- 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" or as "Unbooked Allowance for Probable Losses on Financial Instruments Received" giving the public a way to track these unbooked losses on a quarterly basis. (See www.bsp.gov.ph).
In a blog post entitled "Philippine Commercial Banks with Overstated Capital as of December 31, 2011", 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 December 31, 2011, a total of eight Philippine Thrift Banks, out of a total field of sixty-six 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 four thrift banks on this list would experience only a 11.76% to 15.94% writedown of their stockholders equity. These banks are:
- Bataan Development Bank (15.94% overstatement)
- Citibank Savings Inc. (15.50% overstatement)
- Planters Development Bank (14.14% overstatement)
- Legazpi Savings Bank (11.76% overstatement)
The rest of the four thrift banks with overstated capital have unbooked losses that would impact less than 4% of their stockholders equity. It is interesting to note that six of the eight banks on this list have been classified as distressed (highlighted in yellow) in a previous blog post "City Savings Bank Takes Silver in Insolvency" 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 | ||||
| December 31, 2011 | ||||
| Bank | Unbooked Losses | SE | Adjusted SE | Impact on SE |
| Bataan Development Bank | 10,703,963.85 | 67,151,915.52 | 56,447,951.67 | 15.94% |
| Citibank Savings Inc. | 275,687,913.91 | 1,778,267,246.43 | 1,502,579,332.52 | 15.50% |
| Planters Development Bank | 684,130,861.71 | 4,837,392,051.52 | 4,153,261,189.81 | 14.14% |
| Legazpi Savings Bank Inc. | 20,725,664.65 | 176,184,787.67 | 155,459,123.02 | 11.76% |
| Wealth Bank - A Development Bank | 12,292,789.70 | 358,069,342.71 | 345,776,553.01 | 3.43% |
| The Queen City Development Bank | 17,022,634.84 | 693,438,533.93 | 676,415,899.09 | 2.45% |
| Farmers Savings & Loan Bank | 332,049.10 | 96,695,493.71 | 96,363,444.61 | 0.34% |
| Premiere Development Bank | 1,627,182.76 | 716,643,346.57 | 715,016,163.81 | 0.23% |
| Allied Savings Bank | 0.00 | 987,463,043.06 | 987,463,043.06 | 0.00% |
| Bataan SLA | 0.00 | 76,234,112.66 | 76,234,112.66 | 0.00% |
| BDO Elite Savings Bank | 0.00 | 1,507,551,908.05 | 1,507,551,908.05 | 0.00% |
| BPI Direct Savings Bank | 0.00 | 725,409,794.69 | 725,409,794.69 | 0.00% |
| BPI Family Savings Bank | 0.00 | 13,922,916,376.18 | 13,922,916,376.18 | 0.00% |
| BPI Globe Banko Inc. Savings Bank | 0.00 | 449,784,483.73 | 449,784,483.73 | 0.00% |
| Business & Consumers Bank | 0.00 | 75,041,830.71 | 75,041,830.71 | 0.00% |
| Card SME Bank Inc. (A Thrift Bank) | 0.00 | 135,000,938.65 | 135,000,938.65 | 0.00% |
| Century Savings Bank | 0.00 | 870,581,931.91 | 870,581,931.91 | 0.00% |
| China Bank Savings | 0.00 | 1,293,810,766.29 | 1,293,810,766.29 | 0.00% |
| City Savings Bank | 0.00 | 1,775,429,527.38 | 1,775,429,527.38 | 0.00% |
| CityState Savings Bank | 0.00 | 785,295,250.10 | 785,295,250.10 | 0.00% |
| Cordillera Savings Bank | 0.00 | 99,454,078.20 | 99,454,078.20 | 0.00% |
| Dumaguete City Development Bank | 0.00 | 207,953,940.23 | 207,953,940.23 | 0.00% |
| Dungganon Bank | 0.00 | 61,366,684.12 | 61,366,684.12 | 0.00% |
| Equicom SB | 0.00 | 400,880,700.00 | 400,880,700.00 | 0.00% |
| First Consolidated Bank | 0.00 | 1,607,830,348.37 | 1,607,830,348.37 | 0.00% |
| GSIS Family Bank | 0.00 | 409,541,141.62 | 409,541,141.62 | 0.00% |
| Hiyas Savings & Loan Bank | 0.00 | 146,893,188.34 | 146,893,188.34 | 0.00% |
| HSBC Savings Bank (Phils) Inc. | 0.00 | 2,203,663,156.78 | 2,203,663,156.78 | 0.00% |
| Iloilo City Development Bank | 0.00 | 60,940,836.24 | 60,940,836.24 | 0.00% |
| Isla Bank (A Thrift Bank) Inc. | 0.00 | 627,832,458.81 | 627,832,458.81 | 0.00% |
| Lemery Savings & Loan Bank, Inc. | 0.00 | 69,668,260.33 | 69,668,260.33 | 0.00% |
| Liberty Savings Bank | 0.00 | 60,076,497.74 | 60,076,497.74 | 0.00% |
| Life Savings Bank | 0.00 | 63,657,969.31 | 63,657,969.31 | 0.00% |
| Luzon Development Bank | 0.00 | 371,751,520.19 | 371,751,520.19 | 0.00% |
| Malasiqui Progressive SLB, Inc. | 0.00 | 47,561,616.09 | 47,561,616.09 | 0.00% |
| Malayan Bank Savings & Mortgage Bank | 0.00 | 971,865,947.27 | 971,865,947.27 | 0.00% |
| Maritime SLA | 0.00 | 66,378,323.17 | 66,378,323.17 | 0.00% |
| Merchants Savings & Loan Association Inc. | 0.00 | 703,603,788.65 | 703,603,788.65 | 0.00% |
| Metro Cebu Public Savings Bank | 0.00 | 47,611,835.39 | 47,611,835.39 | 0.00% |
| Microfinance Maximum SB (Maxbank) | 0.00 | 61,760,299.06 | 61,760,299.06 | 0.00% |
| Northpoint Development Bank | 0.00 | 51,255,200.96 | 51,255,200.96 | 0.00% |
| Opportunity Microfinance Bank | 0.00 | 125,795,356.74 | 125,795,356.74 | 0.00% |
| Optimum Development Bank | 0.00 | 641,273,816.64 | 641,273,816.64 | 0.00% |
| Pacific Ace Savings Bank | 0.00 | 70,123,577.71 | 70,123,577.71 | 0.00% |
| Pampanga Development Bank | 0.00 | 109,115,257.91 | 109,115,257.91 | 0.00% |
| Penbank, Inc. | 0.00 | 228,034,536.79 | 228,034,536.79 | 0.00% |
| Philippine Business Bank | 0.00 | 3,582,378,540.51 | 3,582,378,540.51 | 0.00% |
| Philippine Postal Savings Bank | 0.00 | 687,001,256.45 | 687,001,256.45 | 0.00% |
| Philippine Savings Bank | 0.00 | 14,584,140,004.01 | 14,584,140,004.01 | 0.00% |
| Pridestar Development Bank | 0.00 | 66,779,165.00 | 66,779,165.00 | 0.00% |
| Producers Savings Bank | 0.00 | 662,238,871.79 | 662,238,871.79 | 0.00% |
| Progress SLA | 0.00 | 84,450,527.37 | 84,450,527.37 | 0.00% |
| Quezon Coconut Producers SLB Inc. | 0.00 | 56,672,170.22 | 56,672,170.22 | 0.00% |
| RCBC Savings Bank | 0.00 | 7,131,496,114.04 | 7,131,496,114.04 | 0.00% |
| Real Bank (A Thrift Bank) Inc. | 0.00 | 485,472,417.97 | 485,472,417.97 | 0.00% |
| Sampaguita SLA | 0.00 | 64,830,597.27 | 64,830,597.27 | 0.00% |
| Sterling Bank of Asia Inc. | 0.00 | 1,558,763,397.01 | 1,558,763,397.01 | 0.00% |
| Sun Savings Bank | 0.00 | 74,007,397.84 | 74,007,397.84 | 0.00% |
| Tong Yang Savings Bank Inc. | 0.00 | 397,467,814.16 | 397,467,814.16 | 0.00% |
| Tower Development Bank | 0.00 | 109,714,758.28 | 109,714,758.28 | 0.00% |
| UCPB Savings Bank | 0.00 | 2,003,164,192.90 | 2,003,164,192.90 | 0.00% |
| United Overseas Bank Philippines | 0.00 | 699,786,740.71 | 699,786,740.71 | 0.00% |
| University Savings Bank | 0.00 | 196,550,939.52 | 196,550,939.52 | 0.00% |
| Village SLA, Inc. | 0.00 | 70,179,868.87 | 70,179,868.87 | 0.00% |
| World Partners Bank (A Thrift Bank) | 0.00 | 161,937,999.09 | 161,937,999.09 | 0.00% |
| Bank One Savings and Trust Corp. | NA | NA | NA | NA |
| Grand Total | 1,022,523,060.52 | 73,521,285,791.14 | 72,498,762,730.62 | 1.39% |
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