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Friday, July 5, 2013

The Top Distressed Philippine Banks as of December 31, 2012

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 December 31, 2012.  It updates the three previous blog posts:"The Top Distressed Philippine Banks as of September 30, 2012""The Top Distressed Philippine Banks as of June 30, 2012" and "The Top Distressed Philippine Banks as of March 31, 2012".

To see where your bank stands relative to these banks, please check the following previous blog posts:  "Philippine Thrift Banks Deteriorate in the 4th Quarter of 2012""Philippine U/KBs Improve in the 4th Qtr. of 2012""Philippine Thrift Banks Deteriorate in the 3rd Quarter of 2012" and  "Philippine U/KBs Show Some Deterioration in the 2nd Qtr. of 2012" and "Philippine Thrift Banks Continue to Improve in the 2nd Quarter of 2012".

Top Distressed Philippine Banks
By Total Distressed Assets/ Total Capital Cushion
December 31, 2012
In Php

December 31, 2012
Bank Type of Bank Total Distressed Assets (In PHP) Total Capital Cushion (In PHP) Distressed Assets/ Total Capital Cushion (In %)
Philippine Bank of Communications U/KB 5,098,149,508.75 396,965,737.97 1284.28%
The Real Bank (A Thrift Bank) Inc. Thrift 9,104,085,280.75 819,806,739.79 1110.52%
Bank of China Limited - Manila Branch U/KB 6,098,052,440.55 684,298,180.30 891.14%
Inter-Asia Development Bank Thrift 98,986,652.72 12,527,419.93 790.16%
United Coconut Planters Bank U/KB 63,266,790,792.27 9,201,765,912.89 687.55%
Village SLA, Inc. Thrift 482,971,670.79 85,106,104.94 567.49%
Comsavings Bank Thrift 2,152,959,280.94 394,231,674.83 546.12%
Iloilo City Development Bank Thrift 312,348,064.40 66,532,072.05 469.47%
The Palawan Bank Inc. Thrift 88,021,072.90 25,911,081.73 339.70%
Planters Development Bank Thrift 12,948,915,584.01 4,476,918,961.89 289.24%
University Savings Bank Thrift 661,143,467.69 228,612,951.12 289.20%
Legazpi Savings Bank Inc. Thrift 922,546,339.95 361,050,520.81 255.52%
China Bank Savings Thrift 2,193,496,131.15 911,544,737.69 240.64%
Deutsche Bank AG U/KB 3,279,741,854.26 1,465,660,409.12 223.77%
Bataan Development Bank Thrift 173,086,398.77 77,754,277.41 222.61%
Citibank N.A. U/KB 24,587,798,465.66 12,957,591,045.32 189.76%
Standard Chartered Bank U/KB 5,281,945,731.70 2,834,198,027.55 186.36%
RCBC Savings Bank Thrift 13,175,369,165.79 7,182,065,835.47 183.45%
Bank of Commerce U/KB 32,487,156,994.44 19,687,666,611.58 165.01%
Farmers Savings & Loan Bank Thrift 194,814,222.76 120,105,189.66 162.20%
Philippine Resources Savings Banking Corporation Thrift 1,964,754,570.68 1,280,833,710.22 153.40%
Equicom SB Thrift 804,808,813.72 526,478,368.74 152.87%
Business & Consumers Bank Thrift 111,503,405.66 79,778,218.98 139.77%
Malayan Bank Savings & Mortgage Bank Thrift 1,604,314,144.81 1,150,906,649.00 139.40%
Philippine National Bank U/KB 50,766,564,105.82 36,454,637,515.91 139.26%
Hiyas Savings & Loan Bank Thrift 239,626,539.43 175,599,508.50 136.46%
Luzon Development Bank Thrift 644,332,995.39 492,360,638.92 130.87%
Philippine Veterans Bank U/KB 8,261,265,793.78 6,643,455,486.88 124.35%
Silangan Savings and Loan Bank, Inc. Thrift 61,066,411.54 51,238,430.87 119.18%
Security Bank Savings Corporation Thrift 2,351,384,570.60 2,117,832,548.04 111.03%
Korea Exchange Bank U/KB 622,081,667.32 583,041,140.10 106.70%
Opportunity Kauswagan Bank, Inc. Thrift 181,267,927.74 170,899,309.83 106.07%
Philippine Savings Bank Thrift 16,254,121,220.71 16,065,835,469.57 101.17%
Grand Total
266,475,471,287.45 127,783,210,487.61 208.54%



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 December 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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