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Monday, June 6, 2016

BSP: GSIS Family Bank aka Comsavings Bank is Better Off Dead

Last May 13, 2016, GSIS Family Bank, also known as Comsavings Bank, was finally shut down by the BSP.  Based on the latest records, the bank had 14,507 deposit accounts with Php 974.81 million in deposits.  Approximately 19.33% of these deposits were over PDIC's Php 500,000 maximum deposit insurance limit.  Therefore, depositors lost Php 188.42 million.

The bank started failing way back in June 2005, when its Classified Loans and Other Risky Assets grew by over 5,000% in one quarter, from only around Php 25 million as of March 2005 to around Php 1.276 billion by June 2005.  The bank had to support this staggering amount of dud loans with only Php 608 million in equity.  As of December 2015, classified loans remained unchanged at Php 1.276 billion but the equity base shrunk to just Php 14.35 million.

The bank was consistently on the top of our list of distressed Philippine banks.  As of September 30, 2015, the bank had an astounding distressed ratio of 14,272.55% - way, way above our cut-off of 100%.  Believe it or not, this number is way down from the comically high ratio of 68,226.10% as of March 2015.

By BSP's own indicators, the bank was failing.  As of December 2015, the bank had Capital Adequacy Ratios of just 2.20 (Total CAR) and 1.74 (Tier 1 CAR).  These numbers are abysmally below BSP's own recommended ratios of 10 for both ratios.

If this bank were a private bank, it would have failed a long time ago.  The government backing increased its longevity but also increased the pain to both the stockholders and depositors.

The bank was put up on the auction block last April 2015 and went through several rounds of bidding and negotiated sale, but nothing materialized.  The last bidder, Phindep Development Corp, a real estate developer based in Kawit, Cavite seemed bogus because it did not seem to have the financial capacity or expertise to run the bank, having just incorporated last March 2015.  The lone legitimate bidder for the bank was Altus Capital Partners Inc., a distressed asset bidder that previously bought the distressed assets of Planters Development Bank last September 2012.  That deal obviously fell through. Apparently, Altus decided that Comsavings Bank was better off dead.

And the BSP concurred.

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