Banking Aurora Borealis
Banking Aurora Borealis
Banking Aurora Borealis
College of Law
General Luna, St. Iloilo City, Philippines
Aurora Borealis
October 8, 2018
I. INTRODUCTION
persons, with a common bond of interest, who have voluntarily joined together to
achieve their social, economic and cultural needs and aspirations by making equitable
contributions to the capital required, patronizing their products and services and
accepting a fair share of risks and benefits of the undertaking in accordance with the
organized for the primary purpose of providing a wide range of financial services to
There are a total of twenty-five (25) existing cooperative banks listed under the
Banko Sentral ng Pilipinas (BSP) database. Ten out of the said twenty-five are
recognized as part of the top one hundred rural and cooperative banks in the
Philippines according to total assets as of March 31, 2018. The top performing
cooperative bank based on total assets is First Isabela Cooperative Bank Inc.
(FICOBANK).
Philippines of 2008 which was amended by Republic Act 9520. Cooperative banks are
also regulated by Republic Act 8791 (the General Banking laws of the Philippines) and
BSP Circulars.
The aim of this paper is to introduce four (4) cooperative banks existing and
operating in the Philippines. The following will be highlighted by this paper: 1) brief
The Metro South Cooperative Bank (MSCB) is the first cooperative bank in the
Authority (CDA) as a cooperative, and with the Bangko Sentral ng Pilipinas (BSP), as a
On March 24, 1997, Metro South Cooperative Bank started banking operation
owned by more than 800 cooperatives nationwide with a total paid in capital and net
worth of P587.3M and P656.0M respectively and total assets of P 3.48B as of December
31, 2017.
In 2018, MSCB will undergo a digital transformation as the first cooperative bank
that will collaborate with leading Fintech companies enabling MSCB to expand and
attract other markets, tapping into segments that have not been tapped before;
As the only cooperative bank located in NCR, it has flourished in the past 21
years because of its prime location. In fact, it considers its location as its competitive
edge. Its basic function is to provide banking services to cooperatives found within NCR.
Currently, the Chairman of the Board of Directors is Father Serafin Peralta and
the President is Ms. Renelia Estioko. Below are the Core Values, Vision, Mission, Goals,
and Financial Products of Metro South Cooperative Bank. Its financial products are
further divided among credit facilities, special loans, and savings deposit.
Core Values
Vision
Mission
To provide quality banking services of all our stakeholders and strengthen the
cooperative movement.
Goals:
patronage refund.
their needs.
status not only of its members but also of the community where we
Financial Products
Credit Facilities
1. Credit Line
2. Term Loan
business loan
8. Back-to-Back Loan
Special Loans
TANGING YAMAN
CAR-A-VAN LOAN
Savings Deposit
1. Regular Savings
2. Individual
100,000.00
1. Regular Savings
The First Isabela Cooperative Bank (FICOBank) is one of the pioneer and
prominent cooperative banks in the Philippines. Its origin is deeply rooted in the
nayon, which represented the farmers who have limited resources and access to
banking services. From a molehill-size cooperative rural bank that it opted to be, it
From the time it launched the first salvo of its banking services in 1980,
FICOBank continually operates on the basis of firm and sound cooperative banking
principles. And for the reason that its cooperative nature translates to “people helping
people transform their lives,” FICOBank is more involved in the community than any
other banking institution. To a great extent, it contributes to the socio-economic
farmers, fishers and their organizations; micro, small and medium entrepreneurs; rural,
urban and overseas workers; and professionals, pensioners and other segments of the
market. It also provides money-wiring and cash-dispensing services to the public. Its
extensive array of innovative financial products and services and its exclusive list of
complementary development support and solutions are adaptive and responsive to the
individual members and 100,000 depositing and borrowing clients. This proves that
FICOBank is a real people's bank that has a big heart for the common good of the
greatest number.
FICOBank’s products and services can be accessed by the banking public at its
Vizcaya, Cagayan, Tarlac, Nueva Ecija, Bataan, Pampanga, Pangasinan and Bulacan.
These operating units effectively extend the Bank’s market reach and bolster its
True to its unique character, FICOBank is owned, managed and controlled by its
governed by its Board of Directors (BOD), which is composed of seven regular directors
and two independent directors. The BOD, in its oversight function, is assisted by 10
Board Committees. Its corporate and business affairs are administered by the Senior
Management (SM), Treasury & Corporate Services Group (TCSG) and Operation &
outstanding performance has been consistently noticed through the years by the Land
Bank of the Philippines, Cooperative Banks Federation of the Philippines, Bangko Sentral
organizations.
area of operation (Regions I-II-III and CAR). In full awareness of this institutional
pursuit, FICOBank puts first and foremost the common interest and aspiration of its
members and clients, along with their families and communities. Providing excellent
customer service, fostering longer-term relationships and offering the best possible
Corporate Identity:
Philippines. It provides a broad line of innovative financial products and services, and
wide range of development support and solutions that are adaptive and responsive to
banking public in its areas of business operation in Northeast, Central and Northwest
Luzon. It’s rare nature, as a cooperative bank, sets it apart from all other banking
FICOBank Works in the dynamics of a corporation where the core officers are
composed of the Chairman, the Vice-Chair, and the Board of Directors. These officers
are responsible for appointing the president of the cooperative bank who shall serve as
Chief Executive Officer and shall be responsible for the general supervision of the
banking operation of the whole banks including its 34 branches. All of the branches
including the main office shall be under the direct supervision of the Executive Vice-
President for the Operation. Organizational structure is herein referred to as Figure No.
1.
of the transparency and dedication of its members who are instrumental in keeping it
officers. The fact that it already has 34 branches in Regions 1, 2, 3 and other areas in
the Cordillera Autonomous Region (CAR) is already an apparent manifestation that the
bank is solid. In the subsequent years the bank is projected to increase its capitalization
to P5.2 Billion pesos from the P4.11 Billion assets this year. This is needed to attain its
vision of extending its operations to different part of the country especially in the Ilocos
Region where poverty rate remains below the normal threshold of the government
standard by providing the agri-aqua sectors with soft loans and micro-finances for
Chairman
Board of Directors
Corporate Secretary
C. Cooperative Bank of Benguet
Land Bank of the Philippines (LBP) facilitated by its Field Office Manager, Leon
1990. This caught the interest of the cooperative leaders in Baguio City and Benguet in
owning a cooperative bank. A special committee was created to plan and organize a
The creation of a cooperative bank was approved and appointed Prof. Dizon
Mayos from Benguet State University to head the interim Board of Directors. Mr. Gerry
Development Project was assigned to assist the interim officers in the collection of
share stock pledges of cooperatives to meet the minimum paid-up share of Php
Pilipinas.
On May 22, 1992, the BSP issued the “Authority to Organize” to CBB and
subsequently its registration was approved by CBA on June 8, 1992. With the continued
technical assistance from Land Bank, the pioneer staff worked and complied the pre-
opening requirements. On September 15, 1992, Central Bank Governor Jose L. Cuisa,
Jr. signed the ”Authority to Operate” for the Cooperative Bank of Benguet, thus,
It started its business operations on October 1, 1992 CBB, owned by the General
of the Province and the individual/preferred shareholders within and outside the
Cordillera. The first set of regular Board of Directors was chaired by Mr. Casio P. Paris,
Sr. and the pioneer staff is headed by Mr. Gerry T. Lab-oyan as General Manager.
On February 6, 1997, CBB opened its two branches: one at Abatan, Buguias,
Benguet and the other at Baguio City. In 2007, it expanded its services outside Benguet
Province and opened its third branch at Rosario, La Union on June 5, 2008. The Bank
on its 18’th year has already four operating branches where its clients can easily access
on their most expedient preferences. For these achievements, CBB received the 2009
Presidential Citation for Best Practices in Improving Access to Finance for Implementing
Services
projects or rehabilitation
project.
purchase of commodities,
consumers.
blacksmithing/welding shops;
technology.
monthly repayment.
organizations/
cooperatives/federation.
enterprises
is required and the maximum is not more than 40% of the total paid-up capital of the
CBB. This offering is limited to cooperative organizations. The shares are not
shareholders and they can be voted upon to the position of director or officer.
For a Preferred shareholder, one has to buy a minimum of one share amounting
become associate member-investors. It’s a non-voting shares but earns a 12% non-
a bank that will answer to the financial needs of the cooperatives and their members, a
bank that will provide the support funds needed to put up livelihood projects that will
not only provide employment but also uplift the poor from poverty and for them to be
B. maintaining a deposit mix of 60% savings and 40% other deposit type;
portfolio ; and
Organizational Set-up
Specific Functions
passbook.)
crops/commodities production.)
● Salary & Other Personal Loan (To finance various financial needs such
● Housing Loan (To finance purchase of residential lot, house and lot,
house.)
● Car Loan (To finance automobile purchase for personal or business use.)
● Easy Cash Loan (To finance immediate financial needs and guaranteed
● Cooperative Loan (To finance institutional loan for member and non-
On May 23, 2003. SOCIAL SECURITY SYSTEM (SSS) appointed and authorized
The bank and all its branches in different locations has accepted the
members.
Bank of the SSS pensioners monthly pension where the pensioner was required to open
This scheme has avoided loss and misdelivery being encountered in the present
payment-by-check scheme.
On March 8, 2002. The Bank entered into a Sub-Agent Agreement with PETNET
to offer for sale to the general public WESTERN UNION's Send/Pay-Out Money Transfer
Service. Through this sub-agency agreement, the bank was able to provide additional
service to its 3,100 clients with a total amount of P21 Million (pesos) of pay-out
transfers, particularly in Catanauan Branch covering the Bondoc Peninsula area which
has the biggest number of serviced recipients from senders all over the world.
III. COOPERATIVE BANK OF ILOILO: A THEORY BEHIND ITS CLOSURE
Bank Run
A bank occurs when many people try to withdraw their deposits at the same
time. As much of the capital in a bank is tied up in investments, the bank’s liquidity will
sometimes fail to meet the consumer demand. This can quickly induce panic in the
public, driving up withdrawals as everyone tries to get their money back from a system
that they are increasingly skeptical of. This leads to a bank panic which can result in a
systemic banking crisis, which simply means that all of the free capital in the banking
system is withdrawn.
feedback loop effect in the stock markets, which was a much more dynamic factor in
more recent banking crises. John Maynard Keynes once compared financial markets to
a beauty contest, where investors are merely trying to pick what is attractive to other
self-fulfilling investment thought process. This can create dramatic rises and falls
(bubbles and crashes), which in turn can throw banks with poorly designed leverage
Regulatory Failure
One of the simplest ways in which bank crises can occur is a lack of
economy can create something of a domino effect. In 2008, when the U.S. economy
collapses, the reduced buying power and economic output from that economy
dramatically damaged all economies dependent upon it (which includes most of the
competition because such bank are more stable and can offer better services; such
In the end Cooperative Bank of Iloilo failed to liquidate its assets to pay all
the money owed by their depositors. Furthermore, CBI cannot compensate its bank
On January 30, 2012, Sunstar reported that the Iloilo Cooperative bank was
January 20, 2012. The latter took custody of the bank by virtue of a resolution
approved by the Monetary Board on January 20, 2012. The PDIC then took over the
The latest available records as of September 30, 2011, the bank had 2,230
accounts with total deposit liabilities of P129.47million. PDIC said that upon takeover,
all bank records shall be gathered, verified and validated. Valid depositors can only be
paid a maximum of P500,000 net of all obligations with the bank under the maximum
address, of the depositors with valid accounts with balances of P10,000 and below, who
have no outstanding obligations with the bank and who have updated their addresses
with the bank in the past year, and they need not file deposit insurance claims.
Depositors whose accounts have balances of more than P10,000 and have
outstanding obligations are advised to file their deposit insurance claims. The claims
The inclusive dates and schedule were announced through notices that were
posted in the bank premises and other public places as well as through the PDIC
IV. CONCLUSION
V. REFERENCES
Metro South Cooperative Bank. (n.d.). Retrieved September 26, 2018, from
www.mscb.com.ph: https://www.mscb.com.ph/
Philippine Deposit Insurance Corporation. (n.d.). Retrieved July 27, 2018, from
http://www.pdic.gov.ph/files/ccd/COOP%20BANK%20OF%20ILOILO.pdf