The money laundering case involving the Jupiter branch of Rizal Commercial Banking Corp. has somehow affected the bancassurance business of the Yuchengco family and global insurance giant Sun Life of Canada. But things are now on the mend, says Sun Life of Canada Philippines chief Riza Mantaring. The insurance giant has also affirmed its commitment to the partnership, allowing the beleaguered local partner to get back on its feet.
“Obviously, the focus of the bank would have been on addressing those issues so bancassurance has taken the backseat. We continue to sell although not with the same focus as before because obviously they need to address all those issues; that’s the priority,” Mantaring said. Sun Life owns 49 percent of Sun Life Grepa Financial Inc., a partnership with the Yuchengcos, with RCBC as the exclusive bancassurance partner.
“But we’ve seen the funds starting to come back,” Mantaring said, adding that business should return to normal later in the year.
With or without the Jupiter branch issue, the overall bancassurance business—which is heavily into single-premium products that are more sensitive to financial market volatility—had been challenging of late, Mantaring said. However, regular premium sales from traditional protection plans remained strong, she said.
Being a long-term investor in this market, Sun Life continues to be upbeat on the Philippines’ underlying fundamentals. Doris Dumlao-Abadilla
Midnight deal?
WITH ONLY a few weeks before the new administration begins its term of office, there is a need to be vigilant about contracts sealed just as the old administration is on its way out.
Apparently, one such transaction—dubbed a “midnight deal” by its critics—is a public-private partnership (PPP) project that the Philippine Statistics Authority (PSA) is rushing in the dying days of the Aquino administration.
The PSA has scheduled the submission of bids for the Civil Registry System-Information Technology Project Phase 2 (CRS-ITP2) on June 10, just a few weeks before the new administration steps in.
So some are asking: Why the rush?
This PPP project is designed to fully computerize and modernize the civil registry operations of the PSA and will be implemented under a Build, Transfer and Operate (BTO) mode with a concession period of 12 years. This system touches the lives of practically all Filipinos since it involved the record system for births, deaths, marriages, and the like. The deal also includes the construction of a permanent CRS building.
The current system operator originally won a 12-year concession period, which has been extended several times, so it has been running the show for 15 years now. What’s the difference with waiting for a few more weeks?
Some are wondering why there is a rush to get the bids through especially since there seems to be some questionable provisions that favor the existing concessionaire which happens to be one of the bidders for the new contract as well.
According to one critic of the deal, the bid favored the existing foreign concessionaire right from the start. One of the qualifications is for the lead member of the consortium to have successfully completed two software development projects worth P750 million each within the last 10 years. Naturally, it is unlikely for local IT companies to meet this P1.5-billion qualification, which is why most PPP projects allow the local lead proponent to get a foreign technology partner that will help them meet this criterion.
But such a partnership was not allowed in this bid. This requirement meant that only foreign corporations had the financial muscle to take the lead for this project. And it so happens that the existing concessionaire is a foreign entity so this requirement is already in their favor.
A last-minute bid bulletin also issued a cap on the bid price and raised the maximum performance penalty from 2.5 percent to 60 percent, potentially discouraging other parties from joining the bidding process.
Naturally, the existing concessionaire has the advantage of being the incumbent because it already has its system in place and needed only to invest in a new building and some minor modifications to its existing system if needed. More importantly, it already had 15 years to recover its investments.
So the deal’s critics are now pointing out that, with the new administration taking over by next month, perhaps it would be more prudent to postpone the bidding to avoid any suspicion of midnight deals.
What will happen? We’ll know by Friday, June 10, which is when the bidding is set to take place, if at all. Daxim L.Lucas
China play
ALLIED Commercial Bank (ACB), a 100-percent owned subsidiary of Philippine National Bank, has obtained a license from China’s banking regulators to do local currency business. This allows the Chinese banking arm to do more business in the mainland, which may be undergoing a rough patch but is still a major growth driver in the region.
PNB, which is celebrating its centennial this year, is confident that the offshore business will benefit from the growing trade between the Philippines and China (notwithstanding the diplomatic chill arising from the West Philippine Sea dispute).
“We are excited also on the business that we can derive out of Xiamen. We are very well-positioned in terms of capital, in terms of operations, in terms of regulations, to do local currency business in China,” said PNB executive vice president and head of treasury group Horacio Cebrero III. “We are also going to leverage on some of the counter parties or corporate accounts present in Xiamen that may be willing to do business in the Philippines.”
Founded in 1993 and based in Xiamen, ACB has a branch in Chongqing. For now, PNB sees no rush to expand the distribution channel, sticking to two branches in the mainland first. Maybe when China’s economic cycle turns more favorable, expansion will pick up pace. Doris Dumlao-Abadilla
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