Special deposit for Filipino expatriates

Officials of a Philippine state-owned bank yesterday announced the roll out of a deposit instrument that would help Filipino expatriates and their families in the Philippines cushion the impact of the weakening of the greenback against the Philippine peso.

Called as the long-term negotiable certificates of deposit or LTNCD, top officials of the Land Bank of the Philippines spearheaded the launch of the instrument during Sunday night's economic roadshow that served as the curtain-raiser for visiting Philippine President Gloria Macapagal Arroyo's address before Filipino community leaders in the Mina Al Salam Hotel.

“This deposit product is designed to help overseas Filipinos and their families participate in the government's savings mobilisation program, as well as to help soften the adverse impact of the sharp peso appreciation on our OFWs (overseas Filipino workers) as the LTNCD carries a higher yield compared to existing peso savings and time deposits,'' said Gary B. Teves, the Philippine Finance Secretary and chairman of the LandBank.

The peso-dominated LTNCD will be issued in 20,000 pesos (Dh1, 793) denomination in five and a half and 10-year tenors.

Deposits of up to 250,000 pesos (Dh22, 420) are covered by state insurance and are not subject to withholding tax if the amount is kept until maturity.

The deposit carries an indicative yield of 6.25 per cent for a five and half year term, and 6.88 per cent if held for 10 years. The final interest rates however, will depend on the prevailing market rates at the time of issuance.

“Simply put, if an OFW invests 20,000 pesos and holds it until the end of the five and half year term, his investment will earn an interest of 8,056 (Dh732) if the market rate at the time of issuance is 6.25 per cent. If he holds it until 10 years, the interest can reach as much as 12,760 pesos (Dh1, 161),'' explains Gilda E. Pico, president and chief executive officer of the LandBank.

The LTNCD will be formally launched in March through a public offering in Manila.
Investors will be required to present proof of overseas employment (i.e. OFW card issued by the Philippine Overseas Workers Welfare Administration, employment contract and/or Pre-Departure Orientation Seminar certificate).

Philippine-based relatives of Filipino overseas workers, who intend to place their money as an LTNCD, would be required to present proof of relationship to an expatriate (i.e. marriage contract for spouses and birth certificate for children).