PHILIPPINE BANKING
HISTORY
As the banking business gained ground in
America and elsewhere, the Philippines
was not one to be left behind. Historically,
our own past has been intertwined with the
colonization of our country by a
conglomeration of races.
Fromthe pre-spanish times to the present,
our banking history has withstood the
traces of practically every race and
influence that dominated our country
through the years. So much so, that we
could conveniently divide the periods as
that of....
Spanish Era
SPANISH ERA
The Obras Pias ceased to operate in
1820 and was totally non-existent by
1851.
The spanish gov’t., cognizant of the
improving progress, granted a charter to
establish a first commercial bank in
1828.
The Banco Español-Filipino
perform general banking functions and
partly financed foreign trade. It was also
given a privilege of note issue on October
17, 1854.
The pesos fuertes, issued by the
country’s first bank, the El Banco Español
Filipino de Isabel II, were the first paper
money circulated in the Philippines.
BPI issued First Notes
Suez Canal
• 1853 Banco Peninsular Ultramarino of
Madrid put up a branch in the Philippines,
but stop operation after 4 years.
• By the end of Spanish regime, there were
four banks in operation, three of which are
commercial and one a savings bank .
Supervision and regulation were negligible.
There were only the Spansh Civil Code and
the Code of Commerce regulating banking
business. The gov’t. had no definite
commitments and responsibility to the banks
and their clients. Filipino interest in the
banking business then was almost nil.
American Era
Banks operating during the Spanish regime
continues to do business and were soon
joined by branches of the International
Banking Corporation (subsequently absorbed by
the National City Bank of New York) and the
Guaranty Trust Company.
• 1906 The Postal Savings Bank was created
as part and parcel of the Bureau of posts to
inculcate the habit of thrift in the minds of the
people, particularly those in the low income
groups.
• 1908 the Agricultural Bank, with a
capitalization of P1,000,000.00 was
established. This failed however, due to
meager capital
Foreign banks dominated the Philippine
scene until 1916 when the Philippine
National Bank was granted its charter.
This was capitalized at
P 20,000,000.00, which was almost entirely
subscribed by the government and a little of it
by private citizens.
It was granted the privilege to issue its own
notes.
It was engaged in extending short-term notes
to merchants and long-term loans to
agriculture and industry. It established
branches, agencies, and sub-agencies in the
provinces. It was, however, re-organized in
1934 and its capital was reduced to
P 10,000,000.00
AMERICAN
ERA
1900 The Philippine Commission headed by
William H. Taft created the Bureau of Insular
Treasury which was tasked to receive and
disburse public funds and account for the
same. It also began the supervision of the
country’s banks.
1901 The Bureau of Insular Treasury was
placed under executive control of the
Department of Finance and Justice by Section
3 of Act No. 222
1905 The Bureau of Insular Treasury was
renamed to Bureau of the Treasury by Act No.
1679 and given the additional task of
coinage and currencysupervision.
After World War 1, more banks were
established.
1919- Yokohama Specie Bank
1920- China Banking Corporation
- the Peoples Bank and Trust Company
1926- Mercantile Bank of China.
1929- The Bureau of Banking assumed the
supervision of the country’s banks from the
Bureau of the Treasury.
1930- the year marked the milestone in
banking history with the establishment of
the Manila Clearing House, which was
organized only by domestic banks.
With these developments, the banking
industry gained stability and was exempted
from the Banking Holiday of 1933.
Upon the establishment of the
Commonwealth, still other banks joined in.
1937- Nederlandsch Indische Handelsbank
opened a branch
1938- Philippine Bank of Commerce, the
First private bank with genuine Filipino
capital, opened its doors for business.
1938- The Bank of Taiwan was granted
permission to perate a branch in Manila.
1939- three Banks commenced commercila
banking operation namely;
Bank of the Commonwealth
Philippine Bank of Communications and the
government-owned
Agricultural-Industrial Bank.
At this time, there were all in all 17 banks with
the same number of Manila offices, 22
provincial branches, 54 provincial agencies
and 1000 sub-agencies. Of the total number
of banks, two (2) were government-owned.
The others were a mixture of domestic and
foreign capitalization.
Definite steps to supervise and regulate banking
business were necessary as some foreign banks
were not branches but main offices. As such, the
first Philippine Commisssion passed Act 52
which provided for the examination and
inspectionof banks as an initial step toward the
objective of safeguarding the interests of
depositors and stockholders.
Japanese Era
Postwar Era
Traces of Banking History
The spanish Era
The American Era
The Japanese Era
The post-war era, and
The present
Banking Holiday
When a new president, Franklin Delano Roosevelt
was inaugurated in March 1933, banks in all 48
states had either closed or had placed restrictions
on how much money depositors could withdraw.
FDR's first act as President was to declare a national
"bank holiday" – closing the banks for a three-day
cooling off period.
Charter
a written grant by a country's legislative or
sovereign power, by which a body such as a
company, college, or city is founded and its
rights and privileges defined.
Conglomeration
a cluster; things joined into a compact
body, coil, or ball,
a mass of miscellaneous things
Banko Sentral Ng Pilipinas
Established 1949
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