Ilocos Norte residents warn on P1-coin hoax

The Bankers’ Association in Ilocos Norte are warning the public not to believe rumors that a one-peso coin could be exchanged for a higher amount of cash.

The bankers’ advisory came out as rumors spread in the area that a one-peso coin dated 2004 could be exchanged in banks for P20.

Ronald Mandac, Bankers’ Association director, said that there were many who believed in the rumor and flocked to banks asking how their coins can be exchanged. He also said there was no directive from Bangko Sentral ng Pilipinas on the supposed exchange issue.

Mandac said however that he believes the issue is related to another rumor which said that the 2004 one-peso coin supposedly contains silver and bronze.

Authorities claimed that not only a few residents of Laoag City collected 2004 one-peso coins hoping that it would be exchanged for the higher amount of cash.

Similar rumors have been spreading most likely in the rural areas not only of the present day one-peso denomination. Rizal head peso minted during the time of President Marcos, known to many as "The Large Peso" has its own version of myth.

Some says that Marcos hid his gold on these coins, the reason why the coin has its yellowish color. Most likely, they added "it can be found in coins dating 1971", which is actually a non-existent date.

Even the 10-peso is not spared from the series of gossips. Some speculate that the core of the coin has gold in it, and the metal is abundant only in the coin minted in the year 2000.

The millennium peso is scarce though, but BSP officials assure that there is no gold in it.

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Anti-counterfeit Campaign: BSP Revised Reward System "Bayani ka na, magkakapera ka pa!"

The BSP Reward System, launch Anti-Counterfeiting campaign that, encourages the populace to furnish information on person/groups responsible for the manufacture/passing of counterfeits. This nefarious activity can be more effectively suppressed with the cooperation of the public.

There is a Committee on Rewards who shall determine the amount of reward in accordance with certain rules and regulation as approved by the Monetary Board.

Any person who voluntarily gives definite and sworn information leading to the the arrest/prosecution of a person or group of persons engaged in counterfeiting/passing of Philippine notes and coins or foreign notes and coins acceptable to BSP may qualify for the reward except however, officers or employees of the BSP or any intelligence or law enforcement agencies such as NBI, PNP, BIR, Bureau of Customs, including their relatives within the 3rd degree of consanguinity or affinity.
Recent introduction of counterfeit coins and notes have resulted to major changes in the production of coins and upgrade of the security features of the local currency especially high denomination notes such as 200-piso, 500-piso, and 1000-piso.

"The latest printing technology and other high end software have enabled counterfeiters and forgers to produce more complicated counterfeits. That is why the BSP has required its departments to harness all available resources to halt further damage to our monetary system." a BSP official explained.

"We don't want to experience the same setback when we first encountered the fake 5-piso and 10-piso coins which were only detected when much have been already introduced to the local economy. We did not anticipate such incident because we thought only coins of higher exchange rate such as the dollar, euro, and yen are vulnerable for counterfeiting. We have underestimated the intrinsic value of our own coins." He added.

Any person who has information on counterfeiting activities, may call the Investigation Staff, Cash Department at Telephone Nos. 926-5092 or 929-7071 local 618.

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Obama coins failed to capture the taste of local collectors

The "Obama Fever" has failed to capture the taste of local coin collectors unlike of that when the "Harry Potter" coin series and commemorative medals appeared at the local market.

The United States and the rest of world (particularly the African country, Kenya where Obama traces his roots) recently have their own versions of celebrations to welcome the first African-American President on his first official day at the White House as the 44th President of the United States.

Local Ebay sellers, bargain seekers, collectors, and speculators have their own respective opinions why buying or selling Obama memorabilia and mementos is a definite one of a lifetime opportunity.

"One local Ebayer explained that, Obama's charismatic appeal and popularity are two special aspects why collectors rush toward Obama Mania."

"Most known personalities and celebrities made their mark in our history using these equities (trademarks)."

This official Obama coin depicts Barack Obama's bust over the nation's capital and is encircled by the legend "Barack Obama" along the upper rim. (See picture for details)

The Democratic Party placed an order with the Winston Elizabeth & Windsor mint in England for about £100,000 ($156,000) worth of silver Obama coins to be used as gifts for Party supporters. The silver Obama coins, which were made from specially-designed dies, were issued in a numbered limited edition of 300 coins. If you were lucky enough to have received one of these official Obama coins, you just might have a collectible with some potential to increase in value over the years!

The colorized and the silver plate Barack coins that are selling on Ebay are not the same as the official Obama coin. Don't be mistaken that this coin is the real deal, "one collector says". The Obama coins which use a Presidential Dollar for the host coin are colorized through the application of a decal, which is permanently fused to the coin's surface using a hot glue process. In doing so, these marketers are wiping out the faces of our nation's Founding Fathers and placing their garish colorized designs on our U.S. legal tender coinage. The result is a coin that is numismatically worthless; in other words, these colorized Obama coins will never have any value to coin collectors as collectible Presidential Dollars because the original surfaces of the coins have been destroyed by the colorization process, as one Obama collector commented.

These Obama coins are being sold for prices ranging from $9.95 plus shipping (total: $14.90) to nearly $30 each, and all they really are is defaced Presidential Dollars that you can get for $1 at the bank comapred to the official silver Obama coins, which were made from specially-designed dies, and were issued only in a numbered limited edition of 300 coins.

The news regarding this fraud spread into the local numismatic clubs thus, most local collectors have restrained from buying any of these coins to discourage counterfeiting and forgeries which has already plagued the local coin market.

"Besides, being a limited edition, numbering only in 300 to 500 pieces. It can be comparable to a lottery win if a local collector could even acquire one!" One numismatist explained.

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BSP tightens regulations to prevent more bank failures

The Bangko Sentral Ng Pilipinas will release new regulations aimed to penalize and restrain “aggressive banking" tactics.

Besides setting clear definitions of “aggressive banking," the Bangko Sentral ng Pilipinas (BSP) will issue a circular that will impose harsher penalties on banks who plan to cheat their depositors.

“The new guidelines clearly define instances or acts of unsafe and unsound banking practices so that there can be no doubt the regulations have been violated and the banker punished," BSP deputy governor Nestor A. Espenilla said.

The new set of rules define “aggressive banking" as giving loans to borrowers that have poor credit histories by extending their interest rates without much protection for such risks.

Operational standards – as set under the new rules – will make “aggressive banking" extremely difficult since off-market interest rates are going to be defined as more than 50 percent of the median market rate.

“The guidelines in past circulars were implicit. In the new guidelines the rules are now clearly spelled out," Espenilla said.

Aiming to prevent a repeat of recent rural bank failures that have disenfranchised thousands of depositors, new central bank rules have disallowed banks from offering deposit and loan rates that are too high and accepting risky borrowers.

The Monetary Board last week approved Circular 640, which amends a directive issued in 2002. The latter, Circular 341, contains the implementing guidelines of Section 56 — “Conducting Business in an Unsafe or Unsound Manner" — of Republic Act 8791 or the General Banking Law of 2000. Its annex, which Circular 640 amended, lists the activities considered as unsafe and unsound banking practices.

The old annex listed “excessive reliance on large, high-interest or volatile deposits/borrowings" as one of these practices. The amendment restates this to “excessive reliance on large, high-cost or volatile deposits/borrowings to fund aggressive growth that may be unsustainable."

The Monetary Board defines “high-cost" as an effective interest rate on deposits or borrowings that is 50 percent higher than the prevailing market median for similar banks.

Aside from high interest rates, the Bangko Sentral ng Pilipinas (BSP) will examine how deposits were obtained, in particular if a bank resorted to offering noncash incentives worth more than the deposits or if the bank accepted the money outside its premises without central bank authorization.

Last year,PDIC seized 13 rural banks belonging to or affiliated with the Legacy conglomerate on account of unsafe and unsound banking practices, insufficient assets to cover liabilities, and poor liquidity. The Legacy banks had been known to lure depositors with a 20 percent interest.

Recently, heavy withdrawals by panicky depositors brought down two Pampanga-based rural banks this month. All 15 banks have since been placed under the receivership of the Philippine Deposit Insurance Corp. (PDIC).

Rural Bankers Association of the Philippines (RBAP) President Tomas S. Gomez IV said the organization “fully supports" the latest BSP circular.

“It further strengthens depositor protection and is consistent with the BSP’s mandate of prudential regulation. Coupled with PDIC charter amendments ... the revised circular will further strengthen the Philippine banking system," he said.

Circular 640 also expands the list of circumstances that comprise “hazardous lending and lax collection."

One is a high incidence of spurious loans because of poor risk management systems. Another is a high number of borrowers with poor credit histories or a high number of loans that are either unsecured or backed with minimum collateral values. A third is high loan rates designed to compensate for the risks attendant to these type of borrowers and loans. “High" is defined as effective interest rates that are 50% higher than the prevailing market median.

Also, “operating in a way that produces a deficit in net operating income without adequate measures to ensure a surplus in net operating income in the future" constitutes an unsafe and unsound banking practice.

Circular 341 allows the Monetary Board to issue cease and desist orders to banks and to impose a fine of not more than P30,000 per day per transaction, among other sanctions.

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Peso seen to decline futher this week

The peso is seen to be sliding further to the dollar as the inauguration of the newly elected president Barack Obama draws near.

Analysts see the peso's downward trend this week despite the declaration of a unilateral ceasefire of the Israeli forces on its offensive on Hamas that should be favorable to our workers working in the region.

"[Our bias is still towards] a weaker peso," a trader said.

Remittances from overseas Filipino workers (OFWs) have not been enough to sustain the peso’s rise, he added.

"Due to the financial crisis, many OFWs are being threaten by massive layoffs, meaning there will be less dollar remittances in the succeeding months," he added.
The peso hit an intraday high of P47.09 and a low of P47.28 before ending at P47.20 last Friday.

Constantino B. Bombais, first vice-president and treasurer of the Philippine Business Bank, expects the peso to trade between P47.20 and P47.50 to the dollar this week.

He added that the inauguration of US president-elect Barack Obama on Jan. 20 would impact Asian currencies.

"I think the inauguration of Barack Obama will have an effect on all Asian currencies, but that will come in later," Mr. Bombais said.

The newly elected president, he said, is expected to work on measures to stimulate the US economy.

"I think the US will keep the dollar’s strength intact and push it stronger. For the Philippines, that would mean a weaker peso," Mr. Bombais explained.

However, Philippine based exporters favor the current trend as they compensate from their setbacks from the low orders they received last season. Mostly affected were craft and furniture makers who have already felt the effect of the current global financial crisis.

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Special Economic Report: BSP forecast more bank mergers

The Central Bank is expecting further consolidation among local banks, with Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. sticking to his goal of five to six local banking groups dominating the sector.

"I still think five to six local banks plus the branches of foreign banks holding about 70% of the total banking system’s assets would be ideal," Mr. Tetangco told reporters in an e-mail.

"The BSP’s role is to create a working environment that would encourage banks, through market-based policies, to take advantage of opportunities to consolidate or expand as would suit their risk and profit appetite as well as their own overall assessments of the economy," he added.

Central bank data as of September last year showed there were 18 head offices of universal and commercial banks, three subsidiaries of foreign banks and 14 branches of foreign banks. There were also three government bank head offices.

Data also showed that universal and commercial banks continued to corner around 90% of the banking system’s assets at the time.

Since he took the helm of the central bank in 2005, Mr. Tetangco has been supportive of mergers among major banks, saying the BSP would rather have less but stronger banks.

The local banking sector saw a series of mergers and acquisitions in the past few years, among them the Ayala-led Bank of the Philippine Islands-Prudential Bank merger in 2005, the International Exchange Bank-Union Bank of the Philippines merger in 2006 and the China Banking Corp.-Manila Banking Corp. merger in 2007.

The merger between Sy-led Banco de Oro Universal Bank and Equitable PCI Bank, also in 2007, was hailed by industry observers as a landmark transaction as this created the country’s largest bank in terms of assets.

The industry is now awaiting the merger of two Lucio Tan-controlled banks, Philippine National Bank and Allied Banking Corp., which would create the fourth largest bank. — Gerard S. dela Peña

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Special Economic Report: 4 Rural Banks in Pampanga went on holiday 2 days before New Year

Sta. Rita Rural Bank went on Holiday

The public has not yet fully recovered from the bank closures earlier this month, another wave of another bank closures happened two days before the News Year begins. Just this December alone, 10 banks have been seized by the Philippine Deposit And Insurance Corporation (PDIC), 8 which are owned by the Legacy Group who is also the owner of the Legacy Plans that ceased operation in the middle of this month.

All of the rural bank branches that recently went on holiday are located in Pampanga. As the Global Financial Crisis unfolds in the coming year, many analyst foresee that the worst is yet to come to the banking and financial industry.

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Harvard's Ferguson Praises `Ascent of Money' as Markets Plunge

Niall Ferguson, a canny chronicler of financial history, knows a thing or two about market timing.

Sellers have sliced more than $10 trillion off global stock- market value this month, the U.S. is mired in its worst housing crisis since the Great Depression, and hedgehog Andrew Lahde has shut his fund, telling investors, ``Goodbye and good luck.''

So what does Ferguson do? He publishes ``The Ascent of Money,'' an upbeat account of finance from Mesopotamia to McMansion. His thesis: ``Money is the root of most progress.''

After that windup, you might expect me to trash his book. Alas, I can't.

Ferguson, a Scotsman who teaches at Harvard, is the bestselling author of books including ``The House of Rothschild'' and ``The War of the World.'' His new work, like the last three, was conceived as a TV series as well as book. His reputation is riding so high that someone would short him if he were a stock, as Adam Smith biographer James Buchan recently wrote.

``The ascent of money has been essential to the ascent of man,'' Ferguson writes. ``Far from being the work of mere leeches intent on sucking the life's blood out of indebted families,'' he says, ``financial innovation has been an indispensable factor in man's advance from wretched subsistence to the giddy heights of material prosperity that so many people know today.''

Ferguson mercifully lifts the reader above today's doom and gloom with this smart reminder of how mankind has benefited from the rise of bankers, credit and markets. The book works as either a primer or a refresher course, though a serious student of financial history may learn little from these pages.

Clay Tablets

Cantering off in swift, declarative prose, Ferguson traces the rise of money from ancient clay tablets and Roman coins up through the Medici's foreign-exchange dealings; the development of banks; the Dutch formation of a joint-stock, limited liability corporation, the United East India Company; and the resulting creation of the Amsterdam stock market, where bulls were already battling bears in the early 17th century.

As befits a storyteller with a TV deal, Ferguson whips up a good old-fashioned narrative history, complete with heroes and villains, visionaries and scoundrels. Nathan Rothschild is seen shipping gold coins to the Duke of Wellington's army during the Napoleonic Wars. Two hard-drinking Scottish Presbyterian ministers Robert Wallace and Alexander Webster set up what Ferguson calls the first true insurance fund in 1744.

Flawed financial alchemist John Law of Edinburgh introduced 18th-century Paris to the stock-market bubble. We even glimpse a grinning Alan Greenspan accepting the Enron Prize for Distinguished Public Service from Ken Lay just weeks before Enron Corp. filed for bankruptcy protection in December 2001.

British `Narco-State'

The tales, though familiar, are told with brevity and irreverence: The opium-trading British Empire was ``history's most successful narco-state.'' Long-Term Capital Management LP became ``Short-Term Capital Mismanagement.''

Ferguson delights, too, in challenging conventional interpretations of events. The Rothschilds, he argues, made their fortune in spite of the Battle of Waterloo, not because of it. The real turning point in the American Civil War, he argues, came when Union forces captured New Orleans in April 1862, preventing investors in Confederacy cotton bonds from taking possession of the cotton underpinning the securities.

Each chapter teases out a topical thread -- be it real estate or risk -- and toggles ahead in time to show how past trends created present realities. A chapter on banking lands in Bankruptcy Court in Memphis, Tennessee. A discussion of bonds closes with a Congressional Budget Office forecast that the U.S. federal debt will balloon to more than $12 trillion by 2017.

Fittest Survive

Like many economists these days, Ferguson sees finance through the filter of evolution: Each shock to the system results in casualties, as the weakest institutions expire.

``Financial history is essentially the result of institutional mutation and natural selection,'' he writes.

Ferguson closes on a somewhat defensive note. While writing the book, he was often asked if he had selected the wrong title, he says. He stands by the name.

``There have been great reverses, contractions and dyings, to be sure,'' he writes. ``But not even the worst has set us permanently back. Though the line of financial history has a saw- tooth quality, its trajectory is unquestionably upwards.''

``The Ascent of Money: A Financial History of the World'' is from Penguin Press in the U.S., Allen Lane in the U.K. (442 pages, $29.95, 25 pounds).

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