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Life after a Bank Run: The Bangko Kabayan Experience

Bangko Kabayan Inc. Life after a Bank Run: The Bangko Kabayan Experience. Atty. Francis Ganzon President, Bangko Kabayan. 2009 RBAP-MABS National Roundtable Conference May 12-13, 2009 Hyatt Hotel and Casino Manila. The Panic of 1978 :. Mismanagement and Fraud. Bangko Kabayan Inc.

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Life after a Bank Run: The Bangko Kabayan Experience

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  1. Bangko Kabayan Inc. Life after a Bank Run:The Bangko Kabayan Experience Atty. Francis Ganzon President, Bangko Kabayan 2009 RBAP-MABS National Roundtable Conference May 12-13, 2009 Hyatt Hotel and Casino Manila

  2. The Panic of 1978 : Mismanagement and Fraud Bangko Kabayan Inc.

  3. Causes : Loose management  Internal Fraud  High delinquency – illiquidity  Bangko Kabayan Inc.

  4. Effect : Loss of Public Confidence  Panic withdrawals  Bangko Kabayan Inc.

  5. Steps Taken : Reorganization  Professionalization  Deposit Campaign  Bangko Kabayan Inc.

  6. Communication Program  Emergency Loan - BSP  Aggressive Collection of Past Due  Disposition of Acquired Assets  Bangko Kabayan Inc.

  7. Reforms : Recruitment and Hiring based on Merit  Tight Internal Control System  Better Process and Documentation in REM Loans  Deposits vs. Rediscounting as Source of Funds for loans  Bangko Kabayan Inc.

  8. 1993: Growth at the Expense of Liquidity Bangko Kabayan Inc.

  9. Reforms : Adoption of Higher Liquidity Level Policy  Improve Treasury Functions  Bangko Kabayan Inc.

  10. 1996: Closure of Other Banks Bangko Kabayan Inc.

  11. Strategies : High visibility of CEO  Transparency and Good Relations – Staff and Clients  Increase Liquidity – control loan releases, draw on credit lines  Bangko Kabayan Inc.

  12. Stockholder Support – personal funds and guarantees  Maintaining Unity in the Organization  Strength of Faith, Vision and Mission  Bangko Kabayan Inc.

  13. 2001: Personal Tragedy Bangko Kabayan Inc.

  14. Professional organization prepared to handle crisis  Morale support and offers for help from fellow rural bankers  Support from understanding regulators  Bangko Kabayan Inc.

  15. Fruits of years of relationship-building, transparency and good governance! Bangko Kabayan Inc.

  16. Legacy Bank Closures - an Industry Crisis Bangko Kabayan Inc.

  17. Seeking a Common Solution – putting up a united front Bangko Kabayan Inc.

  18. Re-education of Public is Key Bangko Kabayan Inc.

  19. SUMMARY Causes of Bank Run based on BK’s experience: Internal Factors • Mismanagement • Sacrificing liquidity for growth • Personal Tragedy Bangko Kabayan Inc.

  20. External Factors • Peace and order breakdown • Political Upheaval • Closures of other financial institutions O causing crisis in public confidence 0 in the system Bangko Kabayan Inc.

  21. Appropriate Responses: Internal Factors • Professionalization of the organization • Tight and effective internal control • Prudent liquidity management and O better treasury management Bangko Kabayan Inc.

  22. Strong collection infrastructure and O management of delinquent accounts • Effective and quick disposition of 0 Acquired Assets • Strong Communication and a culture O of transparency Bangko Kabayan Inc.

  23. Strong relationship management – O within the organization and with O clients, big and small, even when Othere is no crisis. • Vision and Mission - a strong belief system that imbues everyone in the organization with inspiration and extraordinary persistence in the face of crisis. Bangko Kabayan Inc.

  24. External Factors • Maintain a comfortable liquidity cover • Sources of funds lined up Maintain high credibility with community, 0 regulators and fellow rural bankers and 0 financial institutions Bangko Kabayan Inc.

  25. What can our microfinance clients do for us? • Provide liquidity • Spread good news and counter rumors Bangko Kabayan Inc.

  26. Take care of all stakeholders – and they will take care of you in times of need! Bangko Kabayan Inc.

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