CTB, RBAP defend banking industry

Small banks within the thrift and rural banking system are not necessarily unstable as most are sound, stable, and well-managed. In fact, the two banking systems extend credit to most of the economy’s growth drivers.

That was the reaction of the Chamber of Thrift Banks (CTB) and the Rural Bankers Association of the Philippines (RBAP) to statements that all small banks were financially unstable following the closure of First Savings Bank last week.

The CTB represents the country’s thrift-savings-development banking system while the RBAP represents the rural banks nationwide.

In separate statements, the two banking voices said the country’s banking system is healthy and sound banking practices and good corporate governance not size is the correct gauge of the system.

"We continue to perform a vital role in the economy by providing credit to the growth drivers of our economy, including the small and medium enterprises (SMEs), housing and countryside businesses, and by mobilizing savings," CTB executive director Suzanne Felix said.

"Banks in general cannot relax on the strict adherence to prudent banking management to handle risks, good governance and compliance to regulations and laws which are the essential and long lasting basis of really protecting the money of depositors by small and big banks," RBAP president Senen Glorioso said in a separate statement.

The thrift banks asset base grew to P284 billion as of May this year compared to P252 billion in May last year.

"Loans expanded to P154 billion and deposits to P206 billion this year from P175 billion in May 2003. Our capital adequacy ratio (CAR) remains strong at 18.9 against the 12-percent minimum requirement of Bangko Sentral ng Pilipinas (BSP)," Felix added.

To increase the effectivity of thrift banks, both the CTB and BSP have been encouraging mergers and consolidation in the industry.

The recent acquisitions made by Plantersbank Development Bank of the Region Bank (Los Baños Rural Bank, Inc.) and Active Bank is proof of growth in the sector.

Region Bank, then the largest rural bank in the country, had gross assets of P1.6 billion and a network of 11 branches in Laguna, Batangas and Muntinlupa. With the acquisition, Plantersbank will have total consolidated assets of P 27 billion.

Another thrift bank, Phil. Business Bank, reportedly expressed interest in acquiring First Savings Bank.

"This is certainly proof that indeed there are a number of thrift banks who are expanding and therefore provide the much-needed impetus for reinvigorating the economy, putting their money where their mouths are.

These are the banks that continue to have full faith in the economy and can thus be considered the catalysts that can put to reality the government’s vision of a strong republic," the CTB executive director argued.

Meanwhile, Glorioso said that microfinance loans and savings operations of the system reached and assisted more than 150,000 enterprising poor thus helping transform the economic despair and non-productivity of poor and indigent families into success stories of livelihood, growth and recovery.

To date, more than P2.1 billion of microfinance loans have been delivered to the entrepreneurial poor sectors mainly by rural banks.

"Being small and weak is thus incorrectly and unfairly denigrating small banks such as rural banks which on the contrary remain quite strong and dynamic banking institutions," he added.