How banking developed during the

Commonwealth era and under the

Philippine Republic.

JAPANESE ERA
In 1939, the government created the

Agricultural and Industrial Bank to absorb the

functions of the National Loan and
Investment Board and to harness
government resources.

The Philippine Bank of Communications,

reported to be the first bank with genuine

Filipino private capital, was also established
during this period. However, it was
temporarily closed at the outbreak of the
Second World War.
According to the Bangko Sentral ng Pilipinas
The General Banking Law Annotated: Book 2
(our main source of these historical data),
only Filipino-owned and Japanese banks
were allowed to operate during World
War II.

The Chartered Bank of India, Australia, and

China, the HSBC, and the National City Bank

of New York were all treated as enemy
properties and placed under liquidation by the
Japanese Military Government.
The Nampo Kaihatsu Kinko (or the
Southern Development Bank) opened a Manila
branch in 1942 and acted as the Japanese
governments fiscal agent in the Philippines.

After the liberation, all domestic banks that

operated during the Japanese occupation were

unable to reopen because they didnt meet
the Philippine currency and greater part of
their assets consisted of worthless Japanese
war notes, bonds, and obligations of the
Japanese-sponsored republic, and balances
with Japanese banks.

 In 1945, The first license to reopen

was granted to the National City Bank
of New York.
In the same year, other foreign banks
such as the Chartered Bank of India,
Australia, and China, HSBC, and
Nederlandsche Indische Handelsbanks
were likewise granted the license to
reopen.

 In 1947, the Rehabilitation Finance

Corporation was created by virtue of Republic

Act 85 on the second day of January.It took
over the functions and what was left of the
Agricultural Industrial Bank.
A branch of the Bank of America, NT &SA
(Bank of America) of San Francisco, California,
was allowed to establish a branch in Manila.

 In 1948, the General Banking Act was passed

into law.It provided the definitive rules of

conduct for all banking institutions as to
organization, management, and operation.
In 1949, when the Central Bank of the
Philippines started its operations, the banking
system consisted of seven commercial banks,
three thrift banks, the sole government
specialized bank, the Agricultural and
Industrial Bank, and seven foreign bank
branches.