PBB in discussions to become PERA administrator

PHILIPPINE Business Bank (PBB) is considering becoming an administrator for the personal equity and retirement account (PERA) scheme, even as it noted several obstacles to its possible foray.

PBB President and Chief Executive Officer Rolando R. Avante told Business- World in an interview that the bank is currently looking into offering the recently rolled out voluntary retirement fund to its clients.

“We are mapping out with our trust company [the PERA product]... I think moving forward, definitely,” he said when asked if PBB has plans to become a PERA administrator.

“[ We are also looking at] how you will be able to link it to your existing client base, yung mga (the) SMEs (small and medium enterprises),” Mr. Avante said, adding that the plan continues to be “in the talks... business discussions at the committee level.”

The Bangko Sentral ng Pilipinas (BSP) formally rolled out PERA last Dec. 16, 2016, eight years after Republic Act No. 9505 came into force in 2008. PERA serves to complement the savings of workers through the Government Service Insurance System or Social Security System, as well as boost the development of the capital markets.

The PERA Law seeks to promote capital market development and sav-

ings mobilization by establishing a legal, regulatory framework of retirement plans for individuals composed of voluntary personal savings and investments.

A Filipino employee may place up to P100,000 yearly in five PERA accounts at once. The amount rises to as much as P200,000 for overseas Filipino workers ( OFW). The account holder can enjoy a 5% tax credit that can be deducted in his or her annual tax liabilities.

The contributions will then be invested in products such as trust funds, mutual funds, insurance, pre-need, government bonds and listed equities. The proceeds may be claimed upon reaching the age of 55 or after five years of investing in the fund.

Income generated from PERA contributions — up to the P100,000 cap for local employees and P200,000 for OFWs — are exempted from taxation. These may be reinvested unless withdrawn ahead of retirement.

BDO Unibank, Inc. and the Bank of the Philippine Islands have obtained accreditation to administer PERA. The Land Bank of the Philippines, meanwhile, has received a mandate to be the cash custodian of the retirement fund.

However, Mr. Avante noted several challenges should PBB decide to offer the investment product to its customers, saying that this type of business is “sensitive” as there is a required volume “to support the organization.”

He added that the product is leaning towards “retail so dapat ang system mo in place ( your system needs to be in place).” Mr. Avante said the bank must have strong manpower operations in the “management side, operations side, compliance side” if it wants to offer PERA.

Mr. Avante also noted that as a thrift bank, it will always be a challenge to compete with other big banks as they have “economies of scale.”

“So kami, parati yan (So for us, it's always) catch-up.”

Meanwhile, asked on the bank's capitalization efforts, Mr. Avante said that PBB is “overcapitalized” as a savings bank, with its capital adequacy ratio (CAR) at around 17-18%.

“So we're still okay. There's still a lot of room to leverage and expand the risk,” he added.

For the third quarter of 2016 alone, the listed thrift lender saw its net profit soar to P329.956 million, up 92.4% from P171.528 million in the same period in 2015.

Shares in PBB closed unchanged at P14.20 apiece on Monday. •