For many Filipinos, stocks, bonds and mutual funds sound too complicated. Bank deposits are still the darlings of saving and “investing” and lately, they have been getting a facelift. Yesterday, they were marketed directly to Filipinos working overseas.
Long-term negotiable certificates of deposit, bankers call this product. Trust bankers and investment managers to come up with a mouthful of a name! MoneySense says if you want an easy way to remember, break it down per term.
LT is for long-term, N is for negotiable and CD is for certificate of deposit. In other words, it’s a hybrid product. See that wasn’t so hard, says MoneySense. Right on!
Landbank of the Philippines will be issuing LTNCDs to OFWs as part of its mandate to offer improved investment products to overseas workers seeking to lessen the impact of the appreciation of the peso on their income. In the Philippine Daily Inquirer’s business banner story today, Development Bank of the Philippines and HSBC have also been mentioned as the two other banks that will be joining it in this initiative. (Landbank and DBP are government banks; HSBC looked a little bit out of place). Landbank’s LTNCDs will be launched at the end of January.
Here’s a quick rundown of what this product is, here are some figures and snippets you should remember:
250,000 – maximum coverage from the PDIC (by virtue of its being a deposit product)
5 years – usual maturity
7% to 9.73% – interest of existing LTNCDs from different banks (those who have issued before are Banco de Oro, AIG Philam Savings Bank, Citibank and Bank of the Philippine Islands)
100,000 – minimum investment
Tax exemption, PDIC guarantee and liquidity feature – main advantages of this hybrid product. Government prefers that investors hold it until maturity for five years and encourages that by giving tax exemption. It has a liquidity feature by virtue of its bond features, meaning it can be sold in the market if you suddenly find yourself in need of cash.
Banks and investment houses or brokerages – are where you can buy LTNCDs
Helpful links:
BDO
BPI
Citibank
AIG Philam Savings
BSP circular on LTNCDs
LTNCDS: banks get creative in attracting deposits
January 22nd, 2008 at 1:04 pm
how about PLDT or Ayala Corp Preferred shares? nasa 10% and 9.4% ang interest yearly.. pwede nyo rin tignan ang option na to.
January 20th, 2008 at 12:29 pm
Since OFW Bonds are considered Govt bonds, I’m thinking not to worry kasi back up naman nang govt whatever happen to our investment. Do I’m right Mr. or Miss moderator ? Sana naman mag open naman sila sa sunod nang ibang pang currency.
January 19th, 2008 at 12:05 am
Are these open to OFW’s only?
January 18th, 2008 at 4:15 pm
So what are the mechanics for this new instrument? How can we subscribe to it?
How long are they going to offer it in the market?
For most of OFWs like me who just returned to our host countries from the Christmas holidays, how can we apply for this? I think the timing was off, they should have started offering it during the last quarter of last year, when many OFWs are home, so they can personally attend to it, and personally sign the certificates.
January 18th, 2008 at 3:20 pm
does it have other charges? (like if you need to liquidate it even before maturity date or if you want to deposit within the maturity date)