MANILA, Philippines — As part of its mission to usher its customers and employees toward the road to financial progress, the Bank of the Philippine Islands (BPI) recently flew in globally renowned Personal Finance expert Susan “Suze” Orman for a series of inspiring talks on financial wellness and responsibility.

Orman, a two-time Emmy Award winner and touted by USA Today as a “one-woman financial advice powerhouse and a force in the world of personal finance,” has spoken throughout the United States, South Africa and Asia to audiences of over a hundred thousand. Her recent talks to BPI audiences mark her first appearance in the country—a high point in the bank’s financial literacy campaign.

“BPI’s core values have earned our bank the reputation in this country as a beacon of financial responsibility, and in many ways Ms. Orman mirrors BPI’s core values in that we are aligned with her in our advocacy of financial empowerment,” shares Maria Teresa Javier, senior vice president and head of BPI Asset Management.

Talking Credit

Popular for dishing out financial advice in one of CNBC’s top-drawing segments, “The Suze Orman Show,” the TV host’s visit to the Philippines couldn’t have come at a better time. With the country’s mushrooming BPO industry, and the BSP forecasting OFW remittances to further grow by 5 percent to P21 billion in 2012, consumer spending is likewise increasing.

The Philippines is entering an age of economic empowerment, says Orman, and the country would do well to learn from the current financial crisis in the United States. “I have watched the United States go from being one of the greatest economic powers in the world to being a power that has absolutely no electricity behind it whatsoever. I have watched a country that had a vibrant middle class and I’ve watched that middle class totally disappear. There is now a highway into poverty and there’s absolutely not even a sidewalk out,” Orman shares, citing that 50 million people in the U.S., out of 300 million, are now officially in poverty. “One out of every two people in the U.S. are essentially in poverty or close to being so,” she adds.

The culprit? Credit card debt and amortization debt that people could not afford, says Orman. “The United States allowed its economy to grow on debt and borrowing money. The banks were making wonderful interest and income on the interest and overcharges and late fees and all these things. I watched them lend money to people to buy homes when they couldn’t afford to buy the homes, and now one out of four people in the USA are underwater in their homes. What this means,” she explains, “is I know people who bought homes for $150,000—not so much for a home in the U.S.—and those homes are now selling for $5,000.”

Upon seeing how debt crippled her country, Orman urges the BPI executives in attendance to take care of the country and its people. As much as money can be made in a bank on credit cards and interest on amortization loans, Orman says that “there are other ways to make money other than on the back of things people cannot afford. Build the country on cash, on a solid foundation so that it can never collapse. Then you will have built a future that nobody can ever take away from you.”

Aurelio Montinola III, president of BPI, agrees. “We’re fortunate here to have learned our lessons from the financial crises of the ’80s and ’90s,” he says, “which was that bank leverage, corporate leverage and even consumer leverage was too high. And what we’re trying to do now with BPI is what we call ‘Purposeful and Responsible Lending’ so hopefully we can stay on the right side of Suze’s statements.”

Achieving Balance

Orman’s statements caused quite the stir, as most of the people in attendance belonged to the bank’s credit card group. One employee asked, “How do you propose we sell credit card loans wherein we can merit our business objectives and the social responsibility of financial freedom?”

There are enough people in the country that can afford and use credit cards responsibly, Orman answers. “But I would say that once you see somebody being irresponsible with a BPI credit card, help them. Help them and close it down,” she says.

In the United States, the common practice among credit card companies in terms of handling credit card trouble was actually extending their cardholders’ credit limit. “This was the mistake made in the States,” shares Orman, urging the group to “stop the limit” once someone maxes out their credit card. “Don’t let them charge anymore,” she says, “and as they pay off debt, you can decrease their credit limit so they could never get into credit card trouble…at least with your bank.”

There will always be people who are irresponsible with money, says Orman. “But there are also all these people who are responsible with money and can use your products in a responsible way so that your bank can continue to make money while your consumers can continue as well to live a life where they could be financially free,” she says.

Addressing a credit card division is difficult, admits Orman. “Because I can see the bad that happens with it,” she says, “but I can also see the good, the potential of it if you help others be responsible because they can’t help themselves.”

The bottom line, Orman tells the group: “Just don’t be an aide to somebody’s financial destruction. The number one thing that will render a person powerless when it comes to money is debt. Credit card debt is bondage.”

Published March 26, 2012 in the Business Agenda section of the Manila Bulletin.

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