|Type||Public (PSE: CHIB)|
|Industry||Banking & Finance|
|Founded||Manila, Philippines (1920)|
|Number of locations|
|Key people||Hans T. Sy, Chairman
Gilbert U. Dee, Vice Chairman
Peter S. Dee, President and CEO
|Net income||P5.10 billion PHP (December 31, 2013)|
|Employees||5,594 (as of December 31, 2013)|
China Banking Corporation (PSE: CHIB), commonly known as China Bank, was established in 1920 as the first privately owned local commercial bank in the Philippines initially catering to the banking needs of Chinese-Filipino businessmen. Today, China Bank is a full-service universal bank offering a wide range of deposit, investment, trust, cash management, remittance, and financing products and services to the retail, commercial/middle, and corporate markets. China Bank also offers insurance brokerage and bancassurance services through its subsidiary and affiliate.
China Bank was awarded by the US consulting firm Stern Stewart and Company in 2009 as one of the top 100 ASEAN companies in terms of delivering shareholder value. It was also awarded the Best Wealth Management House in the Philippines by The Asset Magazine (HK) in 2011. At the 2012 Bell Awards of the Philippine Stock Exchange, China Bank was named as one of the best-governed companies in the Philippines. It was the only bank among the top five awardees in the publicly listed companies category. The Bank was again awarded at the Bell Awards in 2013--one of only two other awardees to have been in the top five twice in a row. China Bank was also a recipient of the Institute of Corporate Director's Gold Award for Corporate Governance in 2011 and 2012.
China Bank, founded by Dee C. Chuan, Albino SyCip and other visionaries, opened for business at No. 90 Quintin Paredes Street, Binondo on August 16, 1920, with J.W. McFerran as the first general manager. Shortly afterward, Eugene E. Wing of the International Banking Corporation took over and managed China Bank's operations until 1936. This mixture of cultures represented a seamless merger of Western and Eastern banking policies – an obvious lack during those days when financial institutions governed by Western policies declined credit loans of wealthy Filipino-Chinese businessmen who operated on the principle of ‘xinyong’ or trustworthiness. China Bank recognized xinyong and granted small loans and opened credit accounts with patrons and suppliers without demand for collateral for the loan.
China Bank opened two branches in China, one in Amoy in 1925 and another in Shanghai in 1929. However, both branches closed in 1949 when conditions in China became inimical to the Bank's operations.
When the Japanese occupational forces invaded Manila in 1942, China Bank closed. Fortunately, by the end of 1941, the Bank had been making steady deposits and turning over assets to the United States High Commissioner for safekeeping, with the help of the officials of the US Treasury Department of Manila. With these overseas assets and the Bureau of Banking’s full cooperation, China Bank reopened in 1945 and was listed on the local stock exchange in 1947, among the first local banks to be listed.
China Bank played a key role in post-World War II reconstruction and recovery through its support to businesses and entrepreneurs in critical industries. It opened its first local branch in Cebu in 1949, then in 1969, China Bank computerized its operations, becoming the first bank in Southeast Asia to process deposit accounts on-line. China Bank upgraded its online system in 1988 and launched the TellerCard ATM account and TellerPhone, the first telephone banking service in the Philippines. In 1990, China Bank, along with seven other banks, set up BancNet, now the country’s largest ATM network.
In 1991, China Bank acquired its universal bank license, ushering an era of expanded banking operations. It launched its consumer loans in 1994, China Bank HomePlus loan and China Bank AutoPlus loan, followed by China Check Plus, an interest-earning checking account in 1996. In the same year, China Bank accessed offshore capital markets for the first time by issuing US$50M Floating Rate Certificate of Deposit (FRCD).
As China Bank invested in new technologies, it launched its Cash Management services in 2004, followed by internet banking (China Bank Online) and remittance services in 2006. In the same year, China Bank, with 146 branches at the time, embarked on an aggressive branch network expansion program. Over the last six years, the Bank has doubled its nationwide branch network.
China Bank has been involved in strategic alliances to expand and strengthen its operations. In 2007, China Bank entered into a Bancassurance joint venture with The Manufactures Life Insurance Company, one of the leading insurance companies in the world, to form Manulife China Bank Life Assurance Corporation (MCBLife), and acquired the majority shares in Manila Bank, one of the oldest savings banks in the country.
In 2008, China Bank's thrift bank subsidiary China Bank Savings (CBS) began operations. CBS is focused on the retail side of the business, offering banking products and services that China Bank does not, such as a kiddy savings account and personal loans. In 2012, China Bank acquired Pampanga-based Unity Bank to be merged with CBS. The acquisition supports the Bangko Sentral ng Pilipinas’ Strengthening Program for Rural Banks (SPRB) Plus which aims to effectively serve the countryside and improve the delivery of financial services to rural communities by strengthening the thrift and rural banking industry. The merger fast-tracks the savings bank’s branch expansion program. CBS is targeting 100 branches by 2014.
To complete its range of product offerings, China Bank entered into a credit card partnership with MasterCard in 2013. China Bank is launching three credit card types under the MasterCard brand in the last quarter of 2014: China Bank Prime, China Bank Platinum, China Bank World MasterCard -- all equipped with two of the world’s most advanced security technology: EMV & 3D Secure.
In 2013, China Bank forged a deal to acquire a majority stake in Planters Development Bank (Plantersbank), a development-oriented finance institution nationally acclaimed as the country’s lead bank for small and medium enterprises (SMEs).
The Plantersbank deal was first introduced to China Bank on May 21, 2013 by Investment & Capital Corporation of the Philippines (ICCP), the exclusive adviser to Plantersbank in the transaction. The signing of the Memorandum of Agreement happened on September 18, 2013. The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) gave its approval-in-principle of Planterbank's merger with either China Bank or CBS on December 13, 2013, and on December 18, 2013, the Share Purchase Agreement was signed. China Bank settled P1.579 billion for the 84.77% capital stock owned by the Tambunting family and related parties and the Dutch development bank FMO on January 15, 2014. On the same date, the new members of the Plantersbank board were elected, and officers of China Bank and CBS were appointed to various board/management committees of Plantersbank. Integration activities have commenced and China Bank is preparing for the tender offer to the minority shareholders of the remaining 15.23% Plantersbank stock.
Plantersbank is a good strategic fit with China Bank as both banks share the same strong commitment to SME finance. The acquisition bolsters China Bank’s current strategy in two areas: growing its middle market/SME portfolio and accelerating its network expansion program.
Combined with Plantersbank, China Bank has P455 billion in resources as of March 31, 2014, ranking fifth largest among domestic private commercial banks in the Philippines, and 450 branches nationwide as of March 31, 2014 (299 China Bank, 73 China Bank Savings, and 78 Plantersbank).
Plantersbank will continue to operate as a separate entity under the China Bank Group for about a year. China Bank was given three years from the date of the BSP approval, which means up to December 13, 2016, to complete the merger.
Stock Rights Offering
China Bank successfully raised P8 billion from its stock rights offering, issuing 161,609,878 shares at P49.50 per share. The shares were listed at the Philippine Stock Exchange on May 13, 2014. The fresh equity will be used to fund the growth in the Bank’s loan portfolio, branch network expansion, and technology upgrades.
China Bank is the last major bank to raise capital in recent years. The P8-billion stock rights offer marks the first time that China Bank raised capital from stockholders since it had its stock rights offer in August 1996 and March 1997, right before the Asian crisis. Since the start of its branch expansion program in 2006, China Bank has more than doubled its asset size, market reach, and branch network without having to go back to its shareholders for additional capital, until this years’ stock rights offering.
At its 2014 stockholders’ meeting last May 8, China Bank declared P1.00 per share or 10% cash dividend for a total of P1.59 billion and an 8% stock dividend, and increased its authorized capital stock to P25 billion.
The rights shares purchased by eligible shareholders at P49.50 per share are also entitled to the cash and stock dividends.
Subsidiaries and Affiliates
China Bank is divided into the following subsidiaries and affiliates:
- China Bank Savings, Inc.
- Planters Development Bank
- China Bank Properties & Computer Center, Inc.
- China Bank Insurance Brokers, Inc.
- Manulife China Bank Life Assurance Corporation
Ownership structure by family grouping as of June 2013