Philippine Veterans Bank

History

The concept of a bank for veterans of World War II was conceived in 1956, when a war reparations agreement was signed between Japan and the Philippines. The agreement provided for twenty million dollars in cash, five million pesos in capital and ten million dollars in services. Under Republic Act No. 1789, better known as the Reparations Act, the cash reparations were set aside into a special trust fund for the use of World War II veterans and their families. There were plans to split the funds evenly among all veterans, but legislators say that it is in the higher interest that the funds be invested in a bank that would service their needs. If the fund were split at the time, each veteran would get only one hundred pesos at the then-prevailing exchange rate of two pesos per U.S. dollar.

Through the stirring words of Senator Camilo Osías, as shown in the excerpt below, the Philippine Veterans Bank was born on June 18, 1963 through Republic Act No. 3518, which would become its charter.

Under the PVB charter, the bank's subscribed capital of one hundred million pesos would be divided into 510,000 common shares and 490,000 preferred shares, all with a par value of one hundred pesos. All common shares were subscribed by the government on behalf of the veterans, their families and descendants, while the preferred shares were distributed for free among the veterans.

Unfortunately, the presidency of Ferdinand Marcos proved disastrous for the bank. Subsequent amendments to the PVB charter made through the use of presidential decrees enabled government control over the appointing of PVB's officers, even though the veterans would receive the right to elect their own board members five years after the organization of the bank through the transfer of PVB's common shares. That effectively curtailed the right of the veterans to choose their own board of directors even after all common shares were transferred to them. In essence, the veterans became PVB shareholders in name only. Due to capital deficiencies (and political excesses during the Marcos era), PVB was ordered closed by the Bangko Sentral ng Pilipinas on April 10, 1983, placed under receivership, and subsequently liquidated on June 17, 1985.

By the closure of PVB, a common and a preferred PVB share, worth a combined two hundred pesos, was reduced to a worthless piece of paper. After twenty-three years, each veteran only received twenty-eight pesos worth of dividends as a return on their investment, or fourteen pesos per share.

With the EDSA Revolution and the subsequent ouster of Marcos, the new Philippine government passed Republic Act No. 7169, which would rescind all amendments made during the Marcos era to the PVB charter. The law would revert the PVB charter back to its original state. Through the law, the veterans regained their rights as rightful shareholders of the bank, which were denied during the Marcos era. Since the law also understood that the veterans took no role in the failure of PVB, it allowed the restructuring of its locked government deposits, totaling 1.48 billion pesos at the time, into a seven-year loan. Unlike other banks of its classification, which were bailed out by the government, PVB had to rely on internal funds to keep its commercial banking license. Because of that, its authorized capital was raised to one billion pesos from the previous 100 million.

On May 6, 1992, the Bangko Sentral granted PVB the authority to operate as a private commercial bank, giving up all government control of the bank, and a month later, on June 3, was symbolically re-opened by then-President Fidel V. Ramos, himself a veteran (although not of World War II). The bank re-opened its doors for commercial operations a month after the symbolic re-opening with the opening of its new headquarters in Makati.

Since its re-opening, the bank grew rapidly, opening new branches in the countryside, even with a conservative investment stance. It arranged a conduit agreement with Union Bank of the Philippines to serve veterans who receive their veterans benefits checks but live in areas where there are no Veterans Bank branches. With its recapitalization, the original two shares of each veteran grew to 64 common and ten preferred shares, with a combined value of 6,400 pesos. PVB also embarked on goodwill programs for its veterans, such as free medical care. The bank also places preference to veterans in banking transactions, and places preference to their descendants when applying for PVB jobs. Even with a troubled history, the bank has not failed to only inspire, but also to stand strong in times of crisis.

PVB Today

PVB is currently ranked 22nd among the Philippines’ 36 universal and commercial banks. For the year 2014, the bank reported a consolidated net income of P320 million, up 280% from its 2013 net income of P84 million. Its total resources slightly grew from P55.5 billion in 2013 to P56 billion in 2014 while capital funds in 2014 stood at P6 billion. PVB also reported a 14% increase in its operating income at P3 billion as a result of an 8% increase in its net interest income -- from P1.4 billion in 2013 to P1.5 billion last year.

PVB's capital adequacy ratio (CAR) at the end of 2014 was at 21.27%, one of the highest in the industry and way above the Bangko Sentral ng Pilipinas requirement of 10%. The CAR is a measure of the capability of banks to shoulder risks. PVB currently employs about 900 officers and rank-and-file employees.

It has 60 branches in key cities and municipalities nationwide, with the last 10 branches opening simultaneously in January 2010 under its "10 in 2010" branch expansion program. The bank aims to open several more branches in other key locations across the country to give World War II veterans and their families, as well as its other clients easier access and convenience to its products and services.

In 2010 PVB became a member of BancNet, the Philippines largest interbank network. The migration to BancNet allowed its over 200,000 cardholders 24/7 access to PVB through the network's over 4,000 ATMs nationwide as well as access to BancNet's multitude of services.

In July 2013, PVB named former Finance Secretary, Roberto De Ocampo, a son of a World War II veteran, as its new Chairman. Following the election of De Ocampo as Chairman, four new directors joined the bank's board including former BIR and Customs Chief Guillermo Parayno; former Labor Secretary and currently an Asian Institute of Management (AIM) Executive Director Nieves Confesor; Financial Executives Association of the Philippines (FINEX) President Judith Lopez; and veteran banker Alfonso "Boy" Cruz.

Subsidiaries and Affiliates

The bank is a member of BancNet.

Intervest Projects, Inc. is a wholly owned subsidiary of PVB.

Monarch Properties, Inc. was a wholly owned subsidiary of PVB before it was merged with the bank last November 2010 after receiving approval from the BSP.

Ownership

PVB is 100% owned by Filipino World War II veterans, their families, heirs and descendants.

Competition

As a private commercial bank, PVB competes with the other 36 universal and commercial banks in delivering banking and financial services to both corporate and retail markets.

It is however unique, in that PVB is granted the authority to accept government deposits as mandated by law, Republic Act 7169 Section 6, as a grateful gesture of the nation’s appreciation for the service of our World War II veterans.