JPMorgan wins cash mandate for the Philippines

JPMorgan has been awarded a cash management mandate by Robinsons Land Corporation (RLC), one of the largest property developers in the Philippines.

Under the new mandate, the US bank will specifically target overseas Filipino workers in the US and Canada who are paying monthly mortgages for properties they have bought from RLC.

The bank says its cash management service will help RLC improve its efficiency in monthly collections globally, via wire transfers, cheques or over-the-counter.

“Overseas Filipino workers used to postdate their mortgage cheques up to two, three or even five years,” says Patrick Saw, head of corporates, Southeast Asia at JPMorgan. “This posed a problem for RLC because clearing a post-dated cheque in US dollars, for example, could take as long as between 30 to 40 days. There was also a forex exposure risk because their salaries are in US or Canadian dollars, however, the mortgage payments are in pesos. Our solution was to do away with cheque issuance and provide a US dollar account at our branch in New York and a Canadian dollar account at our branch in Toronto,” he adds.

Mortgage payments collected into the bank branches are processed into a money market deposit account; an attractive proposition for RLC as it has access to daily liquidity and also receives a higher interest payout.

JPMorgan also offers RLC a centralised cheque collection or lockbox service and an automated clearing system, which it says helps to reduce collection times down to three to five days.

The RLC mandate win has reportedly attracted some of its real estate competitors looking for a similar service in the Philippines, although the bank declined to reveal names.

Remo Vignali, managing director, local corporates, Asia-Pacific, JPMorgan, says: “The Philippines is a market we are trying to tap into because of its mass transaction volumes. The size of overseas remittances into the country through bank channels is currently around $15 billion and continues to increase.”

The bank plans to launch a similar service for RLC in the UK, Switzerland and Italy by the end of the year.

RLC attracts millions of overseas Filipinos who acquire the company's condominium units and other properties in the Philippines.