Driven by aggressive economic policy and structural changes in the 1980s and 1990s, the complexity of the Philippine financial system has gradually increased. The sustained thrust of the reform process in the 1990s facilitated the rapid expansion and eventual integration of the local financial system with the rest of the world.
In the last ten years, the financial sector has benefited from a number of liberalization and deregulation initiatives as globalization has taken root more strongly in the Philippines. As a result, the Philippines financial system’s underlying fundamentals have posted steady progress since 2000. As of November 2005, the total assets of the Philippines banking system amounted to Peso 4.4 trillion, more than double the amount recorded in 1996.
Commercial Banks (KBs), which are further subdivided into universal and regular commercial banks, continued to be the dominant players in the industry, accounting for more than 90 percent of the total assets.
The restructuring of the banking system, which involves the consolidation and closure of weak banks, resulted in a reduction in the number of banking institutions from a peak of 1,003 in 1997 to 881 as of end-September 2005 .The total number of banks comprised 42 KBs, 84 thrift banks (TBs) and 755 rural banks (RBs).
The Bangko Sentralng Pilipinas (BSP, the central bank) offered a package of incentives to set in motion the consolidation of the banking industry. A moratorium on the establishment of new banking offices/branches was likewise issued to hasten the creation of larger and stronger banks.
Total Assets of the Banking System (in billions of Pesos)
|
Banks
|
1996
|
1997
|
1998
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
|
KBs
|
1,876.2
|
2,513.0
|
2,512.2
|
2,722.3
|
3,013.6
|
3070.5
|
3250.2
|
3425.6
|
3760.6
|
3968.2
|
|
TBs
|
185.1
|
208.4
|
216.4
|
223.5
|
245.8
|
259.0
|
274.7
|
292.8
|
317.9
|
342.4
|
|
RBs
|
48.0
|
57.6
|
60.0
|
61.5
|
67.4
|
73.8
|
83.5
|
92.4
|
104.5
|
115.5
|
|
Specialized government banks
|
0.2
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Grand Total
|
2,109.5
|
2,779.0
|
2,788.6
|
3007.3
|
3326.8
|
3403.3
|
3608.4
|
3810.8
|
4183.0
|
4426.1
|
Total Number of Financial Institutions
|
|
1996
|
1997
|
1998
|
1999
|
2000
|
2001
|
2002
|
2003
|
2004
|
Sep 2005
|
|
Commercial banks
|
3647
|
4078
|
4230
|
4326
|
4250
|
4320
|
4265
|
4296
|
4329
|
4322
|
|
Thrift banks
|
1171
|
1389
|
1474
|
1478
|
1391
|
1351
|
1278
|
1277
|
1280
|
1279
|
|
Rural banks
|
1514
|
1715
|
1942
|
1885
|
1912
|
1914
|
1911
|
1921
|
2003
|
2052
|
|
Total
|
6332
|
7182
|
7646
|
7689
|
7553
|
7585
|
7454
|
7494
|
7612
|
7653
|
