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Friday, October 26, 2012

The Top Distressed Philippine Banks as of March 31, 2012

Editor's Note:  This blog was inspired by the spectacular failure of Banco Filipino Savings and Mortgage Bank for the second time in its 38 years of existence.  This blog post and other blog posts like it attempt to describe why the bank failed.  But it also attempts to assess what other Philippine Banks have the potential to fail in the not too distant future. To see blog posts on other banks, click on the Banco Filipino Graphic at the top of the blog or click on the blog archive on the right hand column, or simply go to

Editor's Note: The Philippine Deposit Insurance Corporation (PDIC) advised consumers to wisely choose the banks where they will deposit their money. The trouble is, most depositors don't and can't read financial statements before they open a bank account. The regulators, whose job is to safeguard the public's money, have not done a good job recently.  In the past ten years, two commercial banks, twenty-one thrift banks, and a staggering 187 rural banks have collapsed, often quite suddenly and without warning:  Regulators do have a problem bank list that they do not divulge to the public, for fear of sparking another bank run. So who can the public turn to, to advise them where to put their money? No one, except the banks themselves who will always promote their self-interests. This analysis is an attempt to fill in that knowledge gap, by screening out the weaker banks that seem ready to implode at any given moment.

Editor's Note: The ratio of Distressed Assets to Total Capital Cushion is a variant of the famous Texas Ratio, which was widely used by US financial regulators to predict bank failure during the US Savings and Loan Crisis in the 1980s and early 1990s. The basic premise is that a bank with Distressed Assets greater than its Capital Cushion is in danger of insolvency, because a significant drop in the value of  the Distressed Assets will eat into a significant amount of the bank's capital.  A bank that has a Distressed Ratio greater than 100% is flagged as borderline insolvent (highlighted in yellow).  For a more detailed discussion of this ratio, please visit a previous blog post: The Texas Ratio of Select Philippine Banks

This is a list of the top distressed Universal and Commercial (U/KB) as well as Thrift Banks in the Philippines as of March 31, 2012.  To see where your bank stands relative to these banks, please check the following previous blog posts: "Philippine Commercial Banks Show Further Improvement in the 1st Qtr. of 2012" and "Philippine Thrift Banks Continue to Improve in the First Quarter of 2012".

Top Distressed Philippine Banks
By Total Distressed Assets/ Total Capital Cushion
March 31, 2012
In PhP

March 31, 2012
Bank Type of Bank Total Distressed Assets (In PhP) Total Capital Cushion (In PhP) Distressed Assets/ Total Capital Cushion (In %)
Real Bank (A Thrift Bank) Inc. Thrift 9,290,372,249.91 825,587,293.41 1125.30%
Village SLA, Inc. Thrift 612,655,357.33 86,344,754.81 709.55%
United Coconut Planters Bank UKB 58,346,163,511.76 9,060,379,410.73 643.97%
City Savings Bank Thrift 12,605,607,715.11 1,980,135,675.21 636.60%
GSIS Family Bank Thrift 2,216,709,927.78 464,020,110.73 477.72%
Legazpi Savings Bank Inc. Thrift 788,905,245.31 188,812,023.99 417.83%
Iloilo City Development Bank Thrift 255,784,329.12 65,272,215.10 391.87%
Planters Development Bank Thrift 11,509,763,345.38 4,452,573,423.58 258.50%
Bataan Development Bank Thrift 179,150,197.61 76,561,456.79 234.00%
Business & Consumers Bank Thrift 169,610,770.04 80,860,999.25 209.76%
Philippine Resources Savings Banking Corporation Thrift 2,520,580,635.97 1,212,811,159.39 207.83%
Philippine Veterans Bank UKB 11,386,593,846.84 6,300,066,206.28 180.74%
Farmers Savings & Loan Bank Thrift 214,021,290.23 119,495,878.00 179.10%
Philippine Bank of Communications UKB 9,605,657,632.92 5,411,642,825.75 177.50%
RCBC Savings Bank Thrift 13,598,190,601.18 7,861,976,886.63 172.96%
Opportunity Microfinance Bank Thrift 242,994,816.88 140,966,660.91 172.38%
Bank of Commerce UKB 32,940,752,605.77 20,373,765,341.59 161.68%
Equicom SB Thrift 801,463,255.03 505,169,694.78 158.65%
Philippine National Bank UKB 60,946,464,001.47 41,349,439,614.75 147.39%
Hiyas Savings & Loan Bank Thrift 236,466,976.10 164,731,409.03 143.55%
China Bank Savings Thrift 1,672,743,819.51 1,173,665,055.26 142.52%
University Savings Bank Thrift 316,376,243.80 227,936,477.06 138.80%
Malayan Bank Savings & Mortgage Bank Thrift 1,407,474,426.81 1,075,379,215.98 130.88%
Luzon Development Bank Thrift 550,869,696.74 444,071,923.87 124.05%
Dumaguete City Development Bank Thrift 252,146,106.06 206,193,126.17 122.29%
Philippine Postal Savings Bank Thrift 861,789,478.39 818,586,509.18 105.28%
Grand Total
233,529,308,083.05 104,666,445,348.23 223.12%



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' statement of condition as of March 31, 2012 as published in the BSP website ( 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.

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