Life After A Bank Run: The Bangko Kabayan Experience

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

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

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

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

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

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

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.

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

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

1996: Closure of Other Banks Bangko Kabayan Inc.

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

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

2001: Personal Tragedy Bangko Kabayan Inc.

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

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

Legacy Bank Closures - an Industry Crisis Bangko Kabayan Inc.

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

Re-education of Public is Key Bangko Kabayan Inc.

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

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

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

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

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

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.

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

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

Life After A Bank Run: The Bangko Kabayan Experience

by MABSIV on May 20, 2009

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Life After A Bank Run: The Bangko Kabayan Experience — Presentation Transcript