MANILA, Philippines --- MAYBE you've wondered when the business of banking first came about in the Philippines. Or maybe you're curious if banks existed during the Spanish and American colonial periods, and how they fared during the Japanese occupation.
As always, history provides the best answers to these questions. The Bangko Sentral ng Pilipinas (BSP) has published a very informative book, "The General Banking Law Annotated: Book 2," which details the history of banking in the Philippines.
For the next four weeks, I will share with you this special history as written in the BSP book.
According to "The General Banking Law Annotated: Book 2," the first organized credit institutions, known as Obras Pias, were established in the Philippines during the 16th century Spanish colonial era.
The capital of Obras Pias came from pious Catholics and their profits were intended to maintain hospitals, orphanages, and other charitable endeavors.
The Obras Pias served as commercial banks and marine insurance companies, with the bulk of their funds invested in the galleon trade.
In 1869, the opening of the Suez Canal facilitated trade between the Philippines and Europe. The Philippines then attracted British capital, and in the years that followed, the Chartered Bank of India, Australia, and China (now known as the Standard Chartered Bank) and the Hong Kong and Shanghai Banking Corporation (HSBC), both British-owned banks, opened their branches in Manila.
In 1883, Madrid-based Banco Peninsular Ultamarino also established a branch in the country. However the Spanish bank ceased operations after four years.
By the end of the Spanish regime, the banks in existence were: El Banco Espanol Filipino de Isabel (now the Bank of Philippine Islands or BPI), which was given the sole mandate under a Spanish Royal Decree of 1854 to issue banknotes called Pesos Fuertes; the Chartered Bank of India, a branch of the HSBC; the Monte de Piedad; and the Banco Peninsular Ultamarino de Madrid.
It should be noted that under the Spanish regime, there were no significant Filipino interests, initiatives, or capital in banking. …