MODULE 1: HISTORICAL DEVELOPMENT OF PHILIPPINES was created establishing a

BANK AND THE LAWS OF PHILIPPINE BANKING – managed monetary system in the
(PRELIM) Philippines. It was given the sole authority to
issue the republic’s new paper money and
BANK REGULATION - is a form of government
regulate and supervise the country’s banking
regulation which subjects banks to certain
system.
requirements, restrictions and guidelines, designed
to create market transparency between banking PHILIPPINE BANKING LAWS:
institutions and the individuals and corporations
• Republic Act No. 7653 – The New Central Bank
with whom they conduct business, among other
Act which was approved on June 14, 1993
things.
• Republic Act No. 3765 – Truth in Lending Act
HISTORICAL DEVELOPMENT OF BANKS:
An Act to Require the Disclosure of Finance
➢ OBRAS PIAS (PIOUS WORKS) – banking in Charges in Connection with Extensions of Credit
the Philippines began in the 16th or the Truth in Lending Act (June 22, 1963)
century by establishment of this organization
• Republic Act No. 2655 – Usury Law An Act
composing of layman associated with
Fixing Rates of Interest Upon Loans and
religious order.
Declaring the Effects of Receiving or Taking
➢ BANCO ESPANOL-Filipino de Isabel II was the Usurious Rates and for Other Purposes
first state bank in the Philippines that was (February 24, 1916)
established on August 1, 1851 by the Board
• Republic Act No. 3591 – Philippine Deposit
of Authorities (Junta de Autoridades) in
Insurance Corporation An Act Establishing the
Manila because of the need for more
Philippine Deposit Insurance Corporation,
extensive bank services and facilities. In
Defining its Powers and Duties and for Other
January 1, 1912 the name was changed to
Purposes (June 22, 1963)
Bank of the Philippine Islands.
• Republic Act No. 9160 – Anti-Money
➢ MONTE DE PIEDAD Y CAJA DE AHORROS -is
Laundering Act An Act Defining the Crime of
the first mutual savings in the country. A
Money Laundering, Providing Penalties therefor
unique combination of savings banks and
and for Other Purposes (September 29, 2001)
pawnshop opened in 1882 was provided
initial capital by the Obras Pias. The bank • Republic Act No. 265 – Central Bank Act of
was then renamed Monte de Piedad and 1948 An Act Establishing the Central Bank of
Savings Bank. the Philippines, Defining its Powers in the
Administration of the Monetary and Banking
➢ RODRIGUEZ BANKS - was among the first
System, Amending the Pertinent Provisions of
bank that emerged in the early 19th century
the Administrative Code with Respect to the
which was more of a loan association than a
Currency and the Bureau of Banking, and for
regular bank
Other Purposes (June 15, 1948)
➢ In 1906, Postal Savings Bank was put up and
• Republic Act No. 1405 – Law on Secrecy of
it was the first agricultural bank. Later on, its
Bank Deposits An Act Prohibiting Disclosure of
assets and liabilities were transferred in 1916
or Inquiry into, Deposits with any Banking
to the Philippine National Bank.
Institution and Providing Penalty Therefor
➢ Three years after the American Regime (September 9, 1955)
ended, the CENTRAL BANK OF THE
• Republic Act No. 8791 – the General Banking b) INVESTMENT BANKING - focus on
Law An Act Providing for the Regulation of the services for major investors
Organization and Operations of Banks, Quasi- and companies. (asset management,
Banks, Trust Entities and for Other Purposes mergers and acquisitions, raising capital,
(May 23, 2000) securities trading, and securities
underwriting.)
• Republic Act No. 337 – the General Banking
Act An Act Regulating Banks and Banking UNIVERSAL BANK CONCEPT:
Institutions and for Other Purposes or The
➢ The universal bank concept is most relevant
General Banking Act (July 24, 1948)
in the US AND UK.
MODULE 2: CLASSIFICATION OF BANKS - PRELIM
➢ There were once many pure investment
BANKS - A financial institution that accepts banks. However, since the Global Financial
deposits and channels the money Crisis of 2007/8 and the Great Recession
into lending activities. that followed, the banking environment has
changed.
SEVEN CLASSIFICATIONS OF BANKS:
EXAMPLES OF UNIVERSAL BANKS :
1. Universal Bank
a) Land Bank of the Philippines (Landbank)
2. Commercial Bank
b) Bank of the Philippine Islands (BPI)
3. Thrift Bank
c) BDO Unibank, Inc. (BDO)
4. Rural Bank
d) Rizal Commercial Banking Corp. (RCBC)
5. Cooperative Bank
e) Union Bank of the Philippines (Unionbank)
6. Islamic Bank
7. Digital Bank
2. COMMERCIAL BANKS - They are profit-oriented
financial institutions that accept deposits,
1. UNIVERSAL BANKS - is a bank that combines provide loans, and offer services like overdrafts
the three main services of banking under one and electronic fund transfers.
roof.
TYPE OF COMMERCIAL BANKS:
a) RETAIL BANKING – Retail banking
A. PUBLIC SECTOR BANKS – are nationalized
services members of the public and
by the government of a country. In public
small and medium-size businesses.
sector banks, the major stake is held by the
(savings accounts, checking
government.
accounts, overdrafts, personal loans,
and mortgages.) B. PRIVATE SECTOR BANKS - major part of
share capital is held by private businesses
a) WHOLESALE BANKING -
and individuals. These banks are registered
involves borrowing and lending
as companies with limited liability.
money on a very large scale. (Pension
funds, giant companies, governments, C. FOREIGN BANKS – are headquartered in a
and other financial institutions.) foreign country but operate branches in
different countries.
FUNCTIONS OF COMMERCIAL BANKS: 1. SAVINGS BANK - Focus on savings
deposits and mortgage loans.
➢ Commercial banks are institutions that conduct
business for profit motive by accepting public 2. PRIVATE DEVELOPMENT BANK -Support
deposits for various investment purposes. government policies.
3. STOCK SAVINGS & LOAN ASSOCIATIONS –
Use long-term deposits for home loans.
A. PRIMARY FUNCTIONS- Accepting Deposits
EXAMPLES OF THRIFT BANK:
TWO TYPES OF DEPOSITS:
a) Allied Savings Bank
a. Demand Deposits
b) City Savings Bank
b. Time Deposits
c) Legazpi Savings Bank, Inc.
c. Advancing Loans
d) Luzon Development Bank
e) BDO Elite Savings Bank, Inc.
B. SECONDARY FUNCTIONS – agency functions,
general utility functions, and other functions
EXAMPLES OF COMMERCIAL BANKS: 4.RURAL BANKS - provide essential
financial services to individuals and businesses in
a) BDO Unibank, Inc
rural communities.
b) Metrobank
EXAMPLE OF RURAL BANKS:
c) Bank of the PH Island (BPI)
a) Rural Bank of Cardona (Rizal)
d) Land Bank of the Philippine
b) Rizal Bank (a MF RB)
e) Philippine National Bank (PNB)
c) Quezon Capital Rural Bank, Inc
d) Rural Bank of Barili (Cebu)
e) Metro South Cooperative
3. THRIFT BANKS - Also known as savings and
loan associations. Provide basic banking
services, including savings and mortgage loans. 5.COOPERATIVE BANKS - is a retail
It Qualify as depository institutions and commercial banking organized on a
cooperative basis.
FUNCTIONS:
➢ cooperative banking institutions take deposits
1. Accept deposits and offer mortgage loans.
and lend money in most parts of
2. Provide higher interest on savings and lower the world.
interest on loans.
EXAMPLES OF COOPERATIVE BANKS:
3. Help reduce monopoly in the lending
a) Cooperative Bank of Benguet
market.
b) Bataan Cooperative Banks
c) Cooperative Rural Bank
TYPES OF THRIFT BANKS:
 4. Management with sufficient expertise and
integrity
6.ISLAMIC BANKS - Islamic banks are financial
institutions that operate according to Islamic CAPITAL REQUIREMENT/STOCKHOLDINGS:
(Sharia) law, which prohibits interest (riba) and
1. Banks should comply with the required
promotes ethical and fair financial practices.
minimum capital enumerated below or as may
Instead of charging interest, Islamic banks use
be prescribed by the Monetary Board:
profit-sharing, trade, and leasing methods to earn
money. TYPE OF BANK AMOUNT
EXAMPLE OF ISLAMIC BANKS: Universal Bank 4,950,000
a) Al-Amanha Islamic Bank Commercial Bank 2,400,000
b) Maybank Thrift Banks 1,000,000
500,000,00
7.DIGITAL BANKS - are banks that operate entirely 250,000,000
online, without physical branches.
Rural Banks 100,000,000
EXAMPLES OF DIGITAL BANKS:
50,000,000
a) Maya Bank
25,000,000
b) Gotyme Bank
Cooperative Bank 10,000,000
c) Sea Bank
MODULE 3: BANK ORGANIZATION AND
MANAGEMENT - PRELIM 2. At least 25% of the total authorized capital
stock should be subscribed by the subscribers
➢ MONETARY BOARD’S ROLE – Known as Central of the proposed bank.
Banks that is responsible for taking control the
country’s money supply and to control inflation. 3. The stockholdings of an individual, family,
corporate or business group in any bank should
➢ CERTIFICATE OF AUTORITY TO REGISTER – Is a be subject to the following limits:
legal form issued by the BSP that allow a
business to operate legally. a) Foreign individuals and non-bank
corporations can own or control up to
➢ HISTORY OF BANKS – It began with 40% of the voting stock of a domestic
establishments run by priests, where wealth bank
and financial transactions of a banks were
accumulated. b) A Filipino individual and a domestic non-
bank corporation can each own up to
CORE PRINCIPLES IN BANK CREATION: 40% of the voting stock of a domestic
1. Suitable shareholders bank.

2. Adequate financial strength 4. The citizenship of the corporation which is a

stockholder of a bank should follow the
3. Legal structure in line with its operational citizenship of the controlling stockholders of the
structure corporation, irrespective of the place of
incorporation.
5. At least 60% of voting stock of any commercial
bank should be owned by Filipino citizens.
BANK MANAGEMENT - means the process of
governing the bank’s statutory activities. Bank
management can be defined by the particular
INCORPORATORS/SUBSCRIBERS, DIRECTORS AND
object of management – financial activities
OFFICERS:
connected with banking concerns.
• The incorporators/subscribers and proposed
CHARACTERISTICS OF BANK MANAGEMENT:
directors and officers should be persons of
integrity and of good credit standing in the A. Management expertise in planning,
business community management functions, strategic analyses
and policy development
B. Liquidity management
REQUIREMENTS WITHIN 30 DAYS AFTER FIRST DAY
OF OPERATIONS: C. Planning quality
1. BSP should be informed about the first day of D. Risk management
operation and the banking hours and days
E. Interest rate, currency and credit risk
2. A Statement of Condition should be submitted management
as of the first day of operation.
F. Management of human resources
G. Management of control systems
REVOCATION OF AUTHORITY TO ESTABLISH A
H. Auditing, and internal auditing
BANK:
I. Management of profitability and risk
The authority to establish a bank will be
liquidity
automatically revoked if the bank is not organized
and opened for business after receipt by the J. Management of information technology
organizers of the notice of approval by the system: accounting, strategic planning,
Monetary Board/Governor of their application: current analysis and integrated workflow
automation
• Within 6 months for commercial and thrift
banks WHAT DOES A BANK MANAGER DO?

• Within 8 months for rural banks A person tasked with managing the bank’s financial
and other banking activities is called a Bank
Manager. Here’s what a Bank Manager must
THE BOARD OF DIRECTORS: perform regarding bank management:

• Number of Members (Board Directors) – A. Discusses the trends affecting the whole
should have 5-15 members, it should be financial services and related industries.
odd number and has two independent B. Outlines how the behavior of banks
directors.
changed.
• Independent Director C. Assesses the effects of change for bank risk
• Non-Filipino Citizens management.

• Prohibition on Public Officials

D. Coordinate risk management procedures to
an ever-changing international financial
system.
E. He/she assesses the relationship between
capital adequacy and bank performance.
F. A Bank Manager discusses how interest-rate
risk can be averted using hedging activities
using financial derivatives.
G. A Bank Manager analyzes how costs and
funding mix are vital to bank management
when giving loan and making investment
decisions.