MANILA — Despite being in business for over 25 years on Guam the Metropolitan Bank and Trust Co. is unable to expand its services due to Guam’s protective banking regulations bank officers said.

Nothwithstanding this Metrobank offered members of a Guam delegation led by mayors a safe haven for their savings during a presentation of the bank’s products on Aug. 10.

Metrobank on Guam functions like an offshore banking unit offering loans deposits remittance services and trade transactions to its customers. It cannot however offer a wider array of investment tools or expand its network of services due to limitations in Guam’s banking regulations. It has been operating on Guam for 25 years.

Antonio M. Abacan president of Metrobank told the Journal “The banks on Guam have limitation in the sense that you can only lend to the extent of deposits you have. In other countries if you have lots of deposits you can invest it somewhere not through lending.”

He added that even if the bank wanted to it could not convert its Tamuning Guam facility into a bigger branch and expand its services “because we are limited by regulation. But of course you cannot infuse massive capital because you will go bankrupt.”

Despite the size of Guam Angelito M. Villanueva senior executive vice president said there is still room for growth in the island’s banking industry. As such he said Metrobank is still pursuing its plans to convert its branch into a bigger unit and get accredited by the Federal Deposit Insurance Commission.

“I don’t see any problem getting FDIC approval (if allowed to set up a real branch) ” he said. Villanueva said the bank’s application to offer more services to Guam residents is still pending with the Guam Banking Commissioner.

Metrobank is one of 12 local and international banks servicing Guam and one of three Philippines banks serving Filipino-Americans and other ethnic communities. The others are the government-owned Philippine National Bank whose minority partner is taipan and Micronesia Mall owner Lucio Tan. Tan’s Allied Bank is also present on Guam. A big chunk of Metrobank’s business comes from loans to supermarkets owned by Koreans according to Villanueva. He said the bank has neglible bad accounts or past due loans.

Guam banking regulations have generally been seen as protective.

Another condition specific to Guam banking laws that restrict the operations of foreign banks is that banks cannot accept deposits until they lend out funds. In most countries banks are allowed to accept deposits then lend out funds. Bankers describe Guam’s banking regulations as still not at par with international standards.

“This is understandable since they want you to invest your money first before taking deposits ” said Villanueva of the lending rule.

If approved to offer more services Metrobank will be able offer its clients more sophisticated tools of investments such as trust accounts and an extensive list of loan options.

At the presentation of its products before the Guam delegation Metrobank said Guamanians could open savings accounts both in peso and dollar denominations set up trust accounts and invest in high-yielding bond funds.

Officers of Metrobank’s real estate subsidiary Federal Land also briefed delegates and showed an audio-visual production of its many property projects mostly condominium developments in the Manila Bay area Marikina City and Makati City.

The delegation also listened to a presentation by an officer of the Metrobank Foundation which owns Manila Doctors Hospital one of the oldest hospitals in Metro Manila. The hospital opened its doors in 1956 under the ownership the Sisters of St. Paul Chartres before it was taken over by Metrobank in 1979. However it has no accredited Guam insurers unlike Asian Hospital St. Luke’s Medical Center and Makati Medical Center.

Villanueva assured the Guam delegation that their accounts in Metrobank would be safe from the prying eyes of the Internal Revenue Service.

“We adhere to strict bank secrecy laws and we believe our anti-money- laundering law is far superior than that of the U.S. ” he said. Ironically the Philippines was only stricken off the blacklist of the G7-dominated Financial Action Task Force on Money Laundering two years ago when an anti-money laundering law was put in place. Philippine banks are now required to report suspicious transactions or movements of deposits of at least 500 000 pesos ($8 651at the current exchange rate of P57.8:$1).

The bank briefed the Guamanians on its short- and long-term deposit products with varying minimum placements and carrying interest rates based on the period of the deposits.

The mayors said it was attractive to open bank accounts locally so they wouldn’t have to carry around huge amounts of cash while in Manila or keep going to money changers to change their dollars into pesos.

Villanueva said because depositors are issued automated teller machine cards the Guamanians could withdraw their deposits at any ATM abroad carrying the Cirrus MasterCard logos. What’s more the Guamanians can also deposit into their Philippine bank account through Metrobank’s branch in Tamuning.

Metrobank officers offered Guamanians government securities (Treasury bills notes or bonds) to invest in which would yield interest rates higher than current rates offered by U.S. government debt paper. The bellwether 91-day T-bill in the Philippines at present pays an interest rate of 5.62% per annum compared to the U.S. three-month paper which is priced at 3.5%.

U.S. denominated bonds (ROPs) or Philippine government debt denominated in U.S. dollars were also available for investment with tenors ranging from five to 25 years at a minimum placement of $50 000. Current coupon rates of ROPs depending on the issue dates are between 5.62% and 9.875% per annum.

The bank’s trust department briefed the Guam delegation on its short-term dollar-denominated trust investments such as the Philippine Liquid Fund Philippine Bond Fund and Asian Bond Fund as well as long-term trust arrangements designed to suit all levels of income.

Unlike individual deposit accounts these trust funds pool the monies of several depositors and invest them in either government fixed-income instruments and securities or investment-grade Asian fixed income instruments and securities as well as U.S. Treasuries. Minimum placement in these trust funds is $10 000 with interest rates carrying the three- to 12-month London Interbank Offered Rate or as in the case of the Asian Bond Fund the JP Morgan Chase Asian Credit Investment Grade Index.

The long-term revocable trust arrangement Metrobank Abundance asked for the highest minimum placement at $200 000 and “is designed to provide value clients the privilege to attain their investment objectives i.e. regular income retirement needs and real estate planning consideration.” The current rate of return of the fund is 5.5% to 7.5% net of fees and taxes for five years.

Villanueva clarified however that the Guamanians can only open Metrobank’s trust funds and other dollar funds in its branches in the Philippines not on Guam. “There is a need for the investor to be physically present at our bank’s counters in compliance with the ‘Know Your Customer’ policy of monetary regulators.”

He added that these types of investments are only available to Filipinos and resident aliens in the Philippines and those Filipinos holding dual citizenships. About 26% of Guam’s 168 000-population are Filipinos of ethnic origin.

The mayors and their families were also interested in the presentation by Federal Land of its residential developments. Many of them have explored the idea of buying condominiums in the Philippines.

“Of the 70 people (in the delegation) I know maybe 12 to15 are looking to purchase a condominium and invest money here in the Philippines because a lot of their families are also patients ” said Mayor Paul M. McDonald of Agana Heights.

Mayor Melissa Savares of Dededo said “rather than renting space hotels and stuff buying a condo will not only help our people but families who come up for medical treatments.” MBJ