Life After A Bank Run: The Bangko Kabayan Experience


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Life After A Bank Run: The Bangko Kabayan Experience

  1. 1. 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.
  2. 2. The Panic of 1978 : Mismanagement and Fraud Bangko Kabayan Inc.
  3. 3. Causes : Loose management Internal Fraud High delinquency – illiquidity    Bangko Kabayan Inc.
  4. 4. Effect : Loss of Public Confidence Panic withdrawals   Bangko Kabayan Inc.
  5. 5. Steps Taken : Reorganization Professionalization   Deposit Campaign  Bangko Kabayan Inc.
  6. 6. Communication Program Emergency Loan - BSP   Aggressive Collection of Past Due  Disposition of Acquired Assets  Bangko Kabayan Inc.
  7. 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. 8. Growth at the Expense of Liquidity 1993: Bangko Kabayan Inc.
  9. 9. Reforms : Adoption of Higher Liquidity Level Policy Improve Treasury Functions   Bangko Kabayan Inc.
  10. 10. 1996: Closure of Other Banks Bangko Kabayan Inc.
  11. 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. 12. Maintaining Unity in the Organization Strength of Faith, Vision and Mission   Stockholder Support – personal funds and guarantees  Bangko Kabayan Inc.
  13. 13. 2001: Personal Tragedy Bangko Kabayan Inc.
  14. 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. 15. Fruits of years of relationship-building, transparency and good governance! Bangko Kabayan Inc.
  16. 16. Legacy Bank Closures - an Industry Crisis Bangko Kabayan Inc.
  17. 17. Seeking a Common Solution – putting up a united front Bangko Kabayan Inc.
  18. 18. Re-education of Public is Key Bangko Kabayan Inc.
  19. 19. 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.
  20. 20. 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.
  21. 21. 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.
  22. 22. <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.
  23. 23. - 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.
  24. 24. 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.
  25. 25. 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.
  26. 26. Take care of all stakeholders – and they will take care of you in times of need! Bangko Kabayan Inc.