History is littered with the names of companies and insitutions that once stood mighty and proud but have since retreated into the shadows or disappeared from our consciousness completely. For every Bank of the Philippine Islands (BPI) or San Miguel Corp. that has been around for over a century, countless more have been founded, built up, thrived, struggled, and eventually closed down, merged or acquired by another, often larger, company.
One of these names is the Manila Banking Corporation, or simply Manila Bank. Older generations may recall the bank flourishing back in the 60s and 70s. Younger ones might have a hazy memory of it. But we don’t see any traces of it today.
What happened to Manila Bank?
Origins of Manila Bank
Manila Bank was founded by the Puyat family in 1961. The Puyats built their fortune through patriarch Gonzalo Puyat, who, in the 1930s and 1940s, acquired his wealth through a scrap iron and furniture business and eventually got into lucrative government construction contracts and lumber concessions in Mindanao.
According to the book Capital, Coercion and Crime: Bossism in the Philippines by John Thayer Sidel, by the 1950s, Gonzalo Puyat & Sons had a steel plant, and by the 1960s, the company had three manufacturing divisions—furniture, galvanized iron sheets, and flour. It had also managed to establish the Manila Banking Corporation, which was set up by Gonzalo’s son Gil Puyat.
The younger Puyat had previously served as director of the Philippine National Bank from 1945 to 1949. Afterwards, he pursued a career in politics, winning a seat in the Senate in 1951 and becoming president and major financier of the Nacionalista Party. Gil Puyat won reelection three times: 1957, 1963, and 1969. He ran for Vice President in 1961 as Carlos Garcia’s running mate but lost to Emmanuel Pelaez.
Sidel goes on to write that the Puyats conitinued to enjoy “political clout” under President Ferdinand Marcos, even during the Martial Law years.
“Their flagship, the Manila Banking Corporation (MBC), was one of the favored commercial banks during the 1970s, but by the time of Marcos’ ouster MBC was teetering on the verge of bankruptcy due to bad loans extended to agribusiness affiliates and other nonperforming accounts,” Sidel writes.
Indeed, in 1984, court records show that Manila Bank was placed under comptrollership by then Central Bank Governor Jose B. Fernandez in view of the bank’s financial distress.
The Bangko Sentral ng Pilipinas (BSP) or Central Bank’s Monetary Board found that Manila Bank by then was experiencing liquidity problems “and had incurred chrocnic reserve deficiencies against deposit liabilities.” A report on Manila Bank’s financial condition revealed that, as of end-1985, it had a net loss P362.4 million and that “the bank’s financial condition continued to deteriorate.”
The BSP then ordered Manila Bank closed in 1987 and its assets liquidated a year later.
Rebirth of Manila Bank
Twelve years later, on June 26, 1999, Manila Bank was allowed to reopen as a thrift bank. Although the BSP granted it 70-plus branch licenses nationwide, it had only opened 11 by May 2000 because the company said it had difficulties looking for the best sites.
As a thrift bank, Manila Bank became quite busy within its first year of operations. In October 1999, it acquired 60 percent of the formerly Malaysian-controlled TA Bank, whose owners divested after the bank failed to meet higher capital requirements. Manila Bank had also acquired Omni Bank in August that year and said it was looking to acquire or merge with other commercial banks.
In that Philippine Star article, Manila Bank’s SVP and Corporate Secretary David Puyat said they had ambitions of becoming a commercial bank later in the year 2000 soon after it completed its merger with TA Bank.
(According to the BSP, the main difference between a thrift bank and a commercial bank is essentially size. While thrift banks are essentially engaged in accumulating savings of depositors and investing them, as well as providing short-term working capital and medium- and long-term financing to a variety of businesses, universal and commercial banks offer the widest variety of banking services among financial institutions and are authorized to engage in underwriting and other functions of investment houses).
By the mid-2000s, Manila Bank was well on its way to reclaiming its former glory, opening at least 27 of the 70-plus branch licenses it was allowed under its new terms by the BSP’s Monetary Board. At some point it was even able to open the Manila and Hong Kong Capital Corporation Limited, a wholly owned subsidiary in Hong Kong.
In December 2006, Manila Bank’s total assets stood at P10.2 billion, its loans at P4.4 billion, and deposits at P5.2 billion.
But with its success, Manila Bank also began to attract potential buyers. In June 2007, China Banking Corporation, a member of the powerful Sy family’s SM Group, announced it had acquired the Puyat family’s majority share of 87.5 percent in Manila Bank. News reports then said that the acquisition was part of China Bank’s aggressive expansion of its distribution network, as well as the substantial growth in assets and loan portfolio.
“It was a difficult decision for the family to let go a business we have painstakingly built over the years,” said Manila Bank chairman Luis Puyat. “In looking for a partner, we were attracted by China Bank’s industry-best capital strength, financial stability, loyal customers and sustained profitability. We are gratified that Manila Bank will become a crucial part of China Bank’s plans to become a strong major player in the industry.”
Of the 75 branch licenses of Manila Bank, 46 were used by China Bank, which renamed the new bank China Bank Savings in September 8, 2008.
It’s here that the name and story of the company once known as Manila Bank finally comes to an end. For now, at least.
