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Due Diligence Report

On Legal Counseling

Submitted by:
Falsis, Kashmere V.

Submitted to:
Prosecutor Macababbad

Legal Counseling 3-E

S.Y. 2015 - 2016

In the light of the recent events, Rural Bank of Calaca has an existing
liquidity problem which caused financial straits to its company. Now our
company is considering to whether or not to acquire the rural bank. In the
onset of the current issue, the first thing we need to perform to aid the
decision making is to review the history of the Rural Bank of Calaca, to see
fit that they have been in the proper exercise of their duty to extend loans
and advances.
This responsibility of the rural bank is coming from the provision of
General Banking Law where their purpose is to meet the normal credit needs
of farmers, fishermen or farm families owning or cultivating land dedicated
to agricultural production as well as the normal credit needs of cooperatives
and merchants.
While the acquisition may promise wider scope of clients for us, it may
also imply financial threats that could cause unnecessary expenditures from
our company.
For the protection of our company we have to look at these
considerable factors:

Liquidity Problem
The main reason for the Rural Bank of Calacas financial strait was
caused by liquidity problem which can be traced from unpaid mortgages. As
a company we must be able to look for efficient processes and avenues to
reduce the real estate properties the Rural Bank currently owns.

Being a large company perhaps it will be a positive factor in our part to

acquire the rural bank because for one we are already established and
peoples trust towards us will bring about confidence in people purchasing
these real estate properties.

Obviously, our company and the Rural Bank of Calaca has different
sets of directors and at the event of the merger as prescribed by the General
Banking Law the total number of directors should not exceed twenty-one
We have to take into consideration as well the directors that will be
joining us if they are the people that are fit and proper in reaching the goals
of our company and we have to take into consideration as well their
background and related interests such as current investments or businesses
that they are engaged in.
The reason for the stringent background check of the directors is to
make sure that there arent any conflicts of interests existing or the
shareholders are in line with the view of our company to prosper and make
the merger a fruitful one.

Non-Allied Undertakings
Under the General Banking Law, Rural banks may invest in companies
that are engaged in warehousing, fertilizers and other agricultural chemicals,
farm equipments distribution, trucking and transportation of agricultural
products, marketing of agricultural products, leasing and other undertakings
as may be determined by the Monetary Board.

We have to study as well if the Rural Bank of Calaca has made efficient
investments in these non-allied undertakings, and we have to be assured of
the validity of the existing partnerships of the rural bank and perform a
series of background checks to the companies which are engaged in the said

Employee Relations
Employees form a huge part of the banking business, therefore it is
proper to look into the relationship between the Rural Bank of Calaca and its
employees. From there we can perform interviews and information-gathering
on possible avenues that we can improve if we choose to proceed with the
The more detailed look on this spectrum is magnifying on the
positions, type of work and benefits that are currently entitled to its
workforce. We have to consider on possibly cutting-down and implementing
lay-offs to ensure not only job security but also job efficiency.

Client History
Information concerning the current clients of the Rural Bank of Calaca
is very essential consideration to the acquisition because it will be the lifeblood of the merger and their reaction towards the closing of the bank and
the possible acquisition.
Managers of the bank have knowledge regarding the client histories
and their background. From there we can trace and review all the necessary
details for us to consider the factor that would lead us to consider this

Looking into these factors, we can only presume that it is a risk worth
taking. We only have to gather the necessary information for us to help in
our decision. A huge bank such as ours will not only be able to acquire the
properties the Rural Bank of Calaca owns but also gain the trust and
confidence of the depositors under the rural bank.
It can draw as well multiple depositors in the rural areas where the
Rural Bank of Calaca is situated. Therefore, after gaining the said
information and histories regarding the Rural Bank of Calaca we can finally
decide upon acquiring or engaging into a merger with the Rural Bank.