Friday, October 7, 2011

Crisis of confidence

Sep 16, 04:56 PM

By NICHOLAS VON WETTBERG

Until news about the closure of LBC Development Bank broke in the Philippines on Monday, Sept. 12, sending money to the homeland was the least of Anthony’s (not his real name) concerns. The Hayward (Calif.) man, who spoke to FilAm Star only on the condition of anonymity, has for so long remitted anywhere from $400 to $500 every month through LBC Express-Union City, straight to his beneficiary’s account with LBCBank in Makati.

On Tuesday, Anthony’s greatest fear of the moment was confirmed when he spoke to his beneficiary by phone. “My sister told me she will have to wait a few more days before PDIC (state-owned Philippine Depositors Insurance Corp.) could release the money I sent,” he said, in Tagalog. “Now, she needs to find a bridge loan so she can move on.”

Anthony said that even if LBC Express offers other delivery options, such as ATM or door-to-door service, his loyalty to the firm is now challenged.

“It appears to me that the bank was financing the operations of LBC Express, so that it could deliver the remittances and maybe even the balikbayan boxes,” Anthony speculated. “So what happens, now that the goose which laid the golden eggs is dead?”

Letter to the public

In an open letter issued early this week, South San Francisco’s LBC USA Corp. told U.S.-based Pinoys that “LBC Bank’s receivership does not affect any of our cargo and remittance services except ATM Bilis. Although the ATM Bilis service is currently suspended, we assure you that your remittances are intact and we shall be calling you shortly to initiate the release of your unclaimed funds to your beneficiary at the soonest possible time.”

The letter said LBC would be replacing ATM Bilis soon with a new Visa-enabled ATM Bilis card.

LBC Express senior vice president for Marketing Javier C. Mantecon further clarified in a separate news release Tuesday that “LBC Express Inc., although a unit of the LBC Group of Companies, operates independently and is not affected by the placement of LBC Bank under receivership …..it is business as usual for our close to 1000 branches nationwide (Philippines) and more than 100 branches worldwide, and we are assuring our customers that the cargo, courier and remittance services of LBC Express remain strong.”

But for one ‘manongcastro,’ who posted a comment Tuesday on the Philippine Daily Inquirer news website, only time can tell if that declaration is something bankable or just plain rhetoric.

“Kung gayon pala, malaki din ang impact nito sa LBC Express (If that’s the case, this will have a negative impact on LBC Express). Let’s wait and see,” ‘manongcastro’ said of the possible ramifications of the LBC Bank shutdown on the remittance and cargo business of the group.

Reacted another Inquirer.net reader, codenamed ‘Blue Kheng,’: “So does this mean LBCExpress is liable for LBC Bank’s closure?”

One scandal too many

Alrupert “Jun” Gomez, formerly of New York and now a Union City resident, does not find LBC’s assurances comforting either. Now in between jobs, he makes ends meet so he can still somehow remit money to his niece for college tuition and other expenses in Manila.

Speaking in Tagalog, Jun said to FilAm Star, “Now that I’m still looking for work, I can no longer send as often. I will also have to make sure that I can trust the remittance firm, or that the receiving bank back home will not be put out of business by mismanagement or something.”

According to Jun, he thought LBC Express rates and service were satisfactory, based on a remittance he made sometime ago. But what bothers him now is that there’s something dangerously wrong with the LBC Group, to which people entrust their money.

“Or maybe the owners …… the Aranetas have been involved in major scandals lately, all related to money — other people’s money,” he rued.

Jun was referring to two lawsuits brought upon the Aranetas. In March last year, a Philippine court ordered the arrest for fraud of Juan Carlos Araneta and seven other LBC officials, stemming from a lawsuit filed by The Professional Group Inc. (TPG), a Philippine pre-need firm. TPG had allowed LBC to sell pre-need plans and collect premium payments, but which allegedly were never remitted (to TPG).

Then in 2007, a Delaware court ordered Carlos R. Araneta, the majority owner of the joint venture LBC Global Corp., to pay partners ATR Kim Financial Corp. the sum of $24.49 million for allegedly transferring company assets to his children without knowledge from its stockholders.

Breach of trust

Another Filipino immigrant, Cesar Nucum, Jr., a native of Quezon City, said the LBCGroup will need to do plenty of reimaging work, even reinvent itself, to mend the broken public trust and confidence.

Cesar has been sending money to his family via a mainstream bank, but recent policies are making remittance to the Philippines unaffordable for him. He is now shopping.

But with what’s happening with LBC, he said, he doesn’t think it can earn his business, despite the “cutthroat service fees.”

He continued, in Tagalog: “ If the owners can mishandle the money of the wealthy or corporate giants like The Professional Group, how much more with small-time remitters like our kababayan here in the U.S. or, say, the OFWs (overseas Filipino workers)?”

For an operator of a ‘balikbayan’ box forwarding and delivery firm, on the other hand, the LBC crisis could turn into a blessing for the industry – specifically, LBC Express’ competitors.

Speaking to FilAm Star on condition of anonymity, the Filipino American explained that a balikbayan box, just like money remitted to families in the Philippines, “is a love offering …. it doesn’t matter how much it’s worth so long as it gets to the beneficiary – walang labis, walang kulang (nothing more, nothing less) – and on time.”

“Trust is the key in this business, and sometimes the rates and fees come secondary,” the Pinoy businessman said, adding that he does expect some incremental business from the LBC Bank fallout.


1 comment:

allround said...

It was good to hear that LBC expree is not affected on what happen to the bank, so every time I send money via LBC the recipient still receive it on time, even the package I sent arrive on a very good condition despite the bad weather