Chapter 11:

Thrift Banking
Discussant: Revilyn Grace
G. Bangayan
Thrift Banking
Capital is one of the most important components of any business
enterprise. As the level of business activity determines the state of a
country’s economy, it is important that businesses are well-supplied
with capital. This happens when people are inclined to provide the
needed funds through savings.
As many individuals and institutions have limited time and expertise for
making investments, they will require the services of institutions that will
receive and keep their savings useful and secure. The form of service
provided by the economy, in this case is called thrift banking.
Thrift banks, undoubtedly, play an important role in the formation of
capital.
What are Thrift Banks
Financial intermediaries consist of two types: depository and non-depositor. Thrift banks are
depository intermediaries that sell secondary securities in the form of time and savings deposits
and invest principally in residential mortgage and consumer loans.

As of June 2014, the balance sheet of all thrift banks in the Philippines indicate the following:

Asset accounts = 818,931 billion

Liabilities accounts = 726,422 billion
Capital accounts = 92,510 billion

Thrift banks consist of the following types:

1. Savings bank and mortgage banks
2. Private development banks
3. Stock savings and loan associations
4. Microfinance thrift banks
What are Savings Banks
Savings banks may be defined as “thrift
institutions that derive most of their funds from
setting savings deposits to the public and invest
most of their incoming funds in mortgages,
corporate bonds, and consumer loans”
A saving bank is “a bank where investors can
deposit small sums of money and receive
interest in it.”
  A saving and mortgage bank is any corporation organized
for the purpose of accumulating the saving of depositors
and investors them together with its capital, in:
1. Readily marketable bonds and debts securities;
2. Commercial papers and accounts receivables;
3. Drafts, bills of exchange, acceptances, or note arising out
of commercial transactions or in loans secured by bonds,
mortgages on real estate and insured improvements
thereon, and other forms of security or in loans for
personal or household finance, whether secured or
unsecured, and financing for home building and loan
development; and
4. In such other investments and loans which the Monetary
Board may determine as necessary in the furtherance of
national economic objectives.
Services Offered
Modern day savings banks offer more services than
their predecessors. This is so because of the need for
savings banks to survive. Previously, saving banks
were only allowed to handle savings deposits and
residential mortgage loans. This restriction severely
affected the viability of saving banks. Later, they
were allowed to expand their services into non-
traditional lines. The products offered by a typical
savings bank is shown in Exhibit. 11.2
Private Development Banks
Private development banks are designed to
support the policy of the government in
promoting and expanding the economy,
expanding industrial and agricultural growth,
supplying the needs for capital and meeting
demands for adequate investment credit or
medium and long-term loans for entrepreneurs.
What is a Private
Development Bank
A development bank is financial institution whose lending policy is guided, in part
of in total, by the perceived economic, social, or political needs of a country
rather than by commercial goals alone.

A private development bank lends almost exclusively to private businesses and in

general, make intermediate to long-term loans.
A private development bank shall exercise all the powers and shall assume al the
obligations of saving (and mortgage) bank as provided in the General Banking
Act. It shall be organized in the form of stock corporation.

A list of private development banks operating in the Philippines is provided in

Exhibit 11.3.
Exhibit 11.1: A LIST OF SAVING AND
MORTGAGE BANKS OPERATING IN THE
PHILIPPINES
BANK ASSETS
1. BPI FAMILY 206,639 BILLION
2. PS BANK 139,915 BILLION
3. RCBC SAVINGS 68,808 BILLION
4. PLANTERS DEVELOPMENT 50,024 BILLION
5. PHILIPPINE BUSINESS 49,128 BILLION
6. CITY SAVINGS 34,679 BILLION
7. HSBC SAVINGS 27,224 BILLION
8. STERLING BANK 26,954 BILLION
9. CHIN BANK SAVINGS 19,906 BILLION
10. ALLIED SAVINGS 14,938 BILLION
EXHIBIT 11.2: PRODUCTS AND SERVICES OFFERED BY A TYPICAL SAVINGS BANK
CHINA BANK SAVINGS
Products and Services
Savings FCDU

• Easy-Save ATM • FCDU Savings

• Easy-Save Passbook • FCDU Time Deposit
• Easy-Save for Kids
• Easy-Save Loaded
• Easy-Save Basic
Checking Loans

• Easy-Checking • Auto Individual

• Easy-Checking Diary • Auto Corporate
• Housing
• Personal
• SME Individual
• SME Corporate
Time Deposit Easy Padala

• Easy-Earn
• Easy-Earn High Five
Trust

• Corporate/Institutional Trusts
• Personal Trust
• Other Fiduciary Services
• Agency
EXHIBIT 11.3 LIST OF PRIVATE DEVELOPMENT BANKS IN
THE PHILIPPINES (AS OF JULY 25, 2014)
Bank Head Office Location

1. Bataan Development Bank Balanga, Bataan

2. Business and Consumers Bank Iloilo Bank

3. Dumagete City Development Bank Dumagete City

4. First Consolidated Development Bank Tagbilaran City

5. Inter-Asia Development Bank Tagatay City

6. Luzon Development Bank Calamba, Laguna

7. Mindanao, Development Bank Cagayan De Oro City

8. Northpoint Development Bank Makati City

 EXHIBIT 11.3 LIST OF PRIVATE DEVELOPMENT BANKS IN
THE PHILIPPINES (AS OF JULY 25, 2014)
Bank Head Office Location

9. Optinum Development Bank, INC Mandaluyong City

10. Palawan Development Bank Puerto Princesa City

11. Pampanga Development Bank San Fernando City

12. Penbank, INC> Gen. Santos City

13. Planters Development Bank Makati City

14. Pride Star Development Bank Batangas City

15. Queen City Development Bank Iloilo City

16. Tower Development Bank Guiguinto, Bulacan

17. Wealth Development Bank Corporation Cebu City
18. First Valley Bank Cagayan de Oro City
Service Offered
As private development banks also exercise
the powers of saving bank, it is not surprising
to find out that the financial services they
carry are similar. The differences will be
based on the capability of each to offer as
many services accommodation and loan
exposure.
What is Microfinance Thrift Bank
- Is one devoted to extending small loans referred to as
microloans, to individuals, businesses, and organizations.

Bank with microfinance function are classified by the Bangko

Sentral ng Pilipinas as follows.
1. Microfinance oriented thrift banks
2. Microfinance engaged thrift banks
3. Microfinance oriented rural banks
4. Microfinance engaged cooperative banks
5. Microfinance engaged rural banks
6. Universal banks performing microfinance function
7. Regular commercial bank performing microfinance function
STOCK SAVING AND LOAN ASSOCIATION
 Saving and loan association are
established to provide credit and savings
facilities in a fair manner to the consuming
public, industry, commerce, and
agriculture.
WHAT IS A SAVING AND LOAN ASSOCIATION
Saving and loan association are thrift
institutions that raise most of their funds by
offering saving deposits to the public and
devote most of their assets to home
mortgages and other residential related loans
securities.
WHAT IS A SAVING AND LOAN ASSOCIATION
The law indicates the savings and loan
association shall be primarily engaged in
servicing the needs of household by providing
personal finance and long-term financing for
home building and development.
Saving and loan association are two types:
1. Stock and
2. Non-stock
Service Offered
SSLAs are allowed by law to exercise all the
powers of a saving and mortgage bank, and
with the approval of the Monetary Board,
perform services authorized for commercial
banks. As such, it is not surprising to find SSLAs
offering services they offer will only be limited by
the individual capabilities of the SSLAs.
NUMBER AND RESOURCES OF THRIFT BANKS
The contribution of thrift banks in the
development of the Philippine economy
cannot be ignored. Even if there are less
thrift banks in the Philippines in 2014, there
are thrift banks grew to 830 million in March
2014.
AREAS SERVED BY THRIFT BANKS
Thrift banks play a role that becomes more
important every year. Most thrift banks serve
areas that are not covered or fully served
by commercial banks.
Thank you!