By DEE K- CHIONG .Presidenj , Chinn nanking Corporation

On August 16,1920, t he China Banl<ing Corporation fo rmally opened its doors to th amid t he presence of foreign banks and American ru le. epublic,

Today , after sixty years and many t rying times, China Bank has become a reputabl leading commercial hank in the country which extends wide finan~ia l aid to almost ever Y

1stable

commercial, agricult ural and industrial endeavor; sets the pace m improved banking Y '~e Of serves o broad sector of society through its 22 branches nationwide; and participates s:erv'tes; munity welfore projects, civic activities and fund campaigns.

10 COrn.

Its aut horized capitol stock has grown 50 times over t o P?~O mi.llio.n f~om its initia l ca . stock of P10 mill ion in 1920. Tota l resources reached P3.3 b1lhon, md1catmg a growth f ~'ta l per cent from t he 1978 figu re of P2.8 bi llion , while its gross income of P381 .7 million~ 5.6 an increase of 21.9 per cent over 1978's P313.1 million. owed

Dee K -.Chiang, President and Gen~ral Manager •. ~ain~ins that Ch.ina ~ank 's outstandi goal .of serv~ce ~o the peo!lle has made 1t surmount d1ff1cult1es a~d cont•.nue 1ts vital role of ung holdmg the soc1o-econom1c development of the country. Accordmg t o tum, as China Bank P· itself towards the concerns of the new decade, it will " continue to harness its resources to !lears the challenges faced by the banking industry," and intensify its efforts toward the attai nme~eet its goals for the eighties: higher growth rates, manageable balance of payments, renewed em ~~ sis on agro-based industries, and export-oriented business . P ·

CHINA BANKING CORPORATION

60 Years of Fru itfu I S • erv1ce China Banking Corporation , now on its sixtieth

year, takes pardonable pride not only in its con­tinued growth but also in the spirit of service to Philippine society that it has sustained throughout the years. For CBC, the past six decades indeed witnessed a fruitful and meaningful existence.

The records show how, from a struggling bank faced with the perils of a world war, China Bank was able to attain its goal of servicing the financial and credit requirements of a growing Philippines. It like· wise withstood trying times to implement its policy of helping business and industry grow in the country and "to successfully make it to the 80's.

A GLIMPSE OF IDSTORY . The. years followi~g World War I saw the Philip·

pmes still under American rule. The economic situa· tion, however, was starting to pick up and attract enterprising spirits. With the exception of the Bank of the Philippine Islands and the government-owned Philippine National Bank, all the local banks were branches of foreign banks. As more foreign and domestic trades burgeoned, a need for more domestic banks became apparent.

Responding to the call of the times, the late Dee C. Cbuan, lumber T?agnate and philanthropist, and Dr. Albino Z. SyC1p, then a legal practitioner in Manila, met with a group of leading businessmen in lilecember, il9i1.9 at the Oriental Club in Ermita to discuss the groundwork of the organization. Among those present was Oei Tjoe, a wealthy businessman trom Java who subscribed to, and paid in P1 million of · the capital stock of the bank. Some Filipino Chinese Spanish, American and British nationals als~ becam~ stockholders. Their indomitable sp.irit eventually found fulfillment In the incorporntion of the bank on ~July 20, 1920 with an authorized capital stock o£P10 million.

lllhe bank formally opened for business on August 16, i1.920 at No. 90 Rosario Street Manila with a complete line of banki11g facilities and' services to the public. The firsti boar-d of directors was com­posed of Dee C. Chuan, Chah.man; A:Iblno Z. SyCip, Vlce-Chail'man ; Ben1to Sly Cong Bleng, G. A. Cu tJnjleng, Carlos Palanca, Dy Buncio, Uy Yetco, Go J~o, Vlcentl' Gotarnco, Antonio l!.imgenco and Yu Blao Son'tua, members.

The o ~f,Jcers were J!)ee C. Chuan, ~esldenti; Ail' blno z. SyOlp, ViceJPresldent; II. W. McFerran, Acting

190 FOOKIEN II'JMES PHILIPPINES YEARB(!)OK 1980

Manager; Marwin Webster, Secretary-Cashier ; and Jose Damian , Accountant.

In 1924, the Bank moved to its building cons­tructed at the corner of Juan Luna and Dasmariiias Streets to keep pace with growing clientele. The building houses the Head Office to this day.

On August 15, 1925, it opened a branch in Amoy, China and on May 1, 1929, another one in Shanghai.

During the war years, China Bank was forced to close its doors because it was considered as an enemy institution. Dr. Albino Z. SyCip, one of its founders, now deceased, and the late George Dee Sekiat, who would later become its President, were both impri· soned by the Japanese military authorities who con­fiscated all the assets and properties of the Bank.

Then came the battle for liberation of Manila during the early part of 1945 which left China Bank devastated. Under the management of Dr. SyCip who assumed the position after Dee C. Chuan 's death in 1940, the bank was painstakingly rehabilitated. The restoration of the damaged building, equipment and records was not at all a miniscule task. It took the utmost courage of a handful of loyal ·and dedicated employees of the bank who helped with the work.

It was to Dr. SyCip's great relief when he learned of the one factor which would help expedite CBC's resumption of operations: the prescience of the U.S. Treasury officials who, weeks before the Japanese occupation in 1941, gathered the cash of the bank and credited it to its account against the reserves of th.e Philippine Government in New York.

More than ever, a firm determination to start all over again triggered a gathering of forces to blot out whatever scars the war had left behind. Having only P19,962,270.00 in total resources, the Bank struggled for recovery.

Along with its own goal came the task of setting the damaged Philippines back on her own feet . The foremost problem which confronted the country was its dwindling agriculture, trnde, ~'Ommerce und In· dustr.y as well as the dourth of food,, clothing, shelter and materials. To bring in tho necessary goods and to generate funds , China Bank extended wide fi nancial aid to importers of the basic necessities of the Fili· pino people.

From 1946 to the ilrst half of 1950, CBC allotted ~66 million for post-war rehabilitation. Then it went on to financing large-scale projects and new industries

such as those of textiles, food, paints, paper, elec­trical parts and fixtures, cement, plastics, plywood and steel , and agricultural ventures which would sup­ply the Philippines all the important requiremen~. These projects eventually contributed to the coun­try 's Gross National Product.

Occurring within the same period were changes in China Bank's set-up. In 1948, it opened its fm;t loClll brnnch in Cebu City. The following year, its branches in Amoy and Shanghai were both closed down when condi tions in China rendered it impractical to con· tinue their operations.

VEillCLE FOR SOCIO..ECONOMIC DEVELOPMENT

China Bank's dream of serving a broader sector of business and industry was li t tle by little tulfiUed through the gradual establishment of its branches. The Sto. Cristo branch in Manila opened on October 4, 1960. Makati Branch came into being on May ~· 1970, followed by the Caloocan Branch on May 1 • 1973. Another branch started operating in Davao City on May 31, 1976. "ded

In its vast financing program, the Bank 11 d almost every line of commercial , agricul~ml :d. industrial endeavor, from small ventures Ill w to working, poultry, piggery and cottage industries. of the production of grains and the manufacture various products. It also assisted exporters of su~: copra, tobacco, hemp, logs and other indigenous P ducts. . to the

Of equal sign ificance ~re CBC's servu:es il1lted government and the people in general. It coope rnent with the Home Financing Commission, ~. ~v~~ build agency created to help low-income FdiP111 t;ry's their own houses. It also geared itself in the co:.~ it drive towards industrialization ~d ~or w ~vide pioneered in interbank. syndi~te fm~ncmg ft ~orked funds for large.;;cale mdustnal proJects. ti

0 of its

with the Central Bank in the impJementa 0 in une vurious control and monetary policies, always with the government 's development program"ro wide!

China Bank would later on prov~ ho:W :rnmUllitY its commitments were by participating md cBJilPaigJJS. welftu:e projects, civic activitie~, and fun ovation of and subsidizing the construction and ren school buildings. the Ll~

In 1954., it took part in the project of rnrnont pro· Wells Association which helped tbe gove

areas with potable water through the 1116 rural urces of water supply. The proj ct

,;td•·tructiOD of ;ob the tate Albino Z. SyCip, then e01~ pearheade ~oard and General Manager. The wJIS .:m8Jl of the ent Project in 1969 likewise ro­CIIJll 006 Resettlemort of China Bank in helping the ()1r<l the full supP coi~:indige~t res•~:~~ding goal of service to the arf)ll 'l'tUlY , ,ts dou CBC stand amidst difficul ties and

pie b~ mavi:al role of upholding the socio­~t.inue •ts 1 pment of the country. cO" · deve o ee0nonllc UPGRADING CBC's SE~VICES

f th leading commermal banks, CBC was As one 0

. -~ roved banki ng services. It had set a pace:;:r J~~ifory and equipped itself with the up a . ss machines. ~atest bUS10; 't procured and installed the IBM Sys-

Jn 196 ' 1 ntplex computer system designed to

telllf360, 8 :ng of transactions. The said compu ter (8cilitate h~BC the prestige of being the very first earned f~ theast Asia to process both savings and IJallk l)l u nts "on line". current accou to this China Bank was also the first

eorotlarySo theast Asia to do " multiprogram­co!DpanY m ~ter system, and the fust company in JDing" on comp to operate on line with a third­

Philippwes tbe . computer. generat!o~ rsion from the conventional methods of

'ibiS ~:atures speedy processing of about 150 operations nsactions involving demand and savings types . of :d instant updating on savings accounts. depOSits,. ""•cation of account balances and in-

to!DatJC veru' /!.U dat' g on sa\1ngs accounts are also made terest up Jn

passible. t rization has blotted out the incon-. Compuf e CBC's clientele in depositing or with­

veruence 0

they may now do so in any of the Bank's draWIDg~a offices. Through multi-programming, Metro us "off-line" jobs like the payroll, general sunuttaneotatistics and periodic records for the head ledger, s d tak office and the branches are un er en.

CHINA BANK TODAY Despite staggering price increases, the presence of

n ti g rate and worldwide inflation, CBC has 08 0 d to ;urvive and to remain one of the oldest

:f!mng commercial banks in the c01~1!-try. It has upheld a reputation for stability, proof ?f

which is in its annual financial reports. La~t year, 1ts gross income of P381. 7 million showed an mcrease of 21.9 percent over 1978's P313.1 million. __

Total resources amounted to P3.3 billion, showing a growth of 15.6 per cent from the _ 1~78 figure of P2. 8 billion. Loans grew to ~L 94 billion, abetted by a broad dep<isit base amountmg to PL45 lillian.

Total investments increased by P50. 7 million, or 11.7 per cent over the previous year's P434 million . Trading account securities were recorded at P39~.9 million as of December 1979, as compared w1th 1'96.1 million in 1978.

Cash dividends distributed to stockholders summed up to 1'9.4 million, an allotment of P4 .70 per share with return on equity at 18.5 per cent.

At present China Bank has a total of 22 branches to keep up with its program of expanding se~ices _to a broader section of society, It now serviCes 1ts glOwing clientele in the following branches: Cebu; sto. Cristo; Makati; Caloocan; Davao; Greenhills; ~~o; Legaspi Village; Quezon Avenue; -~otgueras ; ~uapo; sta. Ana (Davao City); Manali~ and F: llaJnos, both in Cebu CJity; Masangkay; ll01lo; Pasay, San Fernando, Pampanga; Valenzuela; Cagayan de Oro ill\d Dagupan City. Before the year ends, two to lhree more bW!ches will htve oeen opened. ·

The increase in the number of branches has helped bolster the bank's resources. Last year, the branches alone !:!!Derated total deposits amounting to :-ethan a third of the bank's total deposits of P1.5

!On. CBc is presently 78 per cent Filipino-awned, the

1~ by Chinese, American, British, Spanish and other llltiOnaJ.ities. It is of importance to note that the ~ized capital stoc._k has groWJJ 50 times over to ·~ lllllli9n !rom its i,"'itial capital stoc~ of P10

~ in 1920. The Bank~paid-in c~p~tal mcreased P20'T mi11ion last Year P248 million. _

tile In its long-standing "' I of servicing the people m beat way . &oa Bank bas taken longer

ltr1des Which =~~~:to banish its C:@llservative

Anthony Dee K. Chiong, Jr. James Chua Edward Dee Se Kiao Florentino del Rosario

image. (Above are the members of the present Board posed by the current changes in the banking arena. of Directors.) But with the continued dedication of both its officers

It recently organized an allied undertaking, the and employees, CBC is confident to reach greater CBC Finance Inc. which was incorporated on March heights as it stands in the threshold of the '80s. 21 1980. Its' immediate goal is to serve as a medium THRUSTS FOR TIIE '80s fo; providing factoring, discounting, leasing, and CBC is geari~g itself towards the concerns of the direct lending services. Five of CBC's directors sit in new era. In the banking and financial community, uni-its board: Robert Dee Se Wee, Dee K-Chiong, Gilbert versa! banking or unibanking has become the ultimate Dee PeterS. Dee, and Anthony Dee K-Chiong, Jr. direction. Cognizant of the added solidity it can pro-

' China Bank's .latest venture in international vide the Bank, CBC bas organized the two allied finance is the Manila CBC Finance (Hong Kong) Ltd. undertakings above-mentioned. Organized last June, 1980, it functions as a merchant In its desire to reach a wider expanse, the bank is bank to carry on all or any of the businesses of also studying the feasibility of engaging in other borrowing, raising, lending, advancing, managing, spheres of business such as brokerage, warehousing securities and property, discounting, buying, selling, and trucking. promissory notes, underwriting, and negotiations of It regularly conducts training and development loans among a host of other services. CBC has an courses for its staff to equip them with the necessary equitY participation of 53' per cent in the company knowledge in the face of competition and com­and has five of its directors and officers concurr~ntly plexities in banking. involved in the company. They are : Dee K-Ch1ong, It is envisioned that five years from now, the Gilbert Dee, Peter S. Dee, Edward Dee Se Kiao and bank's headquarters will move to Ayala Avenue in Reynatdo L. Lao. _ Makat; _ Situated on ~ 1?,000-squ~e m~ter lot, the

China Bank today is faced with bigger challenges Chma Bank Tower w1ll me 32 stones htgh , the new _ _:_ ________ . PAST PRESIDENTS OF CHINA BANKING CORPORATION---------.....

The late Dee C. Chuan The late Albino Sycip Tite late George Dee Scld.at

1980 FOOKIEN TIMI'S f>UlLIPPINI'S YliARBOOK 191

cen ter o f imp ved and renewed l'(lsult In lower cost of capital Is ciitflculL services. to predict at this stage. There nro other

otwithstanding the present sec- forces, such as worldwide Jn fiailon and nario of worldwide recession , t he un- dist\Lrbnnces on ex lornal oqulllbrium, predictable moves in the int matiOJ1al thnt complicate the goul of lowering the political front , and the dim forecast for ~'Ost of capital. the years ahead, China Bank faces the Whnt hilS been tho experience of thru ts of the SO's with an optimistic other countries In relation to power perspective of expansion and growth concentration and efficiency? Coun­and a renewed commitment to serve the tries characterized by unlbonking Rtruc· financial needs of our society. turcs have tendocl lo exhibit a fnlrly

China Bank will continue to harness high degrae of lnvolvomont of unl· its resources to meet the challenges banking institutions In business nffnlrs. faced by the banking industry, parti· The concern over power concontro Llon cularly the adoption of the universal has been most pronounced In West banking system in the country 's finau- Germany which has initiated moves to cia! system. limit the extent of business involvement

As a potent vehicle for socio- of unibanking institutions. economic development, the bank shall Available literature suggests that intensify its efforts toward the attain- commercial banking spreads· have been ment of the goals for the new decade- relatively high in unibanking countries. higher growth rate targets, manageable The International Finance Corporation balance of payments, renewed emphasis (IFC) estimates the commercial bank on agro-based industries and export- spread ratio at 3.4 per cent for West oriented business. Germany, 3.2 per cent for Netherlands,

No less than Central Bank Governor and 3. 7 per cent for France. The cones­Gregorio S. Licaros himself lauded the ponding ratio is estimated at 2.4 per performance of China Banking Corpora- cent for Korea, 2.2 per cent for Japan, tion : that it has adhered to its policy of 2.8 per cent for Canada and 3.2 per cent helping finance both small and big for the United States - countries enterprises and of actively participating characterized by the separation of com­in the government's development pro- mercia! banking activities from invest-grams in all its sixty year.; of service. ment banking powers. 1

Indeed, for China Bank, corporate It would be a challenging task for existence is not merely reckoned with in the authorities and responsible members

. terms of absolute values but by the of the fmancial community to ensure impact of its existence as an entity com- that economic opportunities are ade­mitted to service and to the progress of a quately diffused and the cost of capital developing economy. • is realistic and reasonable, reflective of

BARRIOS democratic processes and opportunities. Would the ability of EKBs to go

(From Page 186) into equity investments lead to a sub-Emphasis will be placed in the stnntial increase in equity or venture

future on a service orientation, positive capital? It is doubtful whether this thinking, faster rhythm of work, and a event would come about as there is a sense of competitive spirit. Fee-based natural selectivity in equity investments. activities will grow in relative im- Relevant to the consideration of portance over the yean. equity investments are such aspects as

To be effective, financial insti- acceptable financial performance and tutions can no longer rely on a steady condition, dividend record, and the flow of borrowers, a situation that re- extent of equity involvement of out­fleets a gap between the demand for and sider interest. The prototype banker is aYllilability of funds in the system. To concerned with solvency and liquidity. generate high quality clients and fee- The more _aggressive EKBs may be able based income, financial institutions have to generate investible equity funds but to break out of their enclaves and reach these would tend to flow to friendly or out for new markets. tested ventures.

These profound changes imply a If the environment for under-mdical reformulation of the managerial writings does not materially change, it is and other human resource requirements reasonable to expect that the under­of fmancial institutions. More and more writing activities of EKBs will be modest e_mphasis will :be placed 011 profes- and selective. Slonallsm and skills. Even the organiza. IMPUCA TIONS FOR INVESTORS tiona! structures of financial institutions need to be redefmed to cope with There is some expectation that the c~anging markets and pressures. Tradi- greater interplay of competitive forces tiona! forms of delivering services to will lead to higher rntes of return for clients will have to he restructured. investors and savers, accompanied by

Is it realistic to assume a radical broader investment possibilities over change in attitudes among those consti· time. In any environment characterized tuting the top leadership in the fmancial by inflationary pressures, specific policy system? Managing change will he partly measures and programs should be de­facilitated in tbe future given the rela- signed to induce a rue in the savingS rnte tlve age structure of chief executives by providing reasonable real returns for ~d Uu;, anticipated retirement of tradi- savers. Measures that are addressed to tiona! giants". Tbe resulting realign- real returns for investors have far greater ment of forces will be a function of Impact than programs designed simply perceived optimal Institutional struc- to increase public awareness and deve-tuzes and best fit for the Jlelllonalltl lop savings habits. concerned. e& There Is likewise the expectation

IMPUCATIONS FOR Bum.n..... that the freer market Interplay in the ...... ,"'-'» system will lead to Improved banking

What is the algnifit:ance of unJ. services. The end'users of funds and banking to the IISelll of funds? The savers will he the targets for more e.f!ec­greatest concern of the busines sector 1a tlve delivery systems. the fear of inordinate concentration of TRAJECTORY economic power. The authorities are Will there he an Immediate major hopeful that proper safeguards have tmniformatlon in the financial system? been lmposecl on EKBs and other lnstl· Given the hurdle level of P50@ mil· tutlollB to diffuse economic power. llbn P*td·IIJ! ca,pltal requirement for

Whether or not unlbanldng will EIO!e, it wO!Ud ~ 3 to 6 yelllS before

192 FOOKIEN 11MES PHJUPI'INilS YEARBOOK J980

EKBs can make their presence felt in tho financial system.

In the meantime, the enhanced capacities of Investment houses and thrift banks would enable them to gain momentum and deepen market penetra­tion.

'l'ho nggressive and concerted effort of Investment houses in putting together projocL financing packages would lead to a significant Imprint In the financial community. ln the long-run , Investment houses will have to make strategic moves to reckon wlth t he integrated powers of EKBs.

Professio nally-run t hrift Insti­t utions, with aggressive deposit gene­rating programs, will continue to carve a niche in the system.

By the mid-1980s, one can expect the emergence of dominant EKBs and a h and ful of independent financial groups.

Some people do not take the uni· banking reforms seriously. They are dis­counting any significant transformation in the system. People who share these views grievously · err in judgment. The scenario for the second half of the decade will bear this out.

Whether or not the objectives behind universal banking are achieved would depend on a number of premises.

The first important consideration is some measured degree of interest rate stability in the sYStem. A financial sYStem that is characterized by quantum changes in the level of short-term in· terest rates will tend to exhibit a rela­tively undeveloped capital market and a limited supply of long-term capital.

A second important consideration is an environment with manageable infla. tion. Systems characterized by strong inflationary elements exhibit a modest supply of long-term capital and un· developed capital market institutions and instruments.

The development of a capital mar· ket can he consistent with some rea· sonable level of inflation if interest rates are relatively free to seek their own levels. Interest rate flexibility of long­term financial instruments can be recon· ciled with changes in short-term interest rntes if long-tenn yields are expressed as a margin above a benchmark such as the yield on short-term prime commercial papers. ( Ulre must be exercised that a MIBOR-type pricing mechanism does not represent an equivalent yield substantially lower than the yield on prime commercial papers. Otherwise, term transformation will forever be an elusive goal.)

Finally, the successfUl advance ~d expansion of financial markets will depend, Irrespective of the countries concerned, on the degree of business cer· tainty and positive posture about the future.

We have seen a revolution of nnan· cia! ideologies and strategies. We can expect to witness a decade-long evolution of financial structures and pmctlces. •

1 David Gill ... Banks and Securit ies Marke~s: Some Thoughts ... , on Evaluating Financ1al System Depth and Efficiency" (a paper delivered before the First International Con­ference on the Financial Development o f Latin America and the Caribbt!an. Februarv 26-28, 1979).