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Monday, June 27, 2016

The Top Distressed Philippine Banks as of December 31, 2015

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 December 31, 2015.  It updates a previous blog post: "The Top Distressed Philippine Banks as of September 30, 2015".

To see where your bank stands relative to these banks, please check the previous blog post: "Philippine Banks Deteriorate in the 4th Qtr. of 2015".

The Top Distressed Philippine Banks
Total Distressed Assets/ Total Capital Cushion
December 31, 2015
In Php

December 31, 2015
Bank Total Distressed Assets (In PhP) Total Capital Cushion (In PhP) Distressed Assets/ Total Capital Cushion (In %)
COMSAVINGS BANK 1,395,614,335.77 -65,448,243.20 -2132.39%
VILLAGE BANK INC (A THRIFT BANK) 556,831,461.87 90,737,510.56 613.67%
BANK OF CHINA LIMITED-MANILA BRANCH 12,360,762,970.29 2,656,902,956.21 465.23%
UNITED COCONUT PLANTERS BANK 36,489,118,835.14 8,502,227,574.02 429.17%
LEGAZPI SAVINGS BANK INC 920,377,443.38 237,928,897.09 386.83%
INTER-ASIA DEVELOPMENT BANK 178,434,476.01 56,595,974.69 315.28%
PLANTERS DEVELOPMENT BANK 7,711,750,827.00 3,475,549,539.90 221.89%
CHINA BANK SAVINGS INC 4,180,494,365.12 2,507,115,465.51 166.75%
PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC) 695,613,033.52 441,321,528.25 157.62%
BANK OF COMMERCE 27,469,383,309.13 17,998,319,986.63 152.62%
ENTERPRISE BANK INC (A THRIFT BANK) 415,058,576.41 292,351,344.09 141.97%
DEUTSCHE BANK AG 3,287,852,162.30 2,392,198,121.84 137.44%
LUZON DEVELOPMENT BANK 835,187,995.92 624,743,120.16 133.69%
BATAAN DEVELOPMENT BANK 114,933,644.48 89,393,285.17 128.57%
MALAYAN BANK SAVINGS AND MORT BANK INC 1,536,604,993.38 1,201,791,661.66 127.86%
UCPB SAVINGS BANK 2,969,881,907.55 2,510,649,604.22 118.29%
EQUICOM SAVINGS BANK INC 918,149,056.60 787,522,895.46 116.59%
DUMAGUETE CITY DEV BANK INC 291,959,317.81 255,851,728.23 114.11%
Grand Total 100,932,394,375.91 44,121,201,193.69 228.76%

GSIS Family Savings Bank aka Comsavings Bank's distressed ratio went negative because its total capital cushion became negative.  In other words, it lost so much money that it no longer had any real capital backing up its assets.  Hence, it was only a matter of time before the bank closed.  And, true enough, it was forced to close by the BSP/Monetary Board last May 13, 2016. See previous post: BSP: GSIS Family Bank aka Comsavings Bank is Better Off Dead



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, 2015 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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