Week 1.1-Banking and Financial Institutions

POLICARPIO R.
MALONDA, MPA,REA,REB,LPT
Course Instructor
UNIVERSIDAD DE STA. ISABEL

COLLEGE OF BUSINESS EDUCATION
BUSINESS ADMINISTRATION PROGRAM
FM103- BANKING AND FINANCIAL INSTITUIONS
1ST SEMESTER, AY 2018-2019
FM 103
Banking and Financial Institutions

Courses Objectives
Course in this area are designed to develop an understanding of financial
institutions and financial markets and their relationship to public policies
and management policies. Included are studies of market structure,
profit strategies, relationship of commercial banks and other financial
institutions, problems of asset and liability management, and theory of
interest and asset prices.

• The first organized credit
institutions were
established in the
Philippines during the
16th century Spanish
colonial era. These were
the OBRAS PIAS.

• Obras Pias was a charitable foundation during the Spanish period. The
word itself means works of piety in Spanish. The Church directed a
share of personal fortunes to its charities such as the Obras Pias.
Donors had specified that the funds are to be used for charitable,
religious and educational purposes. However, some of the funds were
managed by confraternities that invested capital in secular activities
like underwriting cargoes for the galleon trade.

• In 1869, the opening of the Suez Canal facilitated trade between
the Philippines and Europe. The Philippines then attracted
British capital, and in the years that followed, the Chartered
Bank of India, Australia, and China (now known as the Standard
Chartered Bank) and the Hong Kong and Shanghai Banking
Corporation (HSBC), both British-owned banks, opened their
branches in Manila.

By the end of the Spanish regime, the banks in existence were:
El Banco Español Filipino de Isabel II (now the Bank of
Philippine Islands or BPI) which was given the sole mandate
under a Spanish Royal Decree of 1854 to issue banknotes
called Pesos Fuertes; the Chartered Bank of India, a branch of
the HSBC; the Monte de Piedad; and the Banco Peninsular
Ultamarino de Madrid.

• During the American colonial period, banks
from the USA started to establish local
branches that would cater to growing American
economic interests and capital inflow into the
country.
• The American Bank was first to open a branch
in 1901. However, it was placed under
receivership by the Insular Treasurer for
making doubtful loans after only 4 years of
operations.

• In 1916, the Philippine National Bank was
established with the Philippine Government as
the majority stockholder. This is to break the
foreign banking monopoly and remedy the lack
of credit facilities.

The PNB was meant to function as a government enterprise
that would widen the variety of banking services “beyond
trade finance in exportation and importation, money
changing of foreign currency, and fund transfers, all of which
, while useful in the short term, failed to mobilize capital in
the development of natural resources.”
• It’s charter at that time empowered PNB to issue bank
notes and act as a depository of government funds.

• At the turn of the 20th century, the Americans
established the Guaranty Trust Corporation
(GTC) and International Banking Corporation
(IBC). The existence of GTC was short-lived,
while IBC was eventually taken over by the
National City Bank of New York (now known as
Citibank).
• In 1918, the Manila branch of the Yokohama
Specie Bank was given license to do business in
the Philippines.

• Between 1935 to 1946, more foreign bank
branches were established in the Philippines.
These include the Bank of Taiwan, and the
Nederlandsche Indische Handelsbanks.
• 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 is the first bank
with genuine Filipino private capital. However, it was
temporarily closed at the outbreak of WWII.
Only Filipino-owned and Japanese banks were allowed to
operate during WWII; The Chartered Bank of India,
Australia, and China, HSBC, and the National City Bank of
New York were all treated as enemy properties and placed
under liquidation by the Japanese Military Government.

• On the other hand, the Nampo Kaihatsu Kinko (Southern
Development Bank) opened a Manila branch in 1942 and acted
as the Japanese government’s fiscal agent in the Philippines.
• After the liberation, all domestic banks that operated during the
Japanese occupation were unable to reopen because the
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 1947, a branch of the Bank of America was allowed to
establish a branch in Manila and in the following year, it
absorbed the assets and liabilities of the local branch of the
Nederlandsche Indische Handelsbanks.

In 1952, the Rural Bank Act was enacted and two years
later, the Agricultural and Industrial Bank merged with the
Reconstruction and Rehabilitation Fund to form the
Development Bank of the Philippines.

BSP Materials\Philippines
Financial
System\FACTBOOK_2016V
2.pdf

“Bawat Kwenta, May Kwento, Ikaw ano
ang Kwenta Mo?”


Week 1.1-Banking and Financial Institutions

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Week 1.1-Banking and Financial Institutions

Uploaded by

Copyright:

Available Formats

POLICARPIO R.

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

UNIVERSIDAD DE STA. ISABEL

You might also like