"The sixties and seventies were a great time for the Philippine finance industry."
In the life of every institution or industry there is a period that histories look back upon and determine to be the institution’s or industry’s halcyon days—days when an institution or industry operated with utmost meritoriousness and was manned by proud and dedicated people. If histories of the Philippine finance industry were asked to pinpoint its halcyon days, I feel certain that they would say that those days were the days of the two-decade period ended 1979.
The sixties and seventies were a great time for the Philippine finance industry, which was continuing its recovery from the disruptions and losses occasioned by World War II and was absorbing the modern financial techniques and systems being developed in the Western and Japanese financial marketplaces. Those were glory days for the Philippine finance industry, and two of the principal contributors to the glory were two institutions that have passed into history—Private Development Corporation of the Philippines (PDCP) and Bancom Development Corporation. Both institutions ended their operations in the 1980s.
As the word ‘development’ in its corporate name indicated PDCP was a development financing institution (DFI), that is to say, lending institution that would finance projects of the developmental kind. It would complement, on the private-sector side, the work of the government owned DBP (Development Bank of the Philippines), which was the successor to the RFC (Rehabilitation and Finance Corporation). At one of its annual meetings in the late Fifties, the World Bank Group resolved to assist, with the blessing of the Philippine government, the establishment of a development financing institution by the Philippine private sector. The establishment of the new institution was welcomed and fully supported by the Program Implementation Agency (PIA) of the newly installed administration of President Diosdado Macapagal. PIA’s director-general, Sixto K. Roxas, was groomed to be PDCP’s operating head.
PDCP’s founding board of directors represented the crème de la crème of the Philippine business community at that time. The directors were heads of the Palanca, Montinola, Far East Bank, Delgado, Ortigas, Villanueva and Ysmael business groups, among others. Representatives of three foreign banking giants (one American, one European and one Japanese) likewise held board seats. PDCP truly had a powerhouse board. Roberto Villanueva of sugar-industry fame was the first president. Sixto Roxas lost out in the shuffle and former banker Vicente Jayme became, as executive vice-president, PDCP’s operating head.
The capital contributed by PDCP’s Philippine stockholders was augmented by a concessional loan by USAID (US Agency for International Development) and a World Bank credit line. Subsequently, the then-newly-established ADB (Asian Development Bank) also extended a credit line to PDCP.
PDCP had everything going for it—government support, participation by some of the biggest Philippine business groups, and financial assistance from the leading international financial institutions and the US.
Because it had abundant peso and foreign-currencies to lend, PDCP was the place to go for the financing of medium-term and long-term projects. Just as PDCP’s ownership profile was the crème de la crème, so its loan portfolio was composed of loans to crème de la crème borrowers. But PDCP’s lending criteria were stringent, and the Philippine business community soon for the message that unsound-project applications would not get very far at PDCP.
Sixto Roxas’ loss of the PDCP operating-head position turned out to be a gain for the Philippine financial industry. Rebuffed at PDCP, Mr. Roxas—SKR to his colleagues—simply turned around and went on to organize what arguably is the best finance house in this country’s history. Together with commercial banker Augusto Barcelon, entrepreneur Ramon V. Del Rosario and a few other leading businessmen, Sixto Roxas organized Bancom Development Corporation.
Because of his stature and reputation, the Fordham University-trained economist was able to attract some of the brightest financially-inclined young men and women and turn them into financial whiz kids. In no time at all Bancom became an investment bank par excellence. For both startups and businesses wishing to expand, Bancom put together creative financial packages that brought together debt and equity in combinations suited to the needs and capabilities of clients.
So prestigious did Bancom—and working for Bancom—become that some observers began talking about a ‘Bancom man.’ Most of the staff members who left Bancom went on to become key officers of both private and government financial institutions.
PDCP was very good at seeking out and providing pesos-and-dollars financing for projects of special importance for this country’s economic development; Bancom was excellent at putting together creative financial packages for just-starting and expanding business enterprises. They were iconic institutions. We need institutions like them at this critical juncture in the development of our economy.
If only it were possible to re-create them.