Bank Marketing Association of the Philippines

Philippine Veterans Bank (PVB)

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Philippine Veterans Bank (PVB)

“True patriotism seeks no reward for services rendered to the State at great sacrifice even at the cost of life itself; but it is also the duty of the State to create the necessary atmosphere and incentives for her citizens.”

WITH THESE STIRRING WORDS, THE STATESMAN, SENATOR CAMILO OSIAS, ELOQUENTLY AFFIRMED IN THE HALLS OF CONGRESS IN 1963 HIS SUPPORT FOR THE ESTABLISHMENT OF THE PHILIPPINE VETERANS BANK.

The idea to establish a veterans bank began in 1956 when the reparations agreement with Japan was concluded. It provided for payment by Japan to the Philippines the amount of US $20 million in cash, P5 million in capital goods and US $10 million in services. Republic Act 1789 or the Reparations Law, placed the cash reparations in a trust fund for the benefit of World War II veterans, their widows and orphans. This fund was meant to be invested into a bank that should service their needs, provide for their future, and harness their potential to once again serve the nation through a financial intermediary that they can truly call their own.

And so, on June 18, 1963, the Philippine Veterans Bank was created with the enactment of Republic Act No. 3518, which became its charter. While PVB was conceived and created as a private commercial bank owned by the veterans, the law provided that it would be a government depository as a gesture of appreciation by a grateful nation to the veterans for the sacrifices that they offered on the altar of freedom.

PVB’s charter provided that during the first five years from the organization of the Bank, members of the board would be appointed by the government pending the transfer of the common shares to the veterans. After this, they were to elect the members of the board in the manner prescribed by the Corporation Code. However, even after the common stocks were transferred to the veterans, subsequent amendments to R.A. No. 3518, through a series of Presidential Decrees issued during the martial law enabled the government to continue appointing board members. As a consequence, the right of the veterans to elect members of the board was curtailed, and they became PVB owners in name only. As history would later unfold, the Bank fell prey to political excesses during that era.

Because of capital deficiency, PVB was closed by the Monetary Board of the Central Bank on April 10, 1983 and placed under receivership. Subsequently, it was placed under liquidation on June 17, 1985. By then, the one common and one preferred share holdings of the veterans valued previously at P200.00, were reduced to almost worthless pieces of paper. After patiently waiting for twenty- three years, all that the veterans got as a return on their investment was P28.00 in cash dividends. PVB’s ignominious closure was a great betrayal to the thousands of World War II veterans from whose funds the Bank was put up, and for whose interest the Bank was supposed to serve.

Shortly thereafter, under a new-found democracy, those who framed the Philippine Constitution of 1987 provided that adequate care, assistance and other benefits should be given to the veterans. With this sublime gesture of magnanimous remembrance enshrined in the fundamental law of the land, the time was ripe for the veterans to redeem what had been unjustly denied them and claim what was rightfully theirs. Through the initiative and determined efforts of the Veterans Federation of the Philippines, the new national leadership and legislature reopened and rehabilitated PVB though the enactment on January 2, 1992 of Republic Act No. 7169, which repealed Presidential Decree Nos. 236, 919, 1636 and 1906 and restored the spirit and intent of the original charter of the Bank, R.A. No. 3518.

Thus, the veterans regained their right as owners to elect the Bank’s board members during the annual stockholders meeting, making them fully responsible in determining the destiny of their institutional legacy to the nation and the succeeding generations.

As the law understood that the veterans were never party to the mismanagement and eventual collapse of the Bank, it allowed the restructuring of the P1.48 billion in government deposits locked-in at the time of its closure into a seven-year loan, with a three year moratorium on principal repayment. This way, the Bank was given the chance to nurture itself back to health, contribute to the economic growth of the country, help uplift the well-being of the veterans, and eventually repay its obligations to the government. Unlike other similarly situated financial institutions that were bailed out by the government, PVB was required to meet the capital requirement for commercial banks without requiring new capital infusion from the government or from outside investors. With these legal guidelines, the Bank relied on internally generated funds for its rehabilitation and growth. Accordingly, PVB raised its authorized capital from P100 million to P1 billion in 1992. This increase in authorized capital stock was fully subscribed and paid for through a declaration of a 900 percent stock dividends in favor of the veteran-stockholders. To date, the authorized capital stock of the Bank is P5 billion.

On May 6, 1992, the Central Bank of the Philippines granted PVB the authority to operate as a private commercial bank. On July 3, 1992, Fidel V. Ramos, then Philippine President, symbolically opened PVB. Commercial operations began a month later with the opening of the Main Branch along Paseo de Roxas in Makati. While reopening of the Bank was an achievement by itself, the greater part of the challenge was putting PVB back on its feet and nurturing its growth. First, there was the daunting task of gathering, consolidating and making sense of the tons of records and vital documents. Then came the time consuming work of hiring and training people to fill an organization that had been crafted to respond to the needs and challenges of the times. The biggest challenge that confronted PVB during its initial years of operations was the negative perception of its image as a bank that had been closed due to mismanagement. Thus, regaining and maintaining public confidence are high in PVB’s operational agenda.

At the outset, PVB adopted a strategy of conservatism in its commercial banking operations. It avoided high risk deals that promised high returns knowing fully well that the only support it could expect from the government were deposits of funds and not bailout funds. To make its presence felt in the market, PVB embarked on a brisk branch development program aimed at putting a branch in key cities and provincial capitals. Since its establishment in 1963 up to the time it was closed in 1985, PVB only had 29 branches. Since its reopening in 1992, however, the Bank was able to put up 43 branches. One motivating factor for the branch expansion program was the Bank’s desire to reach out and provide quality banking services to veterans living in the countryside. For the convenience of veterans living in areas where there were no PVB branches, a conduit arrangement between PVB and the Union Bank of the Philippines enabled veterans to encash their PVAO pension checks at any Union Bank counter nationwide.

Within a short span of six years, PVB earned for itself a track record of sustained growth and has become one of the country’s profitable financial institutions. Total resources grew by 213 percent to P12.52 billion as of December 1998 from only P4.00 billion in 1992, representing an annual growth of P1.06 billion. Cumulative profits realized by the Bank during the seventh-year period reached P2.24 billion, or an average net income of P349 million annually. Because of the Bank’s continued profitability, capital expanded by 81.63 percent to P3.56 billion from only P1.96 billion. PVB achieved this capital growth without asking for a single centavo from its veteran-stockholders.

SHARING THE BENEFITS OF GROWTH

From the time the Bank was established in 1963 up to its closure in 1985, the veterans only received P28 in cash dividends. With the reopening of PVB in 1992, the new leadership of the Bank saw to it that the veterans partook in the success of the Bank. As a result, PVB never failed to declare and distribute cash and stock dividends annually since then. To date, a total of P2.54 billion in stock and cash dividends have been declared by the Bank. Consequently, the shareholding of each veteran grew tremendously by 2,850 percent (the highest so far in the industry) from one common share and one preferred share valued at P200.00 to 54 common shares and 10 preferred shares valued at P6,400.00. To the ailing and elderly veterans, free medical care and medicines are provided by charitable institutions that are financially supported by the Bank. For one, the VFP Out-Patient Center in Taguig, was established by the Board of Trustees for the veterans of World War II out of funds remitted to it by PVB as mandated by law. The Center, which is equipped with modern medical facilities and manned by a dedicated corps of medical professionals, continues to provide dental and medical services, medicines, including the provision of eyeglasses and dentures free-of-charge to veterans, their widows and orphans. Moreover, the Bank gives veterans preferential treatment on their deposit and loan transactions. PVB gives preference in employing their children and grandchildren.

Given this opportunity to chart the destiny of their Bank and knowing that the veterans, are now in their twilight years and must continue enjoying their benefits, the PVB leadership has firmly resolved to continue establishing a solid reputation for growth and build the Bank into a truly lasting legacy to the nation and succeeding generations.

Membership Type: Regular
Address: Philippine Veterans Bank Main Office Building
101 V.A. Rufino corner Dela Rosa Streets
Legaspi Village, Makati City
Philippines 1229
Contact: Telephone Numbers: (+632) 902-1600, (+632) 902-1700, (+632) 857-3800
Website: Philippine Veterans Bank (PVB)