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The Rise and Fall of Banco Filipino

Banco Filipino’s eventual closure left remnants of its glorious past.
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There is a village south of Metro Manila that spans the cities of Parañaque and Las Piñas, a village so expansive that it has a horse ranch, its own gasoline station, and seven gated entrances to keep everything inside it exclusive. B.F. Homes, short for Banco Filipino Homes, is the real estate offshoot of its eponymous developer. The village, once touted as Asia’s largest subdivision (it is larger than San Juan city), was the crown jewel of the assets that belonged to the now-defunct Banco Filipino.

The History of Banco Filipino

Banco Filipino was established in 1964 by Tomas Aguirre, who is the patron of the same family who owns Agencia de Empeños de Aguirre, a popular pawnshop at the time. In fact, it was profits from the pawnshop that allowed Aguirre to establish the bank.

Banco Filipino was a fast-rising star, such that in 1966, a mere two years after its founding, it was considered the premier banking institution in the Philippines. By the 1970s, everyone with a bank account had a bank account in Banco Filipino.

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Perhaps it was its Filipino branding that moved thousands to put their savings in the bank. Banco Filipino had a unique slogan, Subok na matibay, subok na matatag (Proven to be strong, proven to be stable).

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Its client base reached one million accounts in 1972, less than 10 years after opening its first branch. The feat, which no other bank in the Philippines had done before, was thanks to its aggressive expansion plan, especially in the countryside where Filipinos were hesitant to open savings accounts.

One of the best strategies it used to expand its client base involved children. Banco Filipino launched the Happy Savers Club in the ’70s and aired the campaign on TV and radio, complete with a jingle, mascots, and dancing. It was also the first bank to accept small peso deposits. Sari-sari store owners and vendors came in with bills or coins wrapped in brown paper bags—profits from their daily earnings. 

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By 1981, the bank was worth a staggering P4 billion in assets, with over 89 branches spread across the country. All of these came to an abrupt end in 1985 during the time of dictator Ferdinand Marcos, the Bangko Sentral ng Pilipinas (BSP) ordered the bank’s closure for alleged insolvency or inability to pay debt due to mismanagement by its executives. 

The 1985 Closure of Banco Filipino

Millions of Filipino account holders at Banco Filipino felt angry over the closure, including the small depositors who put their money in a bank for the first time. Banco Filipino was considered the Philippines’ most reliable bank, and it had shown no obvious signs of unhealthy financial practices. Nevertheless, when the Bangko Sentral declared Banco Filipino insolvent in 1985, it drove the institution to bankruptcy. People were allowed to withdraw their savings before it eventually closed.  It reopened in 1994 when the Supreme Court declared its closure illegal.

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Although Banco Filipino reopened in 1994, it was never the same bank. Out of the 92 branches it operated nationwide, only 15 managed to reopen. It lost millions of its clients, and billions of its assets because of its 1985 closure.

Ironically, Banco Filipino decided to retain its slogan, Subok na matibay, subok na matatag, when it reopened in 1994. The slogan just became a sad reminder of the bank’s former glory, and not a lot of people wanted to put their trust in a bank that cost them billions.

 

Banco Filipino’s Second Shutdown

Banco Filipino limped through the 1990s and 2000s, existing as an alternative, less crowded bank in Metro Manila. Its offices retained the brown furniture from the ’70s, relics of its glory days. It also attempted to bring back the Happy Savers Club, but this, too, paled in success compared to its heyday. The bank also suffered from mismanagement.

In 2011, the BSP closed Banco Filipino again because of alleged excessive liabilities incurred by the bank versus its assets. The BSP also filed cases against Banco Filipino officials including chairman and president Teodoro O. Arcenas, Jr., vice chairman Albert C. Aguirre, executive vice president Maxy S. Abad, directors Orlando O. Samson, Adelaida C. Adduru-Bowman, Francisco A. Rivera. and Ramon E. Montano, executive vice president Catherine Aguirre-Hernandez, and senior vice president Roberta Afable for allegedly taking out “self-serving loans” worth P2.192 billion.

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In 2019, former officials of Banco Filipino were sued for alleged unsafe business practices. Among them was former Foreign Affairs Secretary Perfecto Yasay, who served as the bank’s director.

 

Banco Filipino Today

Today, assets of Banco Filipino languish in forgotten places, including ruins of a glitzy hotel in BF Homes called Tropical Palace, its abandoned headquarters in Makati, and the massive horse ranch in BF Homes that never ran out of water to keep the grass green for its horses. Its former branches in Metro Manila are dark spaces avoided by people, if these are not yet refurbished as different banks. Banco Filipino is unlikely to regain its former glory, but remnants of that past remains. 

Banco Filipino’s downfall is a lesson for aspiring bankers. It is a story of how debt, mismanagement, and politics caused one of the Philippines’ most powerful families to fall from its high perch with a single snap from the BSP’s fingers under the Marcos regime.  

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About The Author
Mario Alvaro Limos
Features Editor, Esquire Philippines
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