Banco Filipino

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Banco Filipino Savings and Mortgage Bank
Type Public (PSE: BF)
Founded Manila, Philippines (1964)
Headquarters Makati City, Philippines
Key people Teodoro O. Arcenas, Jr. , Chairman and President
Industry Finance and Insurance
Products Financial Services
Revenue P2.932 billion PHP (▲37%) (2001) [1]
Employees unknown
Website www.bancofilipino.com

Banco Filipino Savings and Mortgage Bank (PSE: BF), commonly known as Banco Filipino or BF, is one of the largest savings banks in the Philippines. It is known not only for its innovative offerings but also for its troubled history. It is also known for some property developments such as BF Homes, a subdivision in Parañaque City.

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[edit] History

Banco Filipino was born on July 9, 1964, as a way to realize the dream of Tomas Aguirre: that banking services reach the Filipino masses, which were usually seen as a market underserved by the Philippine banking industry then. It then set out to leave its mark as an innovator, by conceiving the first all-woman bank branch, which became a hit, in 1965, and by 1969 became the first bank to process online transactions in real time, giving customers the ability to deposit in any online BF branch. From 1966 until its closure in 1985, BF was the largest savings bank in the Philippines.

In 1970, Banco Filipino started expanding into the countryside with its first provincial branch opening in Naga City. By 1972, the bank's customer base grew to one million customers, even in the midst of martial law. It was voted the most preferred bank in Metro Manila in 1975. By 1981, the bank achieved what no other savings bank could: 89 branches, four billion pesos worth of assets, three million customers and three thousand shareholders.

On January 25, 1985, even though Banco Filipino was performing well and was seen by most people as a very healthy bank, the Bangko Sentral ng Pilipinas ordered its closure over alleged insolvency. For most of the 1980s, Banco Filipino would remain closed, until a 1991 ruling made by the Supreme Court declared the bank's closure illegal. Banco Filipino subsequently reopened, albeit only with fifteen of its original 92 branches, in 1994.

For much of the remaining 1990s, Banco Filipino would be busy trying to reestablish itself. It became a member of BancNet after launching the BF Cash Card in 1995 and issued its first credit card, a VISA card, a year later. Two years later, BF shares were re-listed on the Philippine Stock Exchange, and the Supreme Court declared in 1999 that Banco Filipino is entitled to damages payments caused by its illegal closure.

[edit] Ownership

  • Metropolis Development Corporation: 19.51%
  • Apex Mortgage and Loans Corporation: 18.7%
  • LBH Incorporated: 7.06%
  • BF Retirement Fund: 2.17%
  • BF Citiland Corporation: 1.98%
  • Grand Farms: 1.9%
  • Himlayang Pilipino: 1.86%
  • Spring Sun Management Systems Corporation: 1.83%
  • Tropical Land Corporation: 1.78%
  • El Grande Development Corporation: 1.75%
  • PII Trading: 1.66%
  • Linktop Properties: 1.63%
  • CLI Management Corporation: 1.41%
  • Casa Tropical: 1.41%
  • Others (includes public stock): 35.35%

[edit] Competition

Banco Filipino mostly competes with other savings banks, such as Philippine Savings Bank and Centennial Savings Bank.

[edit] Firsts

In line with its corporate philosophy, which is personalized service, Banco Filipino is known for the following firsts:

  • Open teller counters instead of the then-common glass-encased counter. Today, all banks have adopted the open teller counter concept.
  • Plastic signs inside bank branches
  • Acceptance of initial savings deposits that are as low as one peso
  • The offering of capital stock to its depositors. Through that scheme, Banco Filipino depositors could in effect become bank co-owners
  • Extended banking hours from Monday to Saturday, 8 am to 8 pm, 6 days a week, 12 hours a day
  • Monthly and even daily (known as "Interest Araw-Araw") interest payments. Many commercial banks and some universal banks have since adopted the monthly interest payment scheme.
  • Advance interest payments on time deposits.
  • The offering of negotiable orders of withdrawal. At the time, savings banks were prohibited from issuing government securities.

[edit] Relation to Urban Bank

In the case against Urban Bank, which was ordered closed for the same reasons as Banco Filipino, Urban Bank president Teodoro Borlongan compared the case of Banco Filipino to the case of Urban Bank, which was argued on the following points:

Banco Filipino Urban Bank
Banco Filipino is a savings bank. Urban Bank is a commercial bank with two subsidiaries.
Banco Filipino was suffering from illiquidity and was granted a 119.7 million-peso loan from the Bangko Sentral. Urban Bank alleges that numerous negative media reports attributed to the Bangko Sentral caused its illiquidity and that it received no help from the Bangko Sentral in resolving its illiquidity.
Banco Filipino declared a self-imposed bank holiday on July 23, 1984 due to its illiquidity. Borlongan and Urban Bank chairman Arsemio Bartolome III pre-cleared a bank holiday with the Bangko Sentral set for April 25, 2000.
Banco Filipino was not ordered closed during its bank holiday. It was put under conservatorship by the Bangko Sentral a week after its bank holiday was declared and was even given a three billion-peso credit line. Despite provisions in Philippine banking law that deal with illiquid banks, Urban Bank was not placed under conservatorship. Instead, it was ordered closed less than 24 hours after the declaration of its bank holiday.
It took six months for Banco Filipino's supervision and examination sector (SES) report to be made. The SES reports were released on January 23, 1985. At the recommendation of the report, BF was ordered closed two days later. Urban Bank's three SES reports were allegedly rushed and made "at the flick of a finger" in three hours. The reports were allegedly signed only 30 minutes before the Monetary Board meeting that would decide the fate of Urban Bank.
While the SES report recommended that Banco Filipino be closed on the basis of illiquidity and insolvency, the Supreme Court found that the report was based on incomplete findings. Urban Bank and its subsidiaries were not found to be insolvent in their SES reports. It was also alleged that not only were Urban Bank's SES reports based on false information, but even its SES reports were falsely substituted and ante-dated to give the impression that the reports existed while deliberating the fate of the bank.
The Supreme Court found that the findings of the Monetary Board in closing Banco Filipino was not only unethical, but also questioned how a bank can resolve its financial status in four days, as well as resolve the issues surrounding the information found in Banco Filipino's SES report. Urban Bank alleged that the Bangko Sentral did not furnish them a copy of its SES reports, so it was unable to take action against the reports' findings. It alleged that its reports were given only five months after the bank was ordered closed. Urban Bank even alleged a lack of due process on its behalf.
Banco Filipino requested the transcripts and records of the meetings deliberating the closure of the bank. The Bangko Sentral denied BF's request. Subsequent amendments to Philippine banking laws require the Bangko Sentral to keep all records of all Monetary Board meetings. Urban Bank alleges that the meeting held regarding the fate of Urban Bank was not even recorded, and that no transcripts of the meeting were made.

[edit] See also

[edit] External links