P7B industry.
5
Philippine MFIs and Outreach 5 Government Financial Institutions 50 Non-Governmental Organizations (NGOs) current outreach approximately 500,000 30 Cooperative Banks - estimated outreach of 400,000 144 Banks (Rural, Thrift) - 540,000 outreach A growing number of commercial banks 6
What is the Scope of Microfinance today? • Microenterprise Loans
Why Microfinance? • Savings Products • Micro Insurance • Remittance / Funds Transfers • Micro Agri Loans • Housing Microfinance • Alternative Energy Loans 943
7
Current supply in the Philippines is only reaching between 10% to 20% of market Potential market of 5.6M families, or 28M people and a P17 billion funding gap
(Lamberte, et.al. Asian Development Bank PPTA study, 2002)
8
Funding for MFI capacity building / expansion Need for reliable automated Management Information Systems and operations
9
Q: What is BPI Microfinance? 10
• BPI was the first private commercial bank to lend to MFIs in the 1980s • BPI is the first private KB to mainstream MF into its core business 11
Wholesale Institutional Loans -
Very competitive interest rates From P5M per MFI 1 to 3-year tenors On clean or secured basis
12
Developmental Capacity-building Soft Loans -
Via BPI Foundation For training and MIS enhancement 4% p.a., 1 to 2-year tenors Up to P1MM per MFI
13
Capacity Building Partnership with Ateneo de Manila University Development Studies Program, Institute of Social Sciences - MF Capacity-Building Courses – 10 locations nationwide - Customized Technical & Mentoring Assistance – financial control and operations management
14
Capacity Building Loan RB Eligibility Requirements - BSP CAMELS rating of at least 3 - PESO rating of at least 3 - Positive earnings for last 3 years
15
Business Advisory & Operations Solutions BPI Express Cash (E-Cash) / Expresslink (E-Link) - Simplifies Loan Disbursement / Cash Management - Eliminates Check Preparation & Disbursement
16
Institutional Partnerships - With international / local developmental institutions (e.g. Microfinance Council, ADB) - Transactions with Grameen Fund USA and Cordaid (Netherlands)
17
BPI Microfinance Unit 9th Floor, BPI Head Office
- Tel Nos: 845-5851 / 816-9547 - Fax: 845-5935 - Email: [email protected] [email protected] 18
19
Planters Development Bank
Microfinance Emerging Partnerships SVP REMIGIO TITO C. TIRONES S.M.E. Banking Group Head and Microfinance Department Head
Conference on Microfinance: “Powering Innovations in Microfinance” July 25, 2008, ADB, Manila, Philippines
Planters Development Bank Corporate Background: •Started more than 40 years ago with an asset base of P500,000 •Largest private development bank with total assets of over P40.4 Billion •21st Largest Banking Institution in the country today with total capital base of P3.1 Billion •Belongs to the top 250 in the country’s top 1,000 corporations
Planters Development Bank Corporate Background: •Nationally acclaimed as the Bank for Small and Medium Enterprises (SMEs) •Consistent recipient of various awards and citations from the country’s program agencies on SMEs •One of three banks worldwide to pursue Double Bottom Line Banking (Harvard Study) •72 Nationwide Branches (9 were opened in 2006)
Planters Development Bank Institutional Foreign Shareholders: Asian Development Bank (1983) Netherlands Development Finance Co. (1986) IFC of the WorldBank (2000) German Investment and Development Agency (2006)
Planters Development Bank Ambassador Jesus P. Tambunting Chairman & Chief Executive Officer • 2005 Asian Banking Awardee for Outstanding Lifetime Achievement • 2003 Management Man of the Year • Chairman, Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) • Co-chairman, Philippine British Council • Director, Globe Telecom • 1993-1998 Philippine Ambassador to London
Planters Development Bank Ma. Flordelis F. Aguenza President & Chief Operating Officer z
Board Member, ShoreBank Corporation in the United States
z
Board Member, Chamber of Thrift Banks
z
Director, PDB FMO Development Center
z
Director, PDB Properties, Inc.
z
Director, PDB SME Solutions, Inc.
Planters Development Bank
Microfinance Experience
Planters Development Bank • September 2006 - Merger of Plantersbank and Micro Enterprise Bank • Establishment of the Microfinance Department under the SME Banking Group • Created a strong unit with solid microfinance experience and reputation • Started offering the wholesale microfinance loan to top MFI’s through the nationwide PDB branch network
Planters Development Bank Objectives:
To better serve as a conduit of funds via wholesale credit to the MFIs
To serve as a complementing institution rather than a direct competitor of existing MFIs
To provide scale-up opportunities for existing MF clients with higher financial requirements
To push microfinance much faster given greater resources, geographical coverage, and a stronger organization with solid experience and reputation
Planters Development Bank Target Clients: The Wholesale Microfinance Facility is marketed among: ¾ Microfinance Institutions (MFI’s) ¾ Rural Banks ¾ Cooperative Banks which are accredited or recognized by: ¾ Bangko Sentral ng Pilipinas (BSP), ¾ Microfinance Council of the Phils. (MCPI) ¾ Microenterprise Access to Banking Services (MABS) ¾ Alliance of Philippine Partners in Enterprise Development, Inc. (APPEND) ¾ Other Local and International Microfinance Industry Associations/Networks
Planters Development Bank Product Features: • Revolving Credit Line • Term: 1 year / 360 days • Interest rate: Market Rate • Payment Mode: Monthly or Quarterly, Principal and Interest amortized • Service Charge: 1% of the amount drawn • Security: Assignment of Sub-borrowers PNs
Planters Development Bank Product Features: • Manner of Release: in tranches; via drawdown based on submitted Certified List of Sub-borrower's PNs • Loan Proceeds will be used to re-finance microfinance sub-borrowers • Drawdown will be on a per branch summary of listing of PNs for easy monitoring of accounts • MFI must open an account with PDB • Assigned amount of PNs should be 120% of the release of fund at any point in time
Planters Development Bank Challenges: 1. Compliance with Accreditation and Pre-approval Requirements Timing and accuracy of information Correct and complete information Point person for MFI (e. g. President, Exec. Dir., Compliance Officer, Microfinance Head, etc.)
Due diligence (e. g. field visit, desk review, interview with MFI and clients, etc.) Mode of communication (email, telephone, mobile phone, etc.)
Planters Development Bank Challenges: 2. Utilization of Approved Credit Line Interest rate Cash flow of MFI Documentary requirements
Planters Development Bank Challenges: 3. Drawdown Turnaround time in loan processing Documentary requirements Issuance of PDCs
Planters Development Bank Challenges: 4. Renewal of Microfinance Wholesale Facility Turn-around time in loan processing Documentary requirements Interest rate Repayment
Planters Development Bank WHY PLANTERSBANK? • Proven track record • SME-friendly procedures and processes • Premium service • Branch network
Planters Development Bank HOW COULD PLANTERSBANK SERVE THE MICROFINANCE INDUSTRY BETTER? • Type of loan • Loan Term • Efficiency (TAT, quality of deliverables, etc.) • Collateral requirements • Value-added services (sme.com.ph, allied services, etc.)
Planters Development Bank Acceptable Eligibility Criteria for MFI’s: ¾ BSP Camels Rating of 3 (applicable for banks) ¾ PESO Microfinance Standards Rating of not less than 70 points or Adjectival Rating of 3 - Satisfactory
Potentials: ¾ Product development to address the needs of MFI’s
Planters Development Bank AMBASSADOR JESUS P. TAMBUNTING Chairman and CEO, Planters Bank
An entrepreneur is someone with a dream,
“
determination, courage, and, may I add, Plantersbank. From the very start, in 1961, our bank has been supportive of the man, or the woman, with the determination, and the courage to pursue a dream. Our support of the Filipino entrepreneur goes beyond commitment. It is a passion.”
Planters Development Bank
Edited by Foxit PDF Editor Copyright (c) by Foxit Software Company, 2004 - 2007 For Evaluation Only.
Edited by Foxit PDF Editor Copyright (c) by Foxit Software Company, 2004 - 2007 For Evaluation Only.
CONCURRENT WORKSHOP SESSIONS Friday, July 25, 2008
11:00 a.m. - 12:30 p.m. Emerging Partnerships between Commercial Banks and MFIs
Auditorium Annex 1 & 2
In previous years, wholesale loan funds for retail microfinance institutions in the Philippines were largely provided by government financial institutions such as People’s Credit and Finance Corporation, Land Bank, Small Business Corporation and the Development Bank of the Philippines. Lately, a few commercial banks have designed and opened a window for MFIs to access wholesale loan funds. While these banks are ready and able to do a respectable volume of business with MFIs, the loan applications and actual volume of loan releases remain way below the expectations of the banks. The session will deal on the early experiences of two commercial banks that have loan windows for retail MFIs. Representatives of the two banks will discuss the challenges they have experienced at the field level, including insights, learnings and peculiarities of doing business with MFIs. Resource speakers: Josaias T. Dela Cruz Vice President for Microfinance, BPI Remigio Tito C. Tirones, SVP & Group Head, SME Banking Group, Planters Development Bank
Facilitator: Edgardo Garcia Microfinance Council of the Philippines, Inc. Documenter: Laila Deles, Pinoy ME
1
• Over 34M (40%) of our population live below the poverty line
Why Microfinance? Why Microfinance?
943
2
3
4
Over the last 25 years, microfinance in the Philippines has doubled every 5 years into a P7B industry.
5
Philippine MFIs and Outreach 5 Government Financial Institutions 50 Non-Governmental Organizations (NGOs) current outreach approximately 500,000 30 Cooperative Banks - estimated outreach of 400,000 144 Banks (Rural, Thrift) - 540,000 outreach A growing number of commercial banks 6
What is the Scope of Microfinance today? • Microenterprise Loans
Why Microfinance? • Savings Products • Micro Insurance • Remittance / Funds Transfers • Micro Agri Loans • Housing Microfinance • Alternative Energy Loans 943
7
Current supply in the Philippines is only reaching between 10% to 20% of market Potential market of 5.6M families, or 28M people and a P17 billion funding gap
(Lamberte, et.al. Asian Development Bank PPTA study, 2002)
8
Funding for MFI capacity building / expansion Need for reliable automated Management Information Systems and operations
9
Q: What is BPI Microfinance? 10
• BPI was the first private commercial bank to lend to MFIs in the 1980s • BPI is the first private KB to mainstream MF into its core business 11
Wholesale Institutional Loans -
Very competitive interest rates From P5M per MFI 1 to 3-year tenors On clean or secured basis
12
Developmental Capacity-building Soft Loans -
Via BPI Foundation For training and MIS enhancement 4% p.a., 1 to 2-year tenors Up to P1MM per MFI
13
Capacity Building Partnership with Ateneo de Manila University Development Studies Program, Institute of Social Sciences - MF Capacity-Building Courses – 10 locations nationwide - Customized Technical & Mentoring Assistance – financial control and operations management
14
Capacity Building Loan RB Eligibility Requirements - BSP CAMELS rating of at least 3 - PESO rating of at least 3 - Positive earnings for last 3 years
15
Business Advisory & Operations Solutions BPI Express Cash (E-Cash) / Expresslink (E-Link) - Simplifies Loan Disbursement / Cash Management - Eliminates Check Preparation & Disbursement
16
Institutional Partnerships - With international / local developmental institutions (e.g. Microfinance Council, ADB) - Transactions with Grameen Fund USA and Cordaid (Netherlands)
17
BPI Microfinance Unit 9th Floor, BPI Head Office
- Tel Nos: 845-5851 / 816-9547 - Fax: 845-5935 - Email: [email protected] [email protected] 18
19
Planters Development Bank
Microfinance Emerging Partnerships SVP REMIGIO TITO C. TIRONES S.M.E. Banking Group Head and Microfinance Department Head
Conference on Microfinance: “Powering Innovations in Microfinance” July 25, 2008, ADB, Manila, Philippines
Planters Development Bank Corporate Background: •Started more than 40 years ago with an asset base of P500,000 •Largest private development bank with total assets of over P40.4 Billion •21st Largest Banking Institution in the country today with total capital base of P3.1 Billion •Belongs to the top 250 in the country’s top 1,000 corporations
Planters Development Bank Corporate Background: •Nationally acclaimed as the Bank for Small and Medium Enterprises (SMEs) •Consistent recipient of various awards and citations from the country’s program agencies on SMEs •One of three banks worldwide to pursue Double Bottom Line Banking (Harvard Study) •72 Nationwide Branches (9 were opened in 2006)
Planters Development Bank Institutional Foreign Shareholders: Asian Development Bank (1983) Netherlands Development Finance Co. (1986) IFC of the WorldBank (2000) German Investment and Development Agency (2006)
Planters Development Bank Ambassador Jesus P. Tambunting Chairman & Chief Executive Officer • 2005 Asian Banking Awardee for Outstanding Lifetime Achievement • 2003 Management Man of the Year • Chairman, Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) • Co-chairman, Philippine British Council • Director, Globe Telecom • 1993-1998 Philippine Ambassador to London
Planters Development Bank Ma. Flordelis F. Aguenza President & Chief Operating Officer z
Board Member, ShoreBank Corporation in the United States
z
Board Member, Chamber of Thrift Banks
z
Director, PDB FMO Development Center
z
Director, PDB Properties, Inc.
z
Director, PDB SME Solutions, Inc.
Planters Development Bank
Microfinance Experience
Planters Development Bank • September 2006 - Merger of Plantersbank and Micro Enterprise Bank • Establishment of the Microfinance Department under the SME Banking Group • Created a strong unit with solid microfinance experience and reputation • Started offering the wholesale microfinance loan to top MFI’s through the nationwide PDB branch network
Planters Development Bank Objectives:
To better serve as a conduit of funds via wholesale credit to the MFIs
To serve as a complementing institution rather than a direct competitor of existing MFIs
To provide scale-up opportunities for existing MF clients with higher financial requirements
To push microfinance much faster given greater resources, geographical coverage, and a stronger organization with solid experience and reputation
Planters Development Bank Target Clients: The Wholesale Microfinance Facility is marketed among: ¾ Microfinance Institutions (MFI’s) ¾ Rural Banks ¾ Cooperative Banks which are accredited or recognized by: ¾ Bangko Sentral ng Pilipinas (BSP), ¾ Microfinance Council of the Phils. (MCPI) ¾ Microenterprise Access to Banking Services (MABS) ¾ Alliance of Philippine Partners in Enterprise Development, Inc. (APPEND) ¾ Other Local and International Microfinance Industry Associations/Networks
Planters Development Bank Product Features: • Revolving Credit Line • Term: 1 year / 360 days • Interest rate: Market Rate • Payment Mode: Monthly or Quarterly, Principal and Interest amortized • Service Charge: 1% of the amount drawn • Security: Assignment of Sub-borrowers PNs
Planters Development Bank Product Features: • Manner of Release: in tranches; via drawdown based on submitted Certified List of Sub-borrower's PNs • Loan Proceeds will be used to re-finance microfinance sub-borrowers • Drawdown will be on a per branch summary of listing of PNs for easy monitoring of accounts • MFI must open an account with PDB • Assigned amount of PNs should be 120% of the release of fund at any point in time
Planters Development Bank Challenges: 1. Compliance with Accreditation and Pre-approval Requirements Timing and accuracy of information Correct and complete information Point person for MFI (e. g. President, Exec. Dir., Compliance Officer, Microfinance Head, etc.)
Due diligence (e. g. field visit, desk review, interview with MFI and clients, etc.) Mode of communication (email, telephone, mobile phone, etc.)
Planters Development Bank Challenges: 2. Utilization of Approved Credit Line Interest rate Cash flow of MFI Documentary requirements
Planters Development Bank Challenges: 3. Drawdown Turnaround time in loan processing Documentary requirements Issuance of PDCs
Planters Development Bank Challenges: 4. Renewal of Microfinance Wholesale Facility Turn-around time in loan processing Documentary requirements Interest rate Repayment
Planters Development Bank WHY PLANTERSBANK? • Proven track record • SME-friendly procedures and processes • Premium service • Branch network
Planters Development Bank HOW COULD PLANTERSBANK SERVE THE MICROFINANCE INDUSTRY BETTER? • Type of loan • Loan Term • Efficiency (TAT, quality of deliverables, etc.) • Collateral requirements • Value-added services (sme.com.ph, allied services, etc.)
Planters Development Bank Acceptable Eligibility Criteria for MFI’s: ¾ BSP Camels Rating of 3 (applicable for banks) ¾ PESO Microfinance Standards Rating of not less than 70 points or Adjectival Rating of 3 - Satisfactory
Potentials: ¾ Product development to address the needs of MFI’s
Planters Development Bank AMBASSADOR JESUS P. TAMBUNTING Chairman and CEO, Planters Bank
An entrepreneur is someone with a dream,
“
determination, courage, and, may I add, Plantersbank. From the very start, in 1961, our bank has been supportive of the man, or the woman, with the determination, and the courage to pursue a dream. Our support of the Filipino entrepreneur goes beyond commitment. It is a passion.”
Planters Development Bank
Edited by Foxit PDF Editor Copyright (c) by Foxit Software Company, 2004 - 2007 For Evaluation Only.
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