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, 2013. It updates the four previous blog posts "The Top Distressed Philippine Banks as of December 31, 2012", "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".
It should be noted that three banks that had no Published Statement of Condition as of March 31, 2013 were classified as distressed as of December 31, 2012:
- The Real Bank, which topped the list of distressed banks with a distressed ratio of 1110.52% as of December 31, 2012, had no Published Statement of Condition as of March 31, 2013.
- Inter-Asia Development Bank, which had a distressed ratio of 790.16% as of December 31, 2012, the second highest distressed ratio among Philippine Thrift Banks, has no Published Statement of Condition as of March 31, 2013. Inter-Asia Development Bank also had the distinction of having negative Stockholder's Equity of Php 16.306 million as of December 31, 2012.
- Legazpi Savings Bank Inc. also had no Published Statement of Condition as of March 31, 2012. As of December 31, 2012, it had a distressed ratio of 255.52%. It is now part of Robinsons Bank Corporation.
To see where your bank stands relative to these banks, please check the following previous blog posts: "Philippine U/KBs stagnate in the first quarter of 2013" and "Philippine Thrift Banks Improve in the 1st Quarter of 2013"
|Top Distressed Philippine Banks|
|By Total Distressed Assets/ Total Capital Cushion|
|March 31, 2013|
|March 31, 2013|
|Bank||Type of Bank||Total Distressed Assets (In PHP)||Total Capital Cushion (In PHP)||Distressed Assets/ Total Capital Cushion (In %)|
|Bank of China Limited - Manila Branch||U/KB||6,226,566,132.27||685,633,584.43||908.15%|
|Village SLA, Inc.||Thrift Bank||496,377,535.75||72,569,009.96||684.01%|
|Comsavings Bank||Thrift Bank||2,112,944,286.62||350,256,389.87||603.26%|
|United Coconut Planters Bank||U/KB||63,212,402,369.73||11,948,563,753.86||529.04%|
|Iloilo City Development Bank||Thrift Bank||319,108,798.97||74,460,161.05||428.56%|
|The Palawan Bank Inc.||Thrift Bank||80,187,590.43||26,105,838.96||307.16%|
|Planters Development Bank||Thrift Bank||11,558,280,974.87||4,492,399,583.23||257.29%|
|China Bank Savings||Thrift Bank||1,992,008,426.44||924,982,941.27||215.36%|
|Bataan Development Bank||Thrift Bank||169,926,802.45||79,408,150.74||213.99%|
|Standard Chartered Bank||U/KB||5,808,076,301.57||2,828,803,541.61||205.32%|
|University Savings Bank||Thrift Bank||426,379,745.66||238,815,498.62||178.54%|
|Bank of Commerce||U/KB||33,113,884,699.17||19,097,682,135.51||173.39%|
|Farmers Savings & Loan Bank||Thrift Bank||206,459,550.90||121,460,323.18||169.98%|
|Equicom SB||Thrift Bank||849,956,397.71||524,113,918.41||162.17%|
|RCBC Savings Bank||Thrift Bank||12,931,004,204.02||8,458,793,246.14||152.87%|
|Business & Consumers Bank||Thrift Bank||125,950,251.62||83,158,250.15||151.46%|
|Opportunity Kauswagan Bank, Inc.||Thrift Bank||148,003,463.85||100,422,184.04||147.38%|
|Malayan Bank Savings & Mortgage Bank||Thrift Bank||1,631,520,959.35||1,197,907,246.98||136.20%|
|Enterprise Bank Inc.||Thrift Bank||308,372,421.55||226,893,033.22||135.91%|
|Hiyas Savings & Loan Bank||Thrift Bank||232,293,909.14||172,039,936.56||135.02%|
|Luzon Development Bank||Thrift Bank||625,433,831.89||505,564,924.77||123.71%|
|Philippine National Bank||U/KB||101,650,751,378.64||83,561,759,995.75||121.65%|
|Philippine Veterans Bank||U/KB||8,509,862,413.39||7,002,089,593.69||121.53%|
|Silangan Savings and Loan Bank, Inc.||Thrift Bank||60,573,617.94||51,238,430.87||118.22%|
|Microfinance Maximum SB (Maxbank)||Thrift Bank||71,037,262.18||63,374,791.71||112.09%|
|Security Bank Savings Corporation||Thrift Bank||1,959,451,355.89||1,774,788,044.47||110.40%|
|Philippine Bank of Communications||U/KB||5,127,180,667.39||4,843,878,337.23||105.85%|
|HongKong & Shanghai Banking Corporation||U/KB||5,236,434,312.10||5,155,376,110.01||101.57%|
|Philippine Resources Savings Banking Corporation||Thrift Bank||1,518,138,930.73||1,504,814,681.31||100.89%|
|Inter-Asia Development Bank*||Thrift Bank||NA||NA||NA|
|Legazpi Savings Bank Inc.*||Thrift Bank||NA||NA||NA|
|The Real Bank (A Thrift Bank) Inc.*||Thrift Bank||NA||NA||NA|
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, 2013 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.