Life after a Bank Run:Life after a Bank Run:The Bangko Kabayan ExperienceThe Bangko Kabayan Experience
2009 RBAP-MABS National Roundtable ConferenceMay 12-13, 2009
Hyatt Hotel and CasinoManila
Atty. Francis GanzonPresident, Bangko Kabayan
Bangko Kabayan Inc.
The Panic of 1978 :The Panic of 1978 :Mismanagement and FraudMismanagement and Fraud
Bangko Kabayan Inc.
Causes :Causes :Loose managementLoose management
Internal FraudInternal Fraud
High delinquency – illiquidityHigh delinquency – illiquidity
Bangko Kabayan Inc.
Effect :Effect :
Loss of Public ConfidenceLoss of Public Confidence
Panic withdrawalsPanic withdrawals
Bangko Kabayan Inc.
Steps Taken :Steps Taken :
ReorganizationReorganization
ProfessionalizationProfessionalization
Deposit CampaignDeposit Campaign
Bangko Kabayan Inc.
Communication ProgramCommunication Program
Emergency Loan - BSPEmergency Loan - BSP
Aggressive Collection of Past DueAggressive Collection of Past Due
Disposition of Acquired AssetsDisposition of Acquired Assets
Bangko Kabayan Inc.
Reforms :Reforms :Recruitment and Hiring based Recruitment and Hiring based on Meriton Merit
Tight Internal Control SystemTight Internal Control System
Better Process and Documentation Better Process and Documentation in REM Loansin REM Loans
Deposits vs. Rediscounting as Deposits vs. Rediscounting as Source of Funds for loansSource of Funds for loans
Bangko Kabayan Inc.
Growth at the Expense Growth at the Expense of Liquidityof Liquidity
1993:1993:
Bangko Kabayan Inc.
Reforms :Reforms :Adoption of Higher Liquidity Adoption of Higher Liquidity Level PolicyLevel Policy
Improve Treasury FunctionsImprove Treasury Functions
Bangko Kabayan Inc.
1996:1996:
Closure of Other Banks Closure of Other Banks
Bangko Kabayan Inc.
Strategies :Strategies :High visibility of CEOHigh visibility of CEO
Transparency and Good Relations Transparency and Good Relations – Staff and Clients– Staff and Clients
Increase Liquidity – control loan Increase Liquidity – control loan releases, draw on credit linesreleases, draw on credit lines
Bangko Kabayan Inc.
Maintaining Unity in the OrganizationMaintaining Unity in the Organization
Strength of Faith, Vision and MissionStrength of Faith, Vision and Mission
Stockholder Support – personal Stockholder Support – personal funds and guaranteesfunds and guarantees
Bangko Kabayan Inc.
2001: Personal Tragedy2001: Personal Tragedy
Bangko Kabayan Inc.
Professional organization prepared Professional organization prepared to handle crisisto handle crisis
Morale support and offers for help Morale support and offers for help from fellow rural bankersfrom fellow rural bankers
Support from understanding Support from understanding regulatorsregulators
Bangko Kabayan Inc.
Fruits of years of relationship-Fruits of years of relationship-building, transparency and building, transparency and
good governance!good governance!
Bangko Kabayan Inc.
Legacy Bank Closures - Legacy Bank Closures - an Industry Crisis an Industry Crisis
Bangko Kabayan Inc.
Seeking a Common Solution – Seeking a Common Solution – putting up a united frontputting up a united front
Bangko Kabayan Inc.
Re-education of Public is KeyRe-education of Public is Key
Bangko Kabayan Inc.
Causes of Bank Run based on BK’s experience:
Internal Factors Mismanagement Sacrificing liquidity for growth Personal Tragedy
SUMMARYSUMMARY
Bangko Kabayan Inc.
External Factors
Political Upheaval
Closures of other financial institutions O causing crisis in public confidence 0 in the system
Peace and order breakdown
Bangko Kabayan Inc.
Appropriate Responses:Appropriate Responses:
Professionalization of the organization
Tight and effective internal control
Prudent liquidity management and O better treasury management
Internal Factors
Bangko Kabayan Inc.
Strong Communication and a culture O of transparency
Strong collection infrastructure and O management of delinquent accounts
Effective and quick disposition of 0 Acquired Assets
Bangko Kabayan Inc.
- a strong belief system that imbues everyone in the organization with inspiration and extraordinary persistence in the face of crisis.
Strong relationship management – O within the organization and with O clients, big and small, even when O there is no crisis.
Vision and Mission
Bangko Kabayan Inc.
External Factors
Maintain a comfortable liquidity coverMaintain a comfortable liquidity cover
Sources of funds lined upSources of funds lined up
Maintain high credibility with community, Maintain high credibility with community, 0 regulators and fellow rural bankers and regulators and fellow rural bankers and 0 financial institutions financial institutions
Bangko Kabayan Inc.
What can our microfinance clients What can our microfinance clients do for us? do for us?
Provide liquidityProvide liquidity
Spread good news and Spread good news and counter rumorscounter rumors
Bangko Kabayan Inc.
Take care of all stakeholders – and they will take care of
you in times of need!
Bangko Kabayan Inc.