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Monday, February 10, 2014

The Top Distressed Philippine Banks as of September 30, 2013

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.  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 September 30, 2013.  It updates the six previous blog posts:"The Top Distressed Philippine Banks as of June 30, 2013""The Top Distressed Philippine Banks as of March 31, 2013""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".

Failed Bank:

It is important to note that one of the banks on this list of distressed banks, namely,Silangan Savings & Loan Bank Inc., failed as of January 9, 2014.  As of September 30, 2013, it had a Distressed Ratio of 124.22%.  For more information regarding this, please refer to the previous blog post: "A Short Analysis of Recent Bank Failures since the Failure of Banco Filipino - Updated"

To see where your bank stands relative to these banks, please check the previous blog post: "Philippine Banks Improve in the 3rd Qtr. of 2013".

The Top Distressed Banks in the Philippines
September 30, 2013
In Php

September 30, 2013
Bank Type of Bank Total Distressed Assets Total Capital Cushion Distressed Assets/ Total Capital Cushion (In %)
THE REAL BANK (A THRIFT BANK) INC Thrift Bank 8,524,192,979.10 403,897,117.56 2110.49%
BANK OF CHINA LIMITED-MANILA BRANCH U/KB 5,413,268,714.84 677,275,685.72 799.27%
VILLAGE BANK INC (A THRIFT BANK) Thrift Bank 687,677,082.87 86,744,428.80 792.76%
COMSAVINGS BANK Thrift Bank 2,181,731,382.42 324,037,558.21 673.30%
UNITED COCONUT PLANTERS BANK U/KB 62,683,146,880.44 12,441,512,075.45 503.82%
ILOILO CITY DEVELOPMENT BANK Thrift Bank 357,993,018.50 74,068,482.77 483.33%
INTER-ASIA DEVELOPMENT BANK Thrift Bank 175,020,938.69 59,391,398.86 294.69%
THE PALAWAN BANK (PALAWAN DB) INC Thrift Bank 77,068,340.15 27,180,689.84 283.54%
PLANTERS DEVELOPMENT BANK Thrift Bank 12,037,164,005.99 4,435,504,297.84 271.38%
BATAAN DEVELOPMENT BANK Thrift Bank 159,894,410.86 77,646,386.19 205.93%
DEUTSCHE BANK AG U/KB 3,067,613,129.87 1,491,605,872.17 205.66%
STANDARD CHARTERED BANK U/KB 5,481,987,266.08 2,746,581,696.80 199.59%
WORLD PARTNERS BANK (A THRIFT BANK) Thrift Bank 331,710,971.69 168,429,784.45 196.94%
UNIVERSITY SAVINGS BANK INC Thrift Bank 465,380,380.07 237,367,686.97 196.06%
CITIBANK, N.A. U/KB 25,141,192,359.18 12,988,072,447.69 193.57%
FARMERS SAVINGS & LOAN BANK INC Thrift Bank 206,034,010.40 120,445,949.31 171.06%
BANK OF COMMERCE U/KB 31,965,699,305.28 18,938,602,086.54 168.79%
ENTERPRISE BANK INC (A THRIFT BANK) Thrift Bank 369,899,499.76 227,755,866.40 162.41%
EQUICOM SAVINGS BANK INC Thrift Bank 862,156,303.88 547,774,008.61 157.39%
OPPORTUNITY KAUSWAGAN BANK INC (A MICROFINANCE THRIFT BANK) Thrift Bank 152,715,466.78 99,188,170.54 153.97%
BUSINESS AND CONSUMERS BANK (A DB) Thrift Bank 125,799,957.15 83,997,066.23 149.77%
RCBC SAVINGS BANK INC Thrift Bank 12,882,048,142.17 8,712,884,410.13 147.85%
PHILIPPINE BANK OF COMMUNICATIONS U/KB 7,076,143,296.69 4,791,505,760.04 147.68%
MALAYAN BANK SAVINGS AND MORT BANK INC Thrift Bank 1,655,811,844.54 1,231,401,672.29 134.47%
HIYAS BANKING CORPORATION Thrift Bank 226,640,660.66 169,268,776.65 133.89%
CHINA BANK SAVINGS INC Thrift Bank 1,236,939,434.71 959,961,776.24 128.85%
SILANGAN SAVINGS & LOAN BANK INC Thrift Bank 64,269,096.58 51,738,430.87 124.22%
LUZON DEVELOPMENT BANK Thrift Bank 619,898,218.14 501,040,949.74 123.72%
PHILIPPINE VETERANS BANK U/KB 8,068,969,382.11 7,003,198,360.29 115.22%
PHILIPPINE NATIONAL BANK U/KB 92,180,432,184.65 83,697,635,640.24 110.14%
MICROFINANCE MAXIMUM SB INC Thrift Bank 59,066,646.76 55,912,948.55 105.64%
KOREA EXCHANGE BANK U/KB 620,702,964.29 590,448,140.37 105.12%
Grand Total
285,158,268,275.30 164,022,075,622.36 173.85%



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 September 30, 2013 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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