- SPV Transactions;
- Acquisitions of failed/failing banks;
- Large credit losses
The premise behind this policy is regulatory forbearance that would allow the banks to earn back and write off those losses over time, reducing their need to raise additional capital and avoid significant dilution of existing shareholders.
In other cases, such as in Asiatrust, banks were literally too weak to write down some additional charges and refused to take the losses.
These measures are not considered "kosher" under Philippine Financial Reporting Standards, resulting in qualified auditors opinions for the bulk of these banks accompanied by the auditor's own estimate on the impact of these unbooked losses on bank capital and assets.
However, the auditor's opinion is issued only once a year, making it difficult for the general public to gauge the financial health of a particular bank in between audited financial statements. Fortunately, these banks are required to report these unbooked losses in their quarterly Published Statement of Condition as "Deferred Charges Not Yet Written Down," giving the public a way to track these unbooked losses on a quarterly basis. (See www.bsp.gov.ph).
In yesterday's blog post, entitled "Philippine Commercial Banks with Overstated Capital", we highlighted the impact of these unbooked losses on the capital of Philippine Commercial Banks. Today, we do the same for Philippine Thrift Banks.
Based on their Published Statements of Condition as of September 30, 2011, a total of nine Philippine Thrift Banks, out of a total field of sixty-five thrift banks, have overstated capital. The overstatement is not as severe as those of the Philippine Commercial Banks, wherein at least two banks - namely Philippine Bank of Communications (PBCom) and United Coconut Planters Bank (UCPB) - would experience a total or near wipeout of their capital base. The top three thrift banks on this list would experience only a 15.03% to 16.45% writedown of their stockholders equity. These banks are:
- Bataan Development Bank
- Citibank Savings Bank
- Planters Development Bank
The rest of the six thrift banks with overstated capital have unbooked losses that would impact less than 8% of their stockholders equity. It is interesting to note that six of the nine banks on this list have been classified as distressed (highlighted in yellow) in a previous blog post "Thrift Banks Improve Due to Survivorship Bias" based on their ratio of Total Distressed Assets to Total Capital Cushion.
| Philippine Thrift Banking System | ||||
| Deferred Charges Not Yet Written Down | ||||
| Impact on Stockholders Equity | ||||
| In PHP | ||||
| September 30, 2011 | ||||
| Bank | Unbooked Losses | SE | Adjusted SE | Impact on SE |
| Bataan Development Bank | 11,166,806.10 | 67,898,427.98 | 56,731,621.88 | 16.45% |
| Citibank Savings Inc. | 282,041,199.88 | 1,779,432,800.72 | 1,497,391,600.84 | 15.85% |
| Planters Development Bank | 706,439,476.77 | 4,699,048,148.39 | 3,992,608,671.62 | 15.03% |
| Metro Cebu Public Savings Bank | 3,712,112.61 | 47,862,077.33 | 44,149,964.72 | 7.76% |
| Wealth Bank (A Development Bank) | 12,320,105.90 | 350,541,914.67 | 338,221,808.77 | 3.51% |
| The Queen City Development Bank | 17,022,634.84 | 685,600,185.63 | 668,577,550.79 | 2.48% |
| Dungganon Bank | 708,972.60 | 59,995,203.59 | 59,286,230.99 | 1.18% |
| Farmers Savings & Loan Bank Inc. | 332,049.10 | 94,563,391.59 | 94,231,342.49 | 0.35% |
| Premiere Development Bank | 1,677,265.99 | 768,276,843.83 | 766,599,577.84 | 0.22% |
| Allied Savings Bank | 0.00 | 968,554,794.81 | 968,554,794.81 | 0.00% |
| Bank One Savings and Trust Corporation | 0.00 | 511,804,029.18 | 511,804,029.18 | 0.00% |
| Bataan SLA | 0.00 | 75,403,679.17 | 75,403,679.17 | 0.00% |
| BDO Elite Savings Bank Inc. | 0.00 | 1,497,352,922.60 | 1,497,352,922.60 | 0.00% |
| BPI Direct Savings Bank | 0.00 | 696,788,887.77 | 696,788,887.77 | 0.00% |
| BPI Family Savings Bank | 0.00 | 13,215,459,607.20 | 13,215,459,607.20 | 0.00% |
| BPI Globe Banko Inc. Savings Bank | 0.00 | 489,761,849.54 | 489,761,849.54 | 0.00% |
| Business & Consumers Bank (A Development Bank) | 0.00 | 75,576,087.80 | 75,576,087.80 | 0.00% |
| Card SME Bank Inc. (A Thrift Bank) | 0.00 | 133,830,679.61 | 133,830,679.61 | 0.00% |
| Century Savings Bank | 0.00 | 863,184,238.96 | 863,184,238.96 | 0.00% |
| China Bank Savings | 0.00 | 1,224,675,478.65 | 1,224,675,478.65 | 0.00% |
| City Savings Bank | 0.00 | 1,609,624,035.57 | 1,609,624,035.57 | 0.00% |
| Citystate Savings Bank | 0.00 | 780,126,791.84 | 780,126,791.84 | 0.00% |
| Cordillera Savings Bank | 0.00 | 93,886,591.83 | 93,886,591.83 | 0.00% |
| Dumaguete City Development Bank | 0.00 | 198,626,212.37 | 198,626,212.37 | 0.00% |
| EIB Savings Bank | 0.00 | 71,672,922.39 | 71,672,922.39 | 0.00% |
| Equicom SB | 0.00 | 413,669,902.29 | 413,669,902.29 | 0.00% |
| First Consolidated Bank Inc. | 0.00 | 1,514,731,131.38 | 1,514,731,131.38 | 0.00% |
| GSIS Family Bank (A Thrift Bank) | 0.00 | 448,823,253.98 | 448,823,253.98 | 0.00% |
| Hiyas Savings & Loan Bank | 0.00 | 145,019,077.71 | 145,019,077.71 | 0.00% |
| HSBC Savings Bank | 0.00 | 2,409,524,105.69 | 2,409,524,105.69 | 0.00% |
| Iloilo City Development Bank | 0.00 | 59,936,963.98 | 59,936,963.98 | 0.00% |
| Isla Bank (A Thrift Bank) Inc. | 0.00 | 626,953,633.38 | 626,953,633.38 | 0.00% |
| Lemery Savings & Loan Bank, Inc. | 0.00 | 69,264,950.06 | 69,264,950.06 | 0.00% |
| Liberty Savings Bank | 0.00 | 59,477,296.86 | 59,477,296.86 | 0.00% |
| Life Savings Bank Inc. | 0.00 | 63,382,539.73 | 63,382,539.73 | 0.00% |
| Luzon Development Bank | 0.00 | 379,670,512.51 | 379,670,512.51 | 0.00% |
| Malasiqui Progressive SLB, Inc. | 0.00 | 51,410,073.54 | 51,410,073.54 | 0.00% |
| Malayan Bank Savings & Mortgage Bank | 0.00 | 951,555,667.97 | 951,555,667.97 | 0.00% |
| Maritime SLA Inc. | 0.00 | 66,464,810.00 | 66,464,810.00 | 0.00% |
| Merchants Savings & Loan Association Inc. | 0.00 | 211,302,268.20 | 211,302,268.20 | 0.00% |
| Microfinance Maximum SB (Maxbank) | 0.00 | 61,572,830.22 | 61,572,830.22 | 0.00% |
| Northpoint Development Bank | 0.00 | 51,898,263.72 | 51,898,263.72 | 0.00% |
| Opportunity Microfinance Bank | 0.00 | 129,288,834.77 | 129,288,834.77 | 0.00% |
| Optimum Development Bank | 0.00 | 634,287,677.54 | 634,287,677.54 | 0.00% |
| Pacific Ace Savings Bank | 0.00 | 67,473,628.50 | 67,473,628.50 | 0.00% |
| Pampanga Development Bank | 0.00 | 105,629,668.63 | 105,629,668.63 | 0.00% |
| Penbank Inc. | 0.00 | 229,619,270.61 | 229,619,270.61 | 0.00% |
| Philippine Business Bank | 0.00 | 3,078,009,090.67 | 3,078,009,090.67 | 0.00% |
| Philippine Postal Savings Bank | 0.00 | 412,083,203.45 | 412,083,203.45 | 0.00% |
| Philippine Savings Bank | 0.00 | 12,955,783,472.56 | 12,955,783,472.56 | 0.00% |
| Pridestar Development Bank | 0.00 | 66,223,603.92 | 66,223,603.92 | 0.00% |
| Producers Savings Bank Corporation | 0.00 | 635,624,074.79 | 635,624,074.79 | 0.00% |
| Progress SLA | 0.00 | 84,589,381.44 | 84,589,381.44 | 0.00% |
| Quezon Coconut Producers SLB Inc. | 0.00 | 56,146,490.46 | 56,146,490.46 | 0.00% |
| RCBC Savings Bank | 0.00 | 7,350,378,695.23 | 7,350,378,695.23 | 0.00% |
| Real Bank (A Thrift Bank) Inc. | 0.00 | 538,954,556.95 | 538,954,556.95 | 0.00% |
| Sampaguita SLA, Inc. | 0.00 | 60,638,793.77 | 60,638,793.77 | 0.00% |
| Sterling Bank of Asia | 0.00 | 1,222,952,920.62 | 1,222,952,920.62 | 0.00% |
| Tong Yang Savings Bank Inc. | 0.00 | 393,913,694.90 | 393,913,694.90 | 0.00% |
| Tower Development Bank | 0.00 | 107,938,662.82 | 107,938,662.82 | 0.00% |
| UCPB Savings Bank | 0.00 | 1,931,050,254.27 | 1,931,050,254.27 | 0.00% |
| United Overseas Bank Philippines | 0.00 | 677,818,259.21 | 677,818,259.21 | 0.00% |
| University Savings Bank | 0.00 | 232,846,311.91 | 232,846,311.91 | 0.00% |
| Village SLA, Inc. | 0.00 | 62,091,439.98 | 62,091,439.98 | 0.00% |
| World Partners Bank (A Thrift Bank) | 0.00 | 163,604,634.27 | 163,604,634.27 | 0.00% |
| Grand Total | 1,035,420,623.79 | 69,841,151,705.51 | 68,805,731,081.72 | 1.48% |
| Source: www.bsp.gov.ph | ||||
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