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.
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 <ul><li>Mismanagement </li></ul><ul><li>Sacrificing liquidity for growth </li></ul><ul><li>Personal Tragedy </li></ul>SUMMARY Bangko Kabayan Inc.
External Factors <ul><li>Political Upheaval </li></ul><ul><li>Closures of other financial institutions O causing crisis in public confidence 0 in the system </li></ul><ul><li>Peace and order breakdown </li></ul>Bangko Kabayan Inc.
Appropriate Responses: <ul><li>Professionalization of the organization </li></ul><ul><li>Tight and effective internal control </li></ul><ul><li>Prudent liquidity management and O better treasury management </li></ul>Internal Factors Bangko Kabayan Inc.
<ul><li>Strong Communication and a culture O of transparency </li></ul><ul><li>Strong collection infrastructure and O management of delinquent accounts </li></ul><ul><li>Effective and quick disposition of 0 Acquired Assets </li></ul>Bangko Kabayan Inc.
- a strong belief system that imbues everyone in the organization with inspiration and extraordinary persistence in the face of crisis. <ul><li>Strong relationship management – O within the organization and with O clients, big and small, even when O there is no crisis. </li></ul><ul><li>Vision and Mission </li></ul>Bangko Kabayan Inc.
External Factors <ul><li>Maintain a comfortable liquidity cover </li></ul><ul><li>Sources of funds lined up </li></ul> 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? <ul><li>Provide liquidity </li></ul><ul><li>Spread good news and counter rumors </li></ul>Bangko Kabayan Inc.
Take care of all stakeholders – and they will take care of you in times of need! Bangko Kabayan Inc.