Suggestions On How To Setup The OFW BANK

Setting up an OFW Bank from start to finish is not just like opening your own savings account, opening a new bank is a long process that requires your strong commitment, hard work, patience and tenacity because there are many concerns to put your mind and heart on. It may not be an easy task but we can do it, more so if a great number of OFWs are committed to this dream. And once we have succeeded, the economic and financial benefits are endless.

THE P2.4B HURDLE

The first thing that we need to consider is do we really have that much money to put up an OFW Bank? The bank that we envision here is not just a rural bank which requires only around P30M cash capital to put up, but what we are looking at here is a commercial bank like BDO Private Bank, Bank of Commerce, Chinatrust, Citibank NA Phils., EastWest Bank, Asia United Bank, Robinsons Bank and many others.

The minimum capital requirement for this type of banking license is P2.4B in cash, on top of the required cash outlay for the capital assets like the main office and its branches, the office equipments and furniture, computers and licensed software, etc. and the necessary operating capital to cover salaries and wages, utilities, advertising, etc. Let’s just say we need another P600M for those things depending on the number of strategic branches that we plan to put up. If that’s the case, the total cash requirement will be P3B (P2.4B required by BSP + P600M for capex & opex - capital expenses and operating expenses). See the related article about the minimum capital requirements for banks.

IT'S ACTUALLY A P3B HURDLE...WHAT?!

Please don't get discouraged, just read on please. I understand how you feel. It might help if you can just get a sip of drinking water and make 5 deep sighs and you will be alright. And keep reading, it's not your time to quit.

I can imagine some folks wrenching already about the P3B amount, and I can almost already hear people reacting like “Naku ang laki pala” or “Naku mabigat pala” or the worst is “Naku ang hirap pala niyan”. These are the most common reactions of people, or I should say common initial reactions, to qualify that statement. Probably that was your reaction too when somebody invited you to work abroad, especially when the workload was being described to you, plus the thought of being alone and away from your family for years. Malamang sabi mo rin noon “Naku ang hirap pala!”. Oo mahirap talaga. But please read on. Don’t just give up yet, intro pa lang po ito mga mahal kong Kababayan. Read on….

But what made you decide to work overseas? What made you overcome the hardships? It’s not the financial hardships at home. What really made you decide to become an OFW is the dream for a better life and financial freedom! You are after of the rewards and financial returns in working overseas. Same with the OFW BANK. Once it is up and operating and raking in profits, you will just be waiting for your financial dividends being the co-owner of that big bank, while you are out there leisurely cultivating your orchid farm in the province or maybe checking with your forwarder if your orchids for export to Australia are shipped on time.

HOW DO WE RAISE THE P2.4B...or P3B

How do we overcome the first hurdle of P2.4B cash capital? Because we cannot get a commercial banking license without that minimum amount. That P2.4B is a whooping big amount and your old small house back home may not have enough room to contain that money, ganun po kalaki yung perang yan. How much more if it’s in P100 bills mas lalong di napo magkasya sa dating bahay nyo.

The P2.4B is big but when you adjust your perspective, that amount becomes small - very small. Let me help you see it the way I see it. Would you believe that the P2.4B amount can be raised in a month?  “Owwws?!”  “Hmmm…Yabang!” I can almost hear some of those comments.  But are you ready for a surprise?

That P2.4B is no hurdle at all because we can raise the Fund in a month in just like a flick of a finger! If all OFWs who now number around 1.3M, whether poorly paid or well paid, well off or not, will invest just P1,850 to this Fund this January then we will have P2.405B already! You do not need to be a nurse or doctor or engineer working overseas to become co-owner of this Bank!
Now that makes you excited. If we include the opex and capex amount you just have to increase your single investment from P1,850 to P2,300. That’s just chicken! (Translation: “Barya lang po yan!”).

With that simple illustration, we can even put up one commercial bank with that big capitalization per month hahahaha. Anong sinabi ni Ayala, ni Sy, ni Cojuangco, ni Ty. They can’t compete with us because they can not raise fresh capital of P3B in just like that in a month! If they are reading this they must be shaking to their nerves because they know we are a formidable competitor, because they know our OFW Bank will siphon off almost all financial transactions of OFWs. Also check another article here for other creative ideas to raise the capitalization.

LET'S GET EXCITED

And how about the potential volume of our regular deposits. Let me help you see it. If all OFWs, around 1.3M of them and not counting yet their spouse, their sons and daughters, will patronize the services of this OFW BANK and let’s just assume they will save just P1,000 per month and deposit it in their regular savings account that translates to P1.3B new cash deposits per month or P15.6B deposits in a year!

That’s why I don’t feel bad about the paltry P1B Loan Facility offered by the Government because we really do not have to depend on government subsidy because we do not need that in the first place if only we know how to maximize our potential and economic influence. Let us move from the “mentality of the poor” mindset to the “mentality of the rich” mindset.

I think that’s enough for now and let us have time to digest that. At least what we have established today is that the capital requirement for setting up an OFW BANK is not an issue. That’s just the amount you spent in that nice restaurant where you dined last weekend with your family or friends.

Mabuhay Po Kayo. Kayang-kaya po natin yan!