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Transcript of Banco Filipino
• Strategic Planning
Banco Filipino's troubles in 2002 were not caused by poor management, or by a liquidity crisis, or by a smear campaign. It was caused by fraud.
Repeating A History Of Bankruptcy
- Case Study
Timeline of Banco Filipino
• 1964 - Banco Filipino is established, founded by Thomas Aguirre
• 1965 - first all women bank, making it a hit
• 1969 – first bank to process online transactions
• 1975 -voted the most preferred bank in Metro Manila
• 1980 – under the Marcos regime the bank closed
• 1981 -It had 89 branches, four billion pesos worth of assets, three million customers and three thousand shareholders.
• 1984 -BF declared a self-imposed bank holiday due to illiquidity. CBP did not order it closed immediately but placed it under conservatorship a week after the declaration. The central bank infused P3 billion pesos as a credit to help it. After six months of examination and supervision, the BSP released the supervision and examination (SES) report on 23 January 1985.
• 1985, January 25 -At the recommendation of the report, the Central Bank of the Philippines closed the bank on the basis of illiquidity and insolvency. For most of the 1980s it remained closed
• 1991 the Supreme Court declared the bank's closure as illegal.The Court found the report was based on incomplete findings.
• 1994 –It subsequently opened in 1994 with only 15 branches out of its original 92 branches.
• 1996 -The Philippine Stock Exchanged relisted it in the bourse.
• 1999 - The Supreme Court declared that BF was entitled to damages payments because of its illegal closure.
• 2002 -BSP extended P3.5 billion worth of emergency loan to Banco Filipino, of which P2.6 billion is still outstanding.
• 2007-2009 - Bank examiners found out that Banco Filipino has been posting losses averaging P2 billion a year
• September 2010 - 91 percent of the bank's total loans became past due, which meant their principal and interest remained unpaid 30 days after their due date. Of this uncollected overdue loans, more than half (P2.2 billion) had been loaned to DOSRI.
• 2010, November -rebuilding plan that the Makati Regional Trial Court approved in November 2010 required that BSP infuse P25 billion in financial assistance to BF. BSP however appealed the order to the Court of Appeals. BF later filed a complaint for contempt against BSP. BSP filed an injunction case at the Court of Appeals.
• 2011, December -it incurred P12 billion in losses. BF executive vice president and corporate secretary Francisco Rivera admitted that the bank continued to lose anywhere between P800 million to P900 million a year since it reopened in 1994. This ongoing bleeding of its finances may have been the reason it stopped filing financial reports to the PSE, resulting to its resenting delisting in the bourse.
• 2011, March – the Philippine Stock Exchange delisted thrift bank Banco Filipino Savings and Mortgage Bank (BF) for "continuous violation" of disclosure rules and failing to submit structured reports.
15 March 2011 (Tuesday), BF voluntarily closed its branches from depositors without prior notice. Only the assigned guards can be found in branch premises, who in turn told bewildered depositors that the employees have not reported to work.
Two days later, the BSP ordered the closure of BF, and placed it under the receivership of Philippine Deposit Insurance Corp. (PDIC). BSP said that its liabilities topped its assets by P8.4 million. It had gathered evidence showing the bank's top officers mismanaged their depositors' money.
• Highly Capitalized Organization with lots of investors and assets.
• Banco Filipino is already established and has made a name to the masses specifically to the population of NCR.
• One of the oldest running banking company
• Continous innovation of the company
• The inconsistency of the organization and the reason of closure of the business.
• Poor marketing strategy
• Less penetration on rural areas
• People will never trust a bank being involved with any illegal case and has been proven bankrupt
• Due to its former issues, it will be hard to re-establish the organization
• The company can easily market and expand all throughout Metro manila.
• Increasing rate of urban migration
• Increasing customer reach
Why did the Banco Filipino Failed?
Loans grew significantly, climbing 26 percent a year. In 1994, Loans stood at PHP 848 million. By 2002, loans amounted to PHP 5.4 billion. Deposits grew even faster, by 31 percent a year. In 1994, the deposit base was PHP 660 million. By 2002, the deposit base was PHP 5.75 billion.
Meanwhile, Acquired Assets grew just as fast, by 23 percent year. In 1994, Acquired Assets stood at PHP 580 million. By 2002, it stood at PHP 3 billion. Acquired Assets jumped by 83 percent in 2001, after the BSP Comptrollership was lifted in 2000. In 2002, it jumped another 45%. By 2002, Acquired Assets made up almost 25% of the bank's total asset base.
Banco Filipino's liquidity position was severely reduced by the conversion of liquid earning assets into Acquired Assets. Its Quick Assets to Total Deposits Ratio, which measures the ability to meet deposit withdrawals, declined steeply. In 1994, that ratio stood at a healthy 91.6 percent. By 2001, the ratio was down to only 22.6 percent. In 2002, it was even lower: 12.2 percent. The largest percentage drops in liquidity occured in 2001 - approximately negative 41.6 percent. And in 2002, liquidity dropped another 45.8 percent.
• Research & Development
A key to a successful business is a good research on their prospective investor. If they improve the R&D and analyse a better prospect for the company they may have survive and redeem their loss on their liability.
involves the creation of strategies that are aimed in maximizing the entity’s future position taking into consideration the various elements and factors that may pervade the company’s internal and external environment. This process also includes SWOT analysis which was already presented.
If Banco Filipino aimed to maximize their planning for their future position considering their external factor that may affect the whole business where should the management must improve to take advantage by the internal strengths.
When interest rates rise after you lock in your money
The organization may not be able to repay the debts
With proper RESEARCH the company can track and foresee what is going to happen in the next years. The REASSURANCE of having a increase in investment and possibly providing a higher interest rate can help the company's reputation.
To ESTIMATE the proper amount to invest and lend, can decrease the risk of having a lot of liabilities to the company.