3. History of the Philippine Banking
• Banking in the Philippines began in the 16th Century
• This was the establishment of Obras Pias (Pious Works)
by laymen associated with the religious orders.
• Funded from legacies and donations of wealthy
individuals
• The Obras Pias was the source of credit and its funds
were invested in mortgage financing loans, trade with
Acapulco and maritime insurance.
• Obras Pias profits were channeled to the construction of
churches , government buildings and other charitable and
religious projects.
4. History of the Philippine Banking
• Among the first banks that emerged in 19th was the
Rodriguez Bank which was considered as more of a loan
association than a regular bank.
• The need for more extensive banking services and
facilities led the board of authorities (Junta de
Autoridades) in Manila to establish on August 1, 1851 the
first state bank in the Philippines.
• The Banco Espanol-Filipino de Isabel II was the first state
bank and Obras Pias provided 50% of its bank capital.
• In 1873, British-Orient banks opened in the country as a
result of the expanded Philippine –European trade that
followed the opening of the Suez-Canal in 1869.
5. History of the Philippine Banking
• The Chartered bank of India, Australia and China opened
in Manila in 1872.
• The Hongkong and Shanghai Banking Corporation
established its Manila branch in 1875.
• The first mutual savings in the country is Monte de Piedad
Y Caja de Ahorros - a unique combination of savings
banks and pawnshops opened in 1882. Initial
capitalization was also provided by Obras Pias.
• The bank was later renamed to Monte De Piedad and
Savings Bank.
• The Banco Espanol-Filipino de Isabel II changed its name
to Bank of the Philippine Islands on January 1, 1912.
6. History of the Philippine Banking
• BPI established correspondent arrangements with a Paris
bank for servicing of client transactions with counterparts
in Europe and other parts of the world.
• BPI is considered as the oldest bank in the country.
• During the American Occupation , seven domestic private
banks came to existence. Branches of Japanese a well as
Chinese banks were also opened during the early part of
the period.
• The Postal Savings Bank was put up in 1906.
• The first agricultural bank was established in 1908 but its
assets and liabilities were transferred to the Philippine
National Bank which was organized in 1916.
7. History of the Philippine Banking
• Three years after the American regime ended, the Central
Bank of the Philippines was created, establishing a
managed monetary system in the Philippines.
• It was given the sole authority to issue the country’s paper
money, regulate and supervise the country’s banking
system.
9. Banko Sentral ng Pilipinas (BSP)
• The BSP was created under Section 2 of RA 7653 better
known as “The New Central Bank Act”.
• It traces the roots and fundamental structure from its
predecessor, the Central Bank of the Philippines.
• The Bank began formal operations on July 3, 1993.
• The BSP performs several important functions that have
significant effect on the value of the money.
10. BSP’s Important Functions
• The Money Manager – The BSP manages the amount of
money available to the public to keep prices from
increasing more than usual. It does this to preserve the
value of money , earnings and savings are not eroded by
abnormal increases of goods and services.
• The Supplier of Money – Only BSP can legally issue
money in paper notes and coins and in amounts
consistent with the country’s economic program. The
money it issues is fully guaranteed by the Government
and can be used to pay any goods and services in the
country. The BSP also prints the paper money and mints
the coins. At its vaults, a ready supply of money is
available to replace old ones or add to those currently
being used.
11. BSP’s Important Functions
• The Banker’s Bank – The BSP grants loans to and accepts
deposit only from banks. It grants loans to banks for
commercial , production and similar purposes as in exports and
imports and agricultural activities. It lends cash to banks in
times of national or local emergencies or its financial problems
directly threatens the stability of the banks.
-BSP accepts deposits from banks as part of their required
reserves.
-As part of its management of the money supply, the BSP
requires banks to set aside and not lend a portion of their
deposits. To comply with this requirement, Banks keeps a portion
of their cash in their vaults and a specified portion deposited with
BSP or invested in Government Securities bought directly from
BSP.
12. BSP’s Important Functions
• The Supervisor of all Banks – In exercise of its
responsibility to supervise banks, the BSP regularly
monitors and examines the operations of banks as well as
their compliance with banking rules and regulations. BSP
can assign a conservator to temporarily manage the bank
to prevent it from incurring more loses and affecting other
banks.
• The Main Bank of the Government – The BSP is the
official depository of the government. Some of the tax
collections , proceeds of the sale of government securities
and foreign loans are deposited to BSP. If government
needs money it withdraws funds from BSP.
13. BSP Monetary Board
• Is the policy-making body of the bank.
• It is headed by the Governor who is concurrently the
Chairman of the Board with five full-time members from
the private sector and one member from the cabinet.
• Implementing its policies and regulations as well as
running the day-to-day operations are the officers and
employees . A deputy Governor heads each of the Bank’s
three major operating sectors.
• Banking Services Sector
• Supervision and Examination Sector
• Resource Management Sector
14. Banko Sentral ng Pilipinas (BSP)
• The BSP is responsible for maintaining Price Stability
conducive to a balanced and sustainable growth of the
economy.
• The BSP keeps the prices of goods and services steady
and at the reasonable levels so the economy can run
unhampered.
• The BSP provides policy directions in the areas of
money, credit and banking.
• To keep the prices at reasonable levels, BSP must protect
at all times the value of Peso.
• BSP supervises the operations of banks to promote the
soundness and safety of banking.
15. Banko Sentral ng Pilipinas (BSP)
• In Republic Act 7653, the BSP also regulates the
operations of finance companies and non-bank financial
institutions doing quasi-banking operations.
17. Private Banking Institutions
• These companies perform the service of safekeeping
funds through the acceptance of money deposits and the
provision of credit through lending of money.
• The banks assist in the mobilization of funds needed for
various industries and other productive undertaking.
1. Commercial Banks – covers the widest range of
functions among all financial intermediaries. Their
services include receiving, collecting, transferring ,
paying, lending, investing, dealing, exchanging and
handling money, safe deposit, custodianship ,
trusteeship and money claims domestically and
internationally.
18. Private Banking Institutions
2. Thrift Banks – are savings and mortgage banks, stock
savings and loan associations, and private development
banks which in addition to accepting savings and time
deposits, perform the following functions: grant loans,
invest in readily marketable bonds and other debt
securities. They differ from commercial banks in that
they cannot engage in international banking operations.
But they can accept checking accounts, government
deposits and foreign currency deposits and perform
trust functions upon approval from Central Bank.
19. Private Banking Institution
3. Rural Banks – regional banks operating primarily to
serve the needs of people in the provinces and sub-
urban areas. Rural banks perform the following
functions: Granting of short term loans to farmers ,
merchants, cooperatives to finance their requirements
in the pursuit of their business which are principally
aimed at countryside development. They also accept
savings and time deposits to accumulate funds for local
development. They also serve as channels for
disbursement and collections of supervised credit
programs and they act as correspondents for other
financial institutions.
20. Government Banks
• Development Bank of the Philippines – was established in
1946 as the Rehabilitation Finance Corporation to attend
to the requirements of rehabilitation and development
after World War II. Today, it is tasked with the
development and expansion of the agricultural industry
and promoting the establishment of private development
bank. Its lending activities are concentrated on
development projects, such as agriculture, industry and
low-cost housing.
21. Government Banks
• Land Bank of the Philippines – was organized in 1963 to
provide timely and adequate financial support to the
Agrarian Reform program. Its lending activities are geared
primarily towards helping farmers acquire land under the
agrarian reform program. The bank was also granted
special powers under the General Banking Act as it can
perform the functions of universal bank including trust
functions.
22. Government Banks
• Philippine Amanah Bank – was established in 1974 to
promote and accelerate the socio-economic development
in Mindanao especially in the predominantly Muslim
province and economically depressed areas of Cotabato ,
Lanao Del Sur, Lanao del Norte, Zamboanga del Sur and
Norte and Sulu. However, it is also based on the Islamic
concept of banking following the “no-interest and
partnership” principles.
23. Private Non-Bank Financial Institutions
1. Investment Houses
2. Investment Companies
3. Financing Companies
4. Securities Dealers/Brokers
5. Non-stock Savings and Loan Associations
6. Building and Loan Associations
7. Pawnshops
8. Trust Corporations
9. Insurance Companies
10. Fund Managers
11. Lending Investors
12. Venture Capital Corporations
24. Government Non-Bank Financial
Institution
• Government Service Insurance System (GSIS)- was
entrusted with the administration of a life insurance fund.
It then extended life insurance coverage and benefits to
government employees in the country. It provides social
insurance and security benefits to members and has
supported financially a wide range of economic
development both government and private.
25. Government Non-Bank Financial
Institution
• Social Security System – grants to its members those
from the private sector benefits such as sickness,
disability, death and old-age pension. Additional benefits
have been incorporated into scheme, including
hospitalization benefits , employees compensation
benefits and maternity benefits.
