The Bank

The 1960s marked a significant milestone in Philippine business history as it signaled the beginning of a period of economic liberalization. Specific measures to eliminate foreign exchange and import controls were undertaken by the government in a move to provide the country's economy with greater access to foreign trade and technology. With this shift in the nation's economic policy, came an era of economic expansion. The Philippines soon became the envy of its neighbor-countries as it proved to be one of the most advanced, high-growth economies in the region. It was also during this time that the government saw the emerging need to sustain its economic gains by liberalizing the entry of new banks into the financial system.
It is against this backdrop that a group of visionaries led by the late Recio M. Garcia saw the golden opportunity to contribute to and share in the growth and progress of the nation by establishing one of the first private development banks in the country and the first banking institution based in Quezon City. Thus, with an initial paid-up capital of P1 million, Quezon City Development Bank was founded. It was organized under the Private Development Banks Act through the support and assistance of the Development Bank of the Philippines by way of counterpart equity investments and loan rediscounting facilities. In the month of October 1960, Quezon City Development Bank opened its doors to the banking public.

The Bank defined its goal and purpose as being "dedicated to Philippine progress". That early, the Bank expressed its unwavering faith in the dynamism and resiliency of the small and medium enterprises (SME). Therefore, as it carefully laid down the foundation for a productive partnership with the Filipino entrepreneur, Quezon City Development Bank steadily grew throughout its first two decades of operations.

The Metamorphosis

The beginning of the decade of the 1980s saw the rapid deterioration of the country's economy. Its impact on a fundamentally weak financial system led to the banking industry's near collapse as the number of bank failures as well as the erosion of public confidence in the financial system reached alarming levels. As a corrective measure, monetary authorities introduced a package of banking reforms that sought to create a healthier and more efficient banking system. To promote stronger and bigger banking institutions, the Central Bank of the Philippines raised the required minimum capitalization of banks across all categories and at the same time introduced universal banking, even as it encouraged mergers and consolidations among banks. To stimulate competition and enhance financial intermediation, the Central Bank undertook the removal of interest rate ceilings on both loans and deposits, and the elimination of the functional distinctions among the different categories of banks. As a result, thrift banks which include private development banks, ceased to enjoy their built-in interest rate advantage over the commercial banks and were instead compelled to compete based on an even-level playing field. As a whole, the banking reforms were a welcome opportunity for the larger banks to consolidate and engage in a free-for-all competition. It was then a question of survival of the fittest. The Bank promptly responded by instituting major structural changes needed to strengthen its financial and organizational capabilities. The capital base was increased to meet the prescribed minimum level. The Bank brought in new blood to professionalize and muscle-build the organization. The Bank also realigned its corporate strategies, structure, and systems to gear up for heightened competition. And most of all, the Bank reaffirmed its continuing commitment and support to the Filipino entrepreneur. All these important changes were formalized with its new name, Asiatrust Bank, in October 1982.

The years that followed saw the phenomenal rise in both the Bank's resources and earnings which grew at a compounded annual rate of 38% and 34% respectively during the period 1982-1990. New and innovative banking products and services were developed in response to the growing needs of its customers. In 1983, the Bank introduced its checking account facility after it was granted the authority by the Central Bank to accept demand deposits. Subsequently, the Bank secured the Central Bank's approval to engage in Trust business along with foreign currency deposits operations. In 1988, the Bank launched its own credit card, the Asiatrust Bank VISA Card, through its tie-up with Equitable Card Network, Inc. By 1991, the Bank installed its first automated teller machine called the "Cash Station" and became the 12th member of the Megalink, a consortium of banks that operates a nationwide network of ATMs. The Bank also secured new accreditations in the various special lending programs of the government and multilateral funding agencies.

Strategic Alliances

In December 1990, the Bank forged a strategic partnership with the Asian Development Bank (ADB), a distinguished international development finance institution recognized worldwide as a "bank for half the world". ADB is jointly owned and sponsored by 34 countries from the Asia-Pacific region and 15 countries from Europe and North America. In the last three decades, it has become a major force in promoting the economic and social progress of the developing member-countries in the Asia-Pacific region, where one-half of the world's population lives.

ADB's equity investment in Asiatrust Bank, which is equivalent to 15% of the Bank's capital stock at that time, was in line with its objective of promoting economic development in the Philippines by catalyzing the flow of external and domestic funding to the private sector. The new capital served to strengthen the Bank's financial resources and capabilities.

In 1993, the ASEAN Strategic Capital Ltd. (ASCL), a Singapore-based regional investment company, joined the Bank's other shareholders through its 12% equity stake in Asiatrust Bank. ASCL's fresh equity infusion provided the capital boost to support the Bank's expansive thrust to reach out to new and growing Filipino business enterprises.