Long Term Negotiable Certificate of Deposit

Wondering why UITFs are declining? Put the blame on LTNCDs!

LTNCDs are peso-denominated negotiable certificates of deposit with an amount of indebtedness of a bank and a designated maturity. It has a minimum maturity of usually five (5) years.

For its offer period, it is sold through the selling agents. Subsequently it is also offered through authorized market makers. LTNCDs represent the Bank's obligation to pay the face value upon maturity and the specified coupon or interest regularly (around every 3 months).

LTNCDs cater primarily to individuals and corporations in search of a superior investment alternative which can help diversify their portfolios. LTNCDs can also be purchased by financial or institutional investors.

As a bond-deposit hybrid, LTNCDs are high-yielding instruments that are negotiable. LTNCDs are also covered by PDIC insurance up to P250k per depositor. An investor can invest in an LTNCD for as low as P100k.

LTNCDs aim to mobilize savings and encourage long-term investment for individual investors as a tax-exempt certificate if held to maturity.

Just like the retail treasury bonds and the UITFs which were among the hottest financial instruments the past few years, the LTNCD is just a new vehicle to park your excess funds, and as such, some of the loopholes may not have surfaced. Remember that after a while, there were some revisions made in regulating RTBs and UITFs, and this had some minor effects (i.e. slight expenses and some confusion among investors). This may possibly happen with LTNCDs, especially when government regulators come in and get themselves involved in hot issues such as these.

Banks that have offered LTNCDs include BDO, BPI, and just recently, AIG-Philam Savings Bank.

Don't Lose your Credit Cards!

A number of credit card holders were recently victimized by a "salisi" thief when their office was intruded by the robber. They only realized that their wallets were lost toward the end of the work day, and immediately they reported the incident to their respective credit card companies. However, it was too late. A shopping spree for the thief and his friends! P100,000 worth of purchases have fraudulently been made using the credit cards.

The victims wrote to the Bangko Sentral to report about the incident. Unfortunately, the bank regulator couldn't do much. Here is BSP's reply...

"As regard your concern on the charges made to your credit cards prior to reporting these lost, we regret to inform that inasmuch as your disputed concerns are contractual in nature, the Bangko Sentral cannot settle such cases as it is not within its authority to do so."

"We suggest that you try once more to request the banks to reinvestigate your cases and for them to look more kindly on your predicament as they might find a more suitable solution to your problem. If the banks will not agree to reverse the charges, as they most likely will, the next best course of action is to ask for more reasonable and affordable paying terms."

"Lastly, may we take this opportunity to remind you to please carefully read all terms and conditions before entering into contracts, be extra vigilant in handling your credit cards and to report loss of the card as soon as possible, to avoid similar situations from recurring."

I just wonder why some credit card issuers who previously issued cards with pictures have stopped offering these photocards. This would have been a pretty good security feature that could have prevented fraudulent transactions.

I also propose that regulators come up with a policy that allows credit cards to only be used upon presentation of a valid ID with picture. Also, it is noted that most retail establishments are very lenient in accepting credit cards as mode of payment, oftentimes neglecting signatures, and so these establishments must also take the blame for allowing fraudulent transactions to take place.