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Monday, February 13, 2017

The Top Distressed Philippine Banks as of September 30, 2016

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, 2016.  It updates a previous blog post: "The Top Distressed Philippine Banks as of June 30, 2016".

To see where your bank stands relative to these banks, please check the previous blog post: "Philippine Banks Deteriorate Slightly in the 3rd Qtr of 2016".

The Top Distressed Philippine Banks
Total Distressed Assets/ Total Capital Cushion
September 30, 2016
In Php

September 30, 2016
Bank Total Distressed Assets (In PhP) Total Capital Cushion (In PhP) Distressed Assets/ Total Capital Cushion (In %)
VILLAGE BANK INC (A THRIFT BANK) 612,421,717.03 98,494,178.93 621.78%
BANK OF CHINA LIMITED-MANILA BRANCH 15,884,638,392.11 2,689,164,904.41 590.69%
INTER-ASIA DEVELOPMENT BANK 212,979,011.00 60,584,384.65 351.54%
UNITED COCONUT PLANTERS BANK 32,102,996,014.60 11,498,031,004.25 279.20%
PHIL POSTAL SAVINGS BANK INC 2,644,058,195.81 1,391,970,544.82 189.95%
CITIBANK, N.A. 28,176,037,619.07 18,852,261,103.84 149.46%
MALAYAN BANK SAVINGS AND MORT BANK INC 1,705,740,200.89 1,180,703,393.55 144.47%
ENTERPRISE BANK INC (A THRIFT BANK) 445,204,238.91 318,128,721.32 139.94%
LUZON DEVELOPMENT BANK 947,553,825.59 681,879,488.39 138.96%
BPI GLOBE BANKO INC A SAVINGS BANK 581,281,529.56 458,848,427.45 126.68%
CHINA BANK SAVINGS INC 11,502,350,011.50 9,231,129,298.27 124.60%
EQUICOM SAVINGS BANK INC 962,220,185.53 802,760,372.06 119.86%
BATAAN DEVELOPMENT BANK 111,829,792.01 95,255,014.64 117.40%
WORLD PARTNERS BANK (A THRIFT BANK) 234,255,813.06 218,147,250.07 107.38%
LEGAZPI SAVINGS BANK INC 920,117,253.90 882,809,874.96 104.23%
METRO CEBU PUBLIC SAVINGS BANK 71,187,151.70 68,780,352.78 103.50%
FARMERS SAVINGS & LOAN BANK INC 138,639,165.85 135,581,798.70 102.25%
Grand Total 100,570,376,629.02 51,413,463,715.95 195.61%


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, 2016 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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