Are there other banks ready to implode? - Thrift Bank Edition as of March 31, 2011

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 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.

List of Philippine Thrift Banks with a High % of Distressed Assets to Total Capital Cushion As of March 31, 2011
Bank	Total Distressed Assets (In PHP Million)1	Total Capital Cushion (In PHP Million)2	Distressed Assets/ Total Capital Cushion (In %)3
Legaspi Savings Bank	798.630	35.263	1730.43%
Village SLA	593.227	56.950	813.24%
Real Bank (A Thrift Bank) Inc.	9,851.599	874.628	788.74%
LBC Development Bank	5,038.581	511.151	703.67%
City Savngs Bank	7,041.887	1,350.343	520.21%
The Palawan Development Bank	96.953	7.082	449.30%
China Bank Savings	2,779.894	1,130.651	392.93%
Planters Development Bank	13,533.951	3,757.840	322.90%
GSIS Family Bank	2,215.126	591.880	306.51%
Iloilo City Development Bank	177.436	57.731	294.71%
Bataan Development Bank	166.968	62.455	233.55%
Farmers Savings and Loan Association	232.837	95.014	202.55%
Business & Consumers Bank A DB	145.180	74.181	183.31%
CityState Savings Bank	1,400.328	781.363	173.56%
Hiyas Savings & Loan Bank	265.453	143.482	167.25%
Opportunity Microfinance Bank	192.736	122.773	152.68%
University SLA	365.425	224.967	151.59%
Equicom Savings Bank	654.065	405.726	145.38%
Dumaguete City Development Bank	272.395	194.208	140.79%
RCBC Savings Bank Inc.	10,694.841	6,571.828	140.74%
Premiere Development Bank	1,287.037	824.669	140.05%
Dungganon Bank	67.114	59.548	111.01%
Malayan Bank Savings & Mortgage Bank	1,085.088	925.197	108.84%
Luzon Development Bank	477.413	419.409	104.48%
Philippine Postal Savings Bank	571.295	427.861	103.29%
Citibank Savings Inc.	3,641.379	1,275.600	99.06%
Producers Savings Bank Corporation	481.180	571.159	91.05%
Metro Cebu Public Savings Bank	63.055	60.724	87.44%
Penbank Inc.	196.750	219.602	86.35%
BPI Family Savings Bank	11,775.509	12,563.940	79.26%
Wealth Bank	299.331	350.603	78.00%
Philippine Savings Bank	10,860.177	10,554.402	76.58%
Tong Yang Savings Bank Inc.	338.577	393.492	76.31%
Cordillera Savings Bank	86.503	97.066	72.96%
United Overseas Bank Philippines	1,040.712	678.813	70.78%
Pampanga Development Bank	82.510	99.964	70.33%
Liberty Savings & Loan	41.524	57.563	69.29%
Philippine Business Bank	1,841.275	2,442.174	66.34%
First Consolidated Bank Inc.	981.161	1,418.425	63.11%
Pridestar Development Bank	42.818	66.988	60.30%
Tower Development Bank	59.849	105.400	57.03%
Sampaguita SLA, Inc.	38.646	59.722	54.00%
Life Savings Bank	34.368	62.545	53.51%
Microfinance Maximum SB (Maxbank)	32.698	61.726	51.30%
Northpoint Development Bank	26.731	54.037	45.72%
Lemery Savings & Loan Bank, Inc.	34.063	71.682	45.40%
Sterling Bank of Asia Inc. (A SB)	720.860	1,185.992	44.70%
UCPB Savings Bank	824.448	1,784.927	43.42%
Robinsons Savings Bank	1,054.429	2,295.879	40.56%
World Partners Bank	67.473	164.047	38.05%
Malasiqui Progressive SLB	21.049	49.475	36.31%
Quezon Coconut Producers SLB	20.594	54.973	35.97%
Allied Savings Bank	349.224	947.920	35.04%
Maritime SLA Inc.	15.638	64.426	23.43%
The Queen City Development Bank	154.557	681.828	22.25%
Optimum Development Bank	141.863	613.451	20.80%
Pacific Ace Savings Bank	13.507	66.580	18.83%
BPI Direct Savings Bank	104.808	619.541	15.39%
HSBC Savings Bank (Philippines) Inc.	306.362	2,139.402	13.31%
Bank One Savings and Trust Corp.	63.092	509.441	12.25%
Bataan SLA	9.134	77.555	11.57%
Isla bank (A Thrift Bank) Inc.	56.019	622.551	8.95%
EIB Savings Bank Inc.	6.394	67.718	8.66%
BPI Globe Bank Inc. Savings Bank	27.906	324.653	8.32%
Progress SLA	5.755	85.219	6.70%
BDO Elite Savings Bank	93.326	1,478.233	6.35%
Merchants Savings & Loan Association	11.583	219.619	5.14%
Century Savings Bank	22.696	846.043	2.93%

Disclaimer:

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' published statement of condition as of March 31, 2011 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.

1Includes Classified Loans and Other Risk Assets, Acquired Real Estate, Non-Current Assets Held for Sale, Other Assets

2Includes Stockholder's Equity less Other Capital Accounts plus Allowance for Credit and Impairment Losses

3A ratio of Distressed Assets to Total Capital Cushion greater than 100% signals the danger of insolvency


In the past ten years, there have been numerous bank failures: 1 commercial bank, 21 thrift banks, and 187 rural banks

LBC Development Bank bites the dust, Are there other LBC's out there waiting to implode? - June 30, 2011 Edition

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 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.

List of Local Philippine Commercial Banks with a High % of Distressed Assets to Total Capital Cushion As of June 30, 2011
	Total Distressed Assets (In PHP Billion)1	Total Capital Cushion (In PHP Billion)2	Distressed Assets/ Total Capital Cushion (In %)3
United Coconut Planters Bank	63.583	6.092	1043.55%
Export and Industry Bank	14.458	1.677	861.95%
Bank of Commerce	34.079	18.568	183.54%
Philippine Veterans Bank	10.793	6.104	176.82%
Philippine National Bank	67.328	38.258	175.98%
Philippine Bank of Communications	9.596	6.096	157.42%
Union Bank of the Philippines	38.686	38.215	101.23%
Rizal Commercial Banking Corporation	29.423	33.099	88.89%
Maybank Philippines Inc.	2.886	3.860	74.75%
Allied Banking Corporation	13.667	18.864	72.45%
Bank of the Philippine Islands	52.695	77.235	68.23%
Metropolitan Bank and Trust Co.	61.204	91.212	67.10%
Land Bank of the Philippines	33.675	51.019	66.01%
Banco de Oro Unibank Inc.	65.864	109.861	59.95%
East West Banking Corporation	7.786	13.658	57.00%
Philippine Trust Company	8.372	14.706	56.93%
China Banking Corporation	18.929	35.375	53.51%
Asia United Bank Corporation	5.029	9.464	53.14%
Security Bank Corporation	12.417	26.704	46.50%
Development Bank of the Philippines	16.103	35.620	45.21%
Robinsons Bank Corpo	1.170	5.187	22.57%
Chinatrust (Philippines) Commercial Banking Corporat	1.230	6.770	18.17%
Al-Amanah Islamic Bank of the Philippines	0.082	0.532	15.49%
BDO Private Bank, Inc.	0.108	4.533	2.38%
Total	569.163	652.708	87.20%

1Includes Classified Loans and Other Risk Assets, Acquired Real Estate, Non-Current Assets Held for Sale, Other Assets

2Includes Stockholders Equity less Other Capital Accounts plus Allowance for Credit Losses and Impairment

3A ratio of Distressed Assets to Total Capital Cushion greater than 100% signals the danger of insolvency

Disclaimer:

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' published statement of condition as of June 30, 2011 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.

Was BSP Remiss in its Regulatory Functions?

3 October 2011

BANGKO SENTRAL NG PILIPINAS

BSP Complex, Roxas Boulevard

Manila

Attn: Ms. Betty Christine C. Bunyi

Officer-in-Charge

Integrated Supervision Department II

Re: Letter dated 21 April 2003

-----------------------------------------------

Gentlemen:

We write on behalf of our clients, Ms. Ana Maria A. Koruga and Mr. Christopher Koruga, in response to your letter dated 16 August 2011.

Your letter dated 16 August 2011 states that the Integrated Supervision Department acted on our 21 April 2003 letter and referred to the Bangko Sentral ng Pilipinas (BSP) letters dated 5 September 2003 and 4 August 2009 attached thereto.

We invite your attention to the Answer dated 18 September 2003 filed in the case of Koruga v. Arcenas, et al. (Civil Case No. 03-985) at the Regional Trial Court of Makati City, Branch 138, by Messrs. Rafael B. Buenaventura, Antonio L. Alindogan, Jr., Juan Quintos, Jr., Melito S. Salazar, Jr., Vicente B. Valdepenas, Manuel L. Roxas III, and Ms. Fe B. Barin, who were then members of the Monetary Board of the BSP. In your Answer, you allege that “(i)t is only the (Monetary Board) which has the sole authority to place a bank under conservatorship or receivership pursuant to Sections 29 and 30 of the New Central Bank Act and Sections 67 and 69 of the General Banking Law of 2000, or preventively suspend or disqualify persons from serving as director or officers of a bank under Section 37 of the New Central Bank Act.”¹

Despite advancing the said argument, the then members of the Monetary Board did not act accordingly and did not address the reliefs sought by our clients.

The letter dated 5 September 2003 merely stated that “(t)he Monetary Board, in its Resolution No. 1034 dated 24 July 2003, noted the report on the complaints of the minority directors/stockholders of Banco Filipino Savings and Mortgage Bank (BFSMB)” and that “the allegations relative to certain bank loans are being addressed and included in the Report of Examination (ROE) as of 31 October 2002.”

The Monetary Board, however, did not explain or act on any of the following:

1. The reason/s why the directors and/or officers of Banco Filipino were not preventively suspended;
2. The reason/s why Banco Filipino was not placed under conservatorship or receivership;
3. The action taken by the Monetary Board and/or by the BSP, if any, based on the Report of Examination. The Monetary Board never informed our clients whether Banco Filipino submitted its comment on the Report of Examination after it was directed to do so by the Monetary Board pursuant to Resolution No. 1034 dated 24 July 2003, and what the consequences are, in the event that Banco Filipino was not able to submit its comment;
4. The sanctions imposed, if any, on the directors and/or officers of Banco Filipino;
5. The private stockholder relief/s, if any, which the Monetary Board provided our clients;
6. If any action was taken by the Monetary Board consistent with our clients’ position, the reason/s why the Monetary Board opposed the Complaint filed by our clients;
7. Specific remedial action sought by our clients on the bank loans detailed in Civil Case No. 03-985 and in our letter dated 21 April 2003.

Unless you can inform us otherwise, we can only conclude that the Monetary Board and/or the BSP have been remiss in its duty to act on our clients’ letter dated 21 April 2003 accordingly and have not addressed the reliefs sought by our clients. Please let us know what reliefs were provided to our client, if any, under our letter dated 21 April 2003 or in the Complaint filed in Civil Case No. 03-985.

Very truly yours,

JOSE A. BERNAS

1See page 11 of the Answer dated 18 September 2003.