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Tuesday, November 22, 2011

Borderline Thrift Banks Still Borderline

Based on the individual Published Statements of Condition for the Thrift Banking Industry (from www.bsp.gov.ph), Total Distressed Assets of the thrift banks increased by PHP 2.7 billion of 2.9% from December 31, 2010 to March 31, 2011.  This was offset by an increase of PHP 7.2 billion (or 10.1%)  in the Total Capital Cushion of the Thrift Banks during the same period.  As a result, the Thrift Bank's Ratio of Distressed Assets to Total Capital Cushion declined by 8.52%, from 130.22% as of December 31, 2010 to 121.70% as of March 31, 2011.

Please note that the overall ratio of 121.70% is still way above the borderline level of 100%.  This ratio has been skewed upward by the presence of around 25 thrift banks that are above the 100% borderline level.  Although levels have improved somewhat, most of the banks that were borderline insolvent as of December 31, 2010 still remained borderline insolvent as of March 31, 2011.  The borderline banks that exhibited a significant drop in their Total Distressed Assets/Total Capital Cushion Ratios include Legaspi Savings Bank (20.3% drop) and City Savings Bank (32.4% drop).  The borderline banks that exhibited a significant increase in this ratio include CityState Savings Bank (342.9% increase), and the now defunct LBC Development Bank (24.0% increase).


Philippine Thrift Banking System



Total Distressed Assets/ Total Capital Cushion



December 31, 2010 to March 31, 2011














December 31, 2010 March 31, 2011 Variance % Variance
CityState Savings Bank 39.18% 173.56% 134.37% 342.94%
BPI Globe Bank Inc. Savings Bank 5.38% 8.32% 2.94% 54.78%
LBC Development Bank 567.42% 703.67% 136.25% 24.01%
Opportunity Microfinance Bank 129.43% 152.68% 23.26% 17.97%
Maritime SLA Inc. 19.95% 23.43% 3.48% 17.44%
Citibank Savings Inc. 91.00% 99.06% 8.06% 8.86%
Hiyas Savings & Loan Bank 156.01% 167.25% 11.24% 7.21%
GSIS Family Bank 286.92% 306.51% 19.59% 6.83%
Dumaguete City Development Bank 132.38% 140.79% 8.41% 6.35%
Bataan SLA 10.98% 11.57% 0.59% 5.38%
Malayan Bank Savings & Mortgage Bank 103.44% 108.84% 5.40% 5.22%
Century Savings Bank 2.81% 2.93% 0.13% 4.46%
Iloilo City Development Bank 283.69% 294.71% 11.02% 3.89%
United Overseas Bank Philippines 68.26% 70.78% 2.52% 3.70%
Bataan Development Bank 226.07% 233.55% 7.48% 3.31%
China Bank Savings 381.64% 392.93% 11.28% 2.96%
Microfinance Maximum SB (Maxbank) 49.89% 51.30% 1.41% 2.82%
Progress SLA 6.59% 6.70% 0.11% 1.70%
Northpoint Development Bank 45.22% 45.72% 0.50% 1.10%
Luzon Development Bank 103.77% 104.48% 0.71% 0.69%
UCPB Savings Bank 43.21% 43.42% 0.21% 0.48%
Cordillera Savings Bank 72.68% 72.96% 0.28% 0.38%
Malasiqui Progressive SLB 36.32% 36.31% -0.01% -0.03%
Pacific Ace Savings Bank 18.87% 18.83% -0.04% -0.21%
Metro Cebu Public Savings Bank 87.66% 87.44% -0.22% -0.25%
Sampaguita SLA, Inc. 54.38% 54.00% -0.39% -0.71%
Isla bank (A Thrift Bank) Inc. 9.02% 8.95% -0.07% -0.77%
Business & Consumers Bank A DB 185.14% 183.31% -1.83% -0.99%
Dungganon Bank 112.33% 111.01% -1.31% -1.17%
Village SLA 823.93% 813.24% -10.69% -1.30%
University SLA 154.21% 151.59% -2.62% -1.70%
Pridestar Development Bank 61.47% 60.30% -1.17% -1.90%
Optimum Development Bank 21.28% 20.80% -0.48% -2.26%
Premiere Development Bank 143.89% 140.05% -3.84% -2.67%
Equicom Savings Bank 149.92% 145.38% -4.54% -3.03%
Wealth Bank 80.48% 78.00% -2.49% -3.09%
Pampanga Development Bank 73.19% 70.33% -2.87% -3.92%
Allied Savings Bank 36.47% 35.04% -1.43% -3.92%
BDO Elite Savings Bank 6.62% 6.35% -0.27% -4.11%
Tong Yang Savings Bank Inc. 79.85% 76.31% -3.54% -4.43%
EIB Savings Bank Inc. 9.18% 8.66% -0.52% -5.70%
Lemery Savings & Loan Bank, Inc. 48.16% 45.40% -2.76% -5.74%
Planters Development Bank 344.85% 322.90% -21.95% -6.36%
Philippine Postal Savings Bank 111.34% 103.29% -8.05% -7.23%
Philippine Savings Bank 83.15% 76.58% -6.57% -7.90%
Real Bank (A Thrift Bank) Inc. 868.10% 788.74% -79.36% -9.14%
Life Savings Bank 59.44% 53.51% -5.93% -9.98%
Sterling Bank of Asia Inc. (A SB) 50.13% 44.70% -5.43% -10.83%
Producers Savings Bank Corporation 102.49% 91.05% -11.44% -11.16%
Farmers Savings and Loan Association 228.64% 202.55% -26.09% -11.41%
The Palawan Development Bank 513.90% 449.30% -64.60% -12.57%
BPI Family Savings Bank 92.13% 79.26% -12.86% -13.96%
RCBC Savings Bank Inc. 166.80% 140.74% -26.06% -15.63%
First Consolidated Bank Inc. 75.89% 63.11% -12.79% -16.85%
HSBC Savings Bank (Philippines) Inc. 16.15% 13.31% -2.84% -17.60%
Quezon Coconut Producers SLB 44.00% 35.97% -8.03% -18.25%
Merchants Savings & Loan Association 6.31% 5.14% -1.17% -18.58%
Robinsons Savings Bank 50.59% 40.56% -10.03% -19.83%
Legaspi Savings Bank 2170.01% 1730.43% -439.58% -20.26%
Liberty Savings & Loan 87.06% 69.29% -17.77% -20.41%
BPI Direct Savings Bank 20.02% 15.39% -4.63% -23.15%
Tower Development Bank 75.62% 57.03% -18.59% -24.58%
City Savngs Bank 769.30% 520.21% -249.09% -32.38%
Philippine Business Bank 98.94% 66.34% -32.60% -32.95%
World Partners Bank 59.37% 38.05% -21.32% -35.91%
Bank One Savings and Trust Corp. 20.00% 12.25% -7.75% -38.75%
The Queen City Development Bank 37.85% 22.25% -15.60% -41.21%


Non-borderline banks that exhibited the greatest improvements in their ratios were as follows;


  1. Liberty Savings & Loan
  2. BPI Direct Savings Bank
  3. Tower Development Bank
  4. Philippine Business Bank
  5. World Partners Bank
  6. Bank One Savings and Trust Corp.
  7. The Queen City Development Bank


Non-borderline banks that exhibited significant deteriorations in their ratios were as follows:


  1. BPI Globe Bank Inc. Savings Bank
  2. Maritime SLA Inc.

Philippine Thrift Banking System









Total Distressed Assets/ Total Capital Cushion









December 31, 2010 to March 31, 2011























December 31, 2010



March 31, 2011



Variance


Total Distressed Assets (In PHP)1
Total Capital Cushion (In PHP)2
Distressed Assets/ Total Capital Cushion (In %)3

Total Distressed Assets (In PHP)1
Total Capital Cushion (In PHP)2
Distressed Assets/ Total Capital Cushion (In %)3

Total Distressed Assets (In PHP)1
Total Capital Cushion (In PHP)2
Distressed Assets/ Total Capital Cushion (In %)3
Legaspi Savings Bank
790,787,568.23
36,441,639.05
2170.01%

798,630,111.18
46,152,061.13
1730.43%

7,842,542.95
9,710,422.08
-439.58%
Village SLA
577,043,128.17
70,035,289.50
823.93%

593,227,159.00
72,946,206.19
813.24%

16,184,030.83
2,910,916.69
-10.69%
Real Bank (A Thrift Bank) Inc.
9,954,853,974.90
1,146,746,391.09
868.10%

9,851,599,352.69
1,249,036,156.19
788.74%

-103,254,622.21
102,289,765.10
-79.36%
LBC Development Bank
4,048,655,003.33
713,516,676.64
567.42%

5,038,581,463.69
716,044,399.24
703.67%

989,926,460.36
2,527,722.60
136.25%
City Savngs Bank
6,911,180,484.23
898,376,680.13
769.30%

7,041,887,200.09
1,353,669,542.94
520.21%

130,706,715.86
455,292,862.81
-249.09%
The Palawan Development Bank
109,060,886.46
21,222,213.57
513.90%

96,953,206.81
21,578,520.32
449.30%

-12,107,679.65
356,306.75
-64.60%
China Bank Savings
2,703,868,715.65
708,478,836.05
381.64%

2,779,893,794.60
707,482,430.32
392.93%

76,025,078.95
-996,405.73
11.28%
Planters Development Bank
13,204,820,165.74
3,829,162,254.99
344.85%

13,533,950,955.06
4,191,355,884.93
322.90%

329,130,789.32
362,193,629.94
-21.95%
GSIS Family Bank
2,108,934,873.50
735,035,754.66
286.92%

2,215,126,011.31
722,703,846.64
306.51%

106,191,137.81
-12,331,908.02
19.59%
Iloilo City Development Bank
164,491,227.09
57,982,389.96
283.69%

177,436,124.14
60,206,324.58
294.71%

12,944,897.05
2,223,934.62
11.02%
Bataan Development Bank
157,591,208.54
69,709,822.28
226.07%

166,967,608.04
71,491,113.71
233.55%

9,376,399.50
1,781,291.43
7.48%
Farmers Savings and Loan Association
255,557,581.90
111,770,882.28
228.64%

232,836,973.06
114,952,036.06
202.55%

-22,720,608.84
3,181,153.78
-26.09%
Business & Consumers Bank A DB
142,609,963.06
77,028,484.73
185.14%

145,179,649.34
79,199,417.20
183.31%

2,569,686.28
2,170,932.47
-1.83%
CityState Savings Bank
315,909,914.49
806,239,256.05
39.18%

1,400,328,486.11
806,839,256.05
173.56%

1,084,418,571.62
600,000.00
134.37%
Hiyas Savings & Loan Bank
247,645,321.52
158,736,197.28
156.01%

265,452,938.70
158,711,645.03
167.25%

17,807,617.18
-24,552.25
11.24%
Opportunity Microfinance Bank
175,764,860.63
135,802,109.03
129.43%

192,736,268.36
126,233,191.43
152.68%

16,971,407.73
-9,568,917.60
23.26%
University SLA
355,031,641.89
230,220,475.89
154.21%

365,424,986.56
241,060,100.32
151.59%

10,393,344.67
10,839,624.43
-2.62%
Equicom Savings Bank
704,023,800.85
469,594,025.42
149.92%

654,064,843.08
449,902,880.38
145.38%

-49,958,957.77
-19,691,145.04
-4.54%
Dumaguete City Development Bank
271,148,295.04
204,824,439.66
132.38%

272,395,329.87
193,474,401.90
140.79%

1,247,034.83
-11,350,037.76
8.41%
RCBC Savings Bank Inc.
10,930,316,206.04
6,552,835,277.90
166.80%

10,694,840,952.48
7,599,027,233.14
140.74%

-235,475,253.56
1,046,191,955.24
-26.06%
Premiere Development Bank
1,313,359,662.84
912,783,669.96
143.89

1,287,037,216.65
918,978,255.91
140.05%

-26,322,446.19
6,194.585.95
-3.83%
Dungganon Bank
66,486,816.72
59,191,429.00
112.33%

67,114,414.83
60,457,554.56
111.01%

627,598.11
1,266,125.56
-1.31%
Malayan Bank Savings & Mortgage Bank
1,036,493,541.66
1,002,030,653.05
103.44%

1,085,088,462.39
996,941,501.60
108.84%

48,594,920.73
-5,089,151.45
5.40%
Luzon Development Bank
436,163,079.47
420,334,380.17
103.77%

477,413,342.50
456,953,152.00
104.48%

41,250,263.03
36,618,771.83
0.71%
Philippine Postal Savings Bank
590,501,600.10
530,342,731.83
111.34%

571,294,747.74
553,099,431.39
103.29%

-19,206,852.36
22,756,699.56
-8.05%
Citibank Savings Inc.
3,606,546,835.07
3,963,330,681.74
91.00%

3,641,378,536.57
3,675,927,419.81
99.06%

34,831,701.50
-287,403,261.93
8.06%
Producers Savings Bank Corporation
435,368,499.59
424,781,801.37
102.49%

481,179,954.20
528,456,241.18
91.05%

45,811,454.61
103,674,439.81
-11.44%
Metro Cebu Public Savings Bank
62,681,149.84
71,505,839.15
87.66%

63,055,090.72
72,112,596.25
87.44%

373,940.88
606,757.10
-0.22%
BPI Family Savings Bank
11,502,835,442.66
12,485,535,541.67
92.13%

11,775,508,662.49
14,855,958,256.88
79.26%

272,673,219.83
2,370,422,715.21
-12.86%
Wealth Bank
308,872,937.46
383,780,751.22
80.48%

299,330,539.41
383,780,751.22
78.00%

-9,542,398.05
0.00
-2.49%
Philippine Savings Bank
10,683,005,572.25
12,847,187,428.93
83.15%

10,860,177,427.02
14,180,778,447.16
76.58%

177,171,854.77
1,333,591,018.23
-6.57%
Tong Yang Savings Bank Inc.
344,928,566.28
431,990,127.62
79.85%

338,576,606.94
443,685,592.60
76.31%

-6,351,959.34
11,695,464.98
-3.54%
Cordillera Savings Bank
86,778,100.36
119,389,723.48
72.68%

86,502,732.68
118,556,006.75
72.96%

-275,367.68
-833,716.73
0.28%
United Overseas Bank Philippines
1,003,700,326.61
1,470,393,906.97
68.26%

1,040,712,097.34
1,470,262,516.31
70.78%

37,011,770.73
-131,390.66
2.52%
Pampanga Development Bank
81,967,250.32
111,985,923.34
73.19%

82,510,420.65
117,322,641.41
70.33%

543,170.33
5,336,718.07
-2.87%
Liberty Savings & Loan
43,654,225.43
50,143,836.27
87.06%

41,524,004.44
59,928,329.41
69.29%

-2,130,220.99
9,784,493.14
-17.77%
Philippine Business Bank
1,884,264,957.92
1,904,439,283.82
98.94%

1,841,274,990.78
2,775,632,541.34
66.34%

-42,989,967.14
871,193,257.52
-32.60%
First Consolidated Bank Inc.
1,034,951,184.84
1,363,683,144.87
75.89%

981,161,467.18
1,554,784,769.47
63.11%

-53,789,717.66
191,101,624.60
-12.79%
Pridestar Development Bank
44,016,527.30
71,601,171.40
61.47%

42,817,731.41
71,002,884.05
60.30%

-1,198,795.89
-598,287.35
-1.17%
Tower Development Bank
79,350,494.02
104,939,329.22
75.62%

59,849,277.51
104,945,435.32
57.03%

-19,501,216.51
6,106.10
-18.59%
Sampaguita SLA, Inc.
38,657,771.38
71,082,533.12
54.38%

38,645,789.03
71,570,976.34
54.00%

-11,982.35
488,443.22
-0.39%
Life Savings Bank
35,172,000.07
59,167,925.68
59.44%

34,367,905.76
64,226,085.27
53.51%

-804,094.31
5,058,159.59
-5.93%
Microfinance Maximum SB (Maxbank)
30,663,335.03
61,461,310.99
49.89%

32,698,325.77
63,741,361.59
51.30%

2,034,990.74
2,280,050.60
1.41%
Northpoint Development Bank
25,863,193.48
57,194,102.23
45.22%

26,731,268.87
58,473,177.23
45.72%

868,075.39
1,279,075.00
0.50%
Lemery Savings & Loan Bank, Inc.
36,137,539.38
75,034,616.55
48.16%

34,063,373.04
75,034,616.55
45.40%

-2,074,166.34
0.00
-2.76%
Sterling Bank of Asia Inc. (A SB)
596,824,755.93
1,190,619,356.86
50.13%

720,860,292.05
1,612,798,867.17
44.70%

124,035,536.12
422,179,510.31
-5.43%
UCPB Savings Bank
814,959,455.76
1,886,042,145.04
43.21%

824,447,663.73
1,898,798,490.84
43.42%

9,488,207.97
12,756,345.80
0.21%
Robinsons Savings Bank
1,170,870,711.81
2,314,318,928.72
50.59%

1,054,429,091.36
2,599,586,008.31
40.56%

-116,441,620.45
285,267,079.59
-10.03%
World Partners Bank
95,390,282.26
160,681,566.86
59.37%

67,472,503.28
177,331,708.61
38.05%

-27,917,778.98
16,650,141.75
-21.32%
Malasiqui Progressive SLB
21,058,505.59
57,973,153.04
36.32%

21,048,584.58
57,973,153.04
36.31%

-9,921.01
0.00
-0.02%
Quezon Coconut Producers SLB
23,896,040.23
54,303,866.14
44.00%

20,594,343.62
57,249,027.19
35.97%

-3,301,696.61
2,945,161.05
-8.03%
Allied Savings Bank
358,775,483.44
983,879,721.95
36.47%

349,223,975.65
996,683,174.47
35.04%

-9,551,507.79
12,803,452.52
-1.43%
Maritime SLA Inc.
13,316,004.88
66,734,039.41
19.95%

15,637,944.69
66,734,039.41
23.43%

2,321,939.81
0.00
3.48%
The Queen City Development Bank
259,528,011.18
685,609,787.74
37.85%

154,556,696.85
694,530,564.40
22.25%

-104,971,314.33
8,920,776.66
-15.60%
Optimum Development Bank
142,488,878.81
669,683,547.67
21.28%

141,863,496.44
682,187,578.12
20.80%

-625,382.37
12,504,030.45
-0.48%
Pacific Ace Savings Bank
12,967,650.24
68,711,003.79
18.87%

13,507,271.13
71,722,910.75
18.83%

539,620.89
3,011,906.96
-0.04%
BPI Direct Savings Bank
124,225,810.48
620,434,936.32
20.02%

104,808,406.42
681,100,718.48
15.39%

-19,417,404.06
60,665,782.16
-4.63%
HSBC Savings Bank (Philippines) Inc.
294,444,104.57
1,822,689,072.79
16.15%

306,361,602.65
2,301,615,321.52
13.31%

11,917,498.08
478,926,248.73
-2.84%
Bank One Savings and Trust Corp.
98,838,353.98
494,240,370.50
20.00%

63,092,255.00
515,107,000.38
12.25%

-35,746,098.98
20,866,629.88
-7.75%
Bataan SLA
8,675,561.43
79,014,317.75
10.98%

9,134,396.80
78,949,231.51
11.57%

458,835.37
-65,086.24
0.59%
Isla bank (A Thrift Bank) Inc.
56,067,036.87
621,455,601.99
9.02%

56,019,093.92
625,758,388.23
8.95%

-47,942.95
4,302,786.24
-0.07%
EIB Savings Bank Inc.
6,417,709.59
69,892,198.75
9.18%

6,393,755.90
73,842,233.73
8.66%

-23,953.69
3,950,034.98
-0.52%
BPI Globe Bank Inc. Savings Bank
19,109,957.15
355,511,236.95
5.38%

27,905,564.04
335,411,294.54
8.32%

8,795,606.89
-20,099,942.41
2.94%
Progress SLA
5,651,459.23
85,767,506.19
6.59%

5,755,292.32
85,879,775.20
6.70%

103,833.09
112,269.01
0.11%
BDO Elite Savings Bank
96,958,473.32
1,464,922,522.32
6.62%

93,326,314.25
1,470,452,260.33
6.35%

-3,632,159.07
5,529,738.01
-0.27%
Merchants Savings & Loan Association
15,178,229.59
240,410,556.71
6.31%

11,583,344.55
225,331,989.32
5.14%

-3,594,885.04
-15,078,567.39
-1.17%
Century Savings Bank
22,888,349.10
815,090,459.16
2.81%

22,695,931.71
773,706,380.01
2.93%

-192,417.39
-41,384,079.15
0.13%
Total
93,200,246,256.78
71,569,278,405.98
130.22%

95,898,245,621.03
78,797,427,304.86
121.70%

-2,697,999,364.25
-7,228,148,898.88
-8.52%

Disclaimer:

This list only serves as a screening guide. It is not a definitive guide and must be taken in the context of other factors. The figures are based on the individual banks' published statement of condition as of March 31, 2011 as published in the BSP website (www.bsp.gov.ph). For this analysis, no attempt was made to go through the audited financial statements of each bank. Readers are suggested to make their own investigations and verify the figures presented. Both BSP and PDIC have their own problem bank screening systems that are much more sophisticated in scope and design, given that they have more access to information over the banks they regulate.

1Includes Classified Loans and Other Risk Assets, Acquired Real Estate, Non-Current Assets Held for Sale, Other Assets
2Includes Stockholder's Equity less Other Capital Accounts plus Allowance for Credit and Impairment Losses
3A ratio of Distressed Assets to Total Capital Cushion greater than 100% signals the danger of insolvency

31 comments:

  1. I'll answer that. The Garcia family put their trust on him, and they couldn't find someone to replace him. I'll admit that last part isn't quite easy to pull off. Still, I'm saying it is ultimately the fault of the Garcias; they should have fired Ong long before 2012. It's a classic case of old-school managment. You put your trust on someone based on things like school ties, familiarity with regard to work experience, and the propensity of company owners not to trust new comers. A fancy college diploma or work experience in Citibank of Bancom, on the other hand, count more than real competence.

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  2. Unfortunately, there are many other banks like Asiatrust. Export and Industry Bank comes to mind: http://bancofilipinofailure.blogspot.com/2013/04/export-and-industry-bank-getting-back.html

    The people who get hurt the most are the uninsured depositors, many of whom often lose their life savings in a failing bank. This blog aims to help people avoid the worst of the worst banks. You can help too by spreading the word about this blog by liking my Facebook Page: https://www.facebook.com/pages/Why-Banco-Filipino-Failed/508485329180188 or following me on Twitter: https://twitter.com/davidcarlgrimes

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  3. I've been depositing for 43 years now and not once did I see my depository bank close or merge with another. While young, I noticed that PNB was the biggest bank and that's all that mattered. As I gradually learned the industry, I took to reading the annual listing. Bank with the top-five locals and you'll never worry about a closure.

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  4. By the way, a Cavite-based thrift bank, Silangan Savings and Loan Bank, Inc., failed last January 9, 2014. Based on its last Published Statement of Financial Condition, it had a Distressed Asset Ratio of 125.55% as of June 30, 2013 - slightly below PNB's level of Distressed Assets of 126.34% for the same period. It was the third bank to fail that was flagged on this blog to be borderline insolvent. Three out of three bank failures were flagged by this blog. Check it out:

    http://bancofilipinofailure.blogspot.com/2014/01/a-short-analysis-of-recent-bank.html

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  5. I appreciate all your research and postings. However all the info is regarding the commercial and savings banks. Do you think it's possible to get similar statistics on rural banks, maybe just the top 5 or top 10 RBs?

    Commercial and savings banks pay far less interest than RBs... it's 1% vs 7%.

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  6. The BSP does not publish them. You have to go to the individual bank websites to get their Published Statements of Condition. Most of them don't have websites or their websites contain almost no financial information.

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  7. A lot of the Rural and Cooperative Banks are in bad shape.

    http://bancofilipinofailure.blogspot.com/2011/12/current-state-of-philippine-rural-and.html

    In the first nine months of 2013, 11 closed: http://www.bsp.gov.ph/banking/pbs_new/1.1.htm

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  8. The Araneta s own the the LBC group of companies and they are in partner with the LBC express. Why is it that the LBC express seem to be very very stable in their capital now. That means the advances given by the LBC bank is true. Its about 3 years now and still the Philippine goverment has no investigation as of now...Kawawa ang mga depositor, Dapat si G Araneta ang sasagot sa mga unpaid deposits . Salamat po

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  9. Secretary DeLima kung talagang sicero ka sa inyong trabaho ,dapat ungkatin din ninyo ang kaso ng LBC bank, kung saan napunta ang mga deposito ng mga tao. Dapat paimbestigahan din ninyo sa Senado ang may ari na Si Ginoong Araneta, kung saan napunta ang mag milyong milyong pisong deposito . Baka meron silang ibang kompanyang pinaglagakan? Salamat po..

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  10. The officers behind LBC Bank were charged this year. I don't know what progress has been made.


    http://www.philstar.com/business/2013/03/25/923575/bsp-urged-proactively-protect-depositors

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  11. Hi David, how do you compute distressed assets and capital cushion? Kindly assist me. I'm not able to reconcile the figures above with the statement of condition uploaded at the BSP website. Thank you.

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  12. David Carl GrimesMarch 11, 2014 at 8:52 PM

    Hi Randyb,

    For Distressed Assets, I generally use the following:

    Classified Loans is a better indicator than NPLs because it can quantify what loans look doubtful and can go bad (become NPLs). For more information on this reasoning, look at: http://bancofilipinofailure.blogspot.com/2014/03/a-simple-stress-test-of-philippine.html)

    ROPA (tells you how much acquired assets they have that can decline in value significantly if it had to be liquidated quickly. High levels indicate that the bank is not earning much from these assets and has a lot of illiquid assets.

    Non-Current Assets HFS is another form of non-earning assets that can decline significantly in a liquidation.

    Other Assets often contains unbooked losses or deferred charges, also contains goodwill, deferred tax assets that can have little or no value in a liquidation. High levels of other assets can indicate accounting irregularities. This is very relevant in the Philippine situation. LBC Development Bank is a prime example of this. (See: http://bancofilipinofailure.blogspot.com/2012/03/lbc-development-bank-where-did-money-go.html). Another example of this is Banco Filipino: http://bancofilipinofailure.blogspot.com/2011/09/bsps-ampaw-accounting-system.html

    Total Capital Cushion:

    Stockholders Equity

    Less: Preferred Stock, etc.

    to arrive at Tangible Common Equity

    Plus:

    Loan Loss Reserves: this provides the extra cushion against a decline in the value of distressed assets.

    I hope this helps.

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  13. So by next year, it'll be an open field even for foreign banks?

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  14. David Carl GrimesMarch 27, 2014 at 7:31 AM

    Yes, if Congress allows it to happen. This might take some time. So, it's not a giiven that it will happen next year.


    http://business.inquirer.net/164366/entry-of-more-foreign-banks-eyed

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  15. Great i am 22 years old and my analysis is homes are too expensive for an employee's salary in the philippines. Imagine a 20k salary per month and a 800k peso home.
    Compared to american standards their monthly salaries are 6k US dollars and a $100k dollar home. Basically in common man terms ( i also can give economic language) the philippine employees cannot buy homes with a very little salary. My heart is american and i will migrate.

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  16. Most homes in the US sell for 3 to 5 times annual salary. So the average US salary of $50K will afford the worker a $200K to $250K home

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  17. hi, that is why there is a gain/loss on repossessed properties in the annual report since these properties were included again in the inventory. please read the financial statement

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  18. the TCT of the house is not transferred to the buyer unless the property has already been fully paid to the developer. That's why it's very easy for the company to 'reinstate' the classification (i.e. from receivables to inventory, the difference in fair value will be reported in the income statement (gain/loss on repossessed property). Hope this clarifies.

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  20. Any comment as to how SIlangan bank with a 125% distressed ratio gets shut down yet some 10x greater stay open? I'm fascinated by this.

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  21. I've been doing a lot of research about financial statements. Just curious - don't you think a better way to calculate how distressed a bank is is to add classified loans and non performing loans then subtract equity?


    Your calculation includes just the classified loans and not the npls.

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  22. Classified Loans include NPLs.

    The US Federal Deposit Insurance Corporation (FDIC), similar to our very own Philippine Deposit Insurance Corporation (PDIC), defines Classified Loans as:

    "Loans classified Loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be effected in the future."

    In Circular #0247 dated May 19, 2000, BSP defines Classified Loans as loans which possess the following characteristics:

    Loans especially mentioned because they have potential weaknesses that deserve Management's close attention;

    Substandard Loans are loans which appear to involve a substantial and unreasonable degree of risk to the institution because of unfavorable record or unsatisfactory characteristics;

    Doubtful Loans are Substandard Loans with the added characteristics that existing facts, conditions, and values make collection or liquidation in full highly improbable and in which substantial loss is probable;

    Loss are loans that are considered uncollectible or worthless and are of such little value that their continuance as bankable assets is not warranted although the loans may have some recovery or salvage value.The circular mandates that an allowance for probable losses should be set up in accordance with the following schedule:

    Loans Especially Mentioned: 5%

    Substandard - Secured: 6% - 25%

    Substandard - Unsecured: 25%

    Doubtful: 50%

    Loss: 100% As of June 30, 2014, "Classified Loans and Other Risky Assets" of the Philippine Banks amounted to PhP 413.842 billion or more than 3 times the size of the Philippine Banking System's NPLs of PhP 119.321 billion for the same period. Consequently, any write-offs of Classified Loans will have three times the impact of an NPL write-off.

    http://bancofilipinofailure.blogspot.com/2015/01/a-simple-stress-test-of-philippine.html

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  23. PDIC did not give a reason why it was shut down. Other banks, like Banco Filipino and LBC Development Bank, there were strong indications of malversation of depositor's funds by the bank owners.

    http://bancofilipinofailure.blogspot.com/2012/03/lbc-development-bank-where-did-money-go.html

    Other banks, like Export and Industry Bank, simply ran out of money.

    http://bancofilipinofailure.blogspot.com/2012/03/time-is-running-out-for-export-and.html

    Lately, the BSP has been encouraging stronger banks to acquire weaker banks. China Bank did this with Planters Development Bank

    http://bancofilipinofailure.blogspot.com/2014/05/the-near-death-experience-of-planters.html

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  24. Yes I assumed classified loans include NPLs until I saw a balance sheet where the gross NPLs were higher than gross classified loans. Maybe it was an error in their reporting.

    http://www.bsp.gov.ph/banking/psoc_tb/SUN%20SAVINGS%20BANK%20INC.htm

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  25. It happens very regularly to all sorts of banks. Take a look at the table Classified Loans vs. NPLs from this blog post. More than ten banks report classified loans lower than NPLs.




    http://bancofilipinofailure.blogspot.com/2015/01/a-simple-stress-test-of-philippine.html

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  26. If classified loans include NPLs, how can NPLs be higher?

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