Corporate Information | Trivia on Philippine Banking


Trivia on Philippine Banking


The First Bank
Philippine Trade
The Salic Law
The Philippines' First Public Bank
The Philippines' First Paper Money
The Pesos Fuertes
Firsts in Banking
The First Branch
Countryside Banking
Silver Coins
The Use of Gold
Oldest Existing Business House
The First Loan
The New Philippine Currency
The First Banking Corporation
The Arranque Market and the Bank
Tobacco in the Philippines
The Rebel Coins
The Chinese in Philippine Trade
The First Tramway
Royal Decision-Making
Act No. 52
The Philippine Currency Under American Regime
The Bank of the Philippine Islands
William H. Taft and BPI
BPI in Zamboanga





The First Bank

DID YOU KNOW...
...that the first bank in the Philippines, established in Manila on August 1, 1851 and originally called El Banco Español Filipino de Isabel 2, was also the first bank in Southeast Asia?

…that this bank was organized 23 years after the king of Spain, Ferdinand VII, issued a decree to establish a public bank in the Philippines?

…that before the establishment of El Banco Español Filipino de Isabel 2, the functions of banks were performed, though on a limited scale, by the obras pias (Spanish for "pious works")?

…that the obras pias were an accumulation of bequests whose donors had specified that the funds be used for charitable, religious, and educational purposes?

…that some of the funds were managed by confraternities that invested capital in secular activities like underwriting cargoes for the galleon trade?

…that the organization of this bank was spearheaded by His Excellency Antonio de Urbiztondo, who was then the Spanish governor and captain-general of the Philippine Islands?


Philippine Trade

DID YOU KNOW...
...that Mexican gold or silver currency brought in via the galleon trade between Manila and Acapulco (in Mexico) became an accepted means to facilitate commodity exchange in the Islands?

…that foreign trading firms engaged in the wholesale-retail business in the Philippines, also functioned as commission merchants, and later served in a limited capacity as merchant bankers in the absence of a regular bank?

…that American trading firms in the Philippines during the Spanish regime gave short-term advances to crop-growers at interest, and accepted funds from customers, also at interest?

…that the first bank in the Philippines, originally called El Banco Español Filipino de Isabel 2, was established in Manila on August 1, 1851 but actual operations began in 1852?




The Salic Law

DID YOU KNOW...
...that if King Ferdinand VII, the father of Isabella II, did not abolish the Salic Law (which forbade the succession of a woman to the throne), the next Spanish ruler would have been his brother, Carlos, and El Banco Español Filipino de Isabel 2 might have been named after him instead?

…that Isabella II was only three years old when she inherited the Spanish throne following the death of her father in 1833?

…that Queen Isabella II was 21 years old when the first bank in the Philippines (and Southeast Asia) was established and named after her in 1851?

…that the name of the bank was eventually shortened to El Banco Español Filipino effective September 3, 1869 after the dethronement of Isabella II as queen of Spain in 1868?


The Philippines' First Public Bank

DID YOU KNOW...
...that the king of Spain, Ferdinand VII, issued a decree on April 6, 1828 to establish a public bank in the Philippines to meet the requirements of increasing commerce and trade in the islands?

…that this bank, originally called El Banco Español Filipino de Isabel 2, was organized as a limited stock company along the lines of contemporary state banks in Europe at that time?

…that the bank's first office was located in the Royal Custom House (also called Aduana, but later known simply as Intendencia) within walled Manila, which is now officially called Intramuros?

…that the bank was originally managed by two elective managers who took turns serving as managing director on an annual basis?

…that about a hundred years later, the Intendencia would also house the first Central Bank of the Philippines?



The Philippines' First Paper Money

DID YOU KNOW...
...that the need for money and credit during the Spanish times grew as a result of the increasing volume of trade in the Philippine Islands in the early 1800s?

…that the Spanish central government in Madrid granted El Banco Español Filipino de Isabel 2, the first bank in the Philippines, the exclusive privilege of issuing paper money in the Islands?

…that the first paper money issued by the bank was collectively called pesos fuertes and originally denominated from 10 to 200 pesos fuertes?

…that the first bank note of El Banco Español Filipino de Isabel 2, carrying the serial no. 0001 and dated May 1, 1852, was denominated in 10 pesos fuertes ?

…that pesos fuertes, in Spanish, literally means "strong pesos"?


Pesos Fuertes

DID YOU KNOW...
...that although the first bank in the Philippines, originally called El Banco Español Filipino de Isabel 2, had printed its first bank note as early as 1852, it was not until after the approval of its by-laws, confirmed in a royal decree from the Spanish central government in Madrid dated October 17, 1854, that the bank was able to formally exercise its privilege to issue paper money to the general public?

…that the pesos fuertes, as the first bank notes in the Philippines were called, could be redeemed in Mexican coins in gold or silver?

…that Mexican coins (brought in via the galleon trade between Manila and Acapulco in Mexico) had been in circulation, though on a limited scale, in the Philippine islands prior to the formal establishment of El Banco Español Filipino de Isabel 2 in 1851?



Firsts in Banking

DID YOU KNOW...
...that the first batch of bank notes issued by the first bank in the Philippines, originally called El Banco Español Filipino de Isabel 2, totaled 2,350 pieces (under different denominations) with a total value equivalent to 100,000 pesos fuertes?

…that these bank notes comprised of 1,000 pieces of 10 pesos fuertes (PF), 600 pieces of 25 PF, 500 pieces of 50 PF and 250 pieces of 200 PF?

…that the first deposit accepted by the bank was an amount equivalent to 3,000 pesos fuertes from a client named Fulgencio Barrera on May 4, 1852?

…that the first borrowing client of El Banco Español Filipino de Isabel 2 was a Chinese named Tadian, for whom the bank discounted a promissory note amounting to 10,000 pesos fuertes on May 1, 1852?

…that the amount lent to Tadian represented 10 percent of the value of the entire notes printed by the bank as of that time?


The First Branch

DID YOU KNOW...
...that the first effort towards setting up bank branches in the Philippines was undertaken by El Banco Español Filipino de Isabel II as early as the first decade of its operations?

…that the first area to be considered as the site of the bank's first branch was the capital of Pampanga (i.e., Bacolor) because the province was an emerging sugar-producing region in Luzon and bustling with economic activity?

…that the bank decided to locate its first branch in 1897 in Iloilo rather than Pampanga (as was originally planned) because the former had gained more prominence as a sugar central in the Philippines?

…that Philippine sugar was exported in large quantity to Australia, England, and the US starting in the 1860s and, thus, became a major source of income for sugar planters as well as the Spanish colonial government in the Philippines?



Countryside Banking

DID YOU KNOW...
...that 1897 marked the beginning of countryside banking in the Philippines with the establishment of the Iloilo branch of El Banco Español Filipino on March 15, 1897?

…that this branch was opened in spite of the ongoing Philippine revolution against the Spanish colonial government?

…that the bank opted to establish its first branch in Iloilo because of the emergence of this region as a promising sugar central?

…that it was Nicholas Loney (the British vice consul in Iloilo from 1856 to 1869) who was credited for boosting sugar production in Iloilo and the Panay provinces?

…that Loney first arranged for the direct shipment of agricultural products from the port of Iloilo to Australia and Europe, thus providing local traders access to cash transactions at better prices?

Silver Coins

DID YOU KNOW...
...that for almost 250 years, the galleon trade between Manila and Acapulco in Mexico dominated the Philippine economy?

…that Mexican cob coins were exchanged for the Oriental goods brought across the Pacific (among natives of the Philippines, these silver coins were dubbed hilis kalamay due to their odd shape)?

…that the appearance of the first regularly published newspaper in the Philippines on August 8, 1811 coincided with the arrival of new coins from the newly independent Latin American states?

…that to obscure the origin of the coins and discourage similar acts of insurrection, the Spanish colonial government superimposed its coat of arms on these coins and put the marking "Manila 1828"?



The Use of Gold

DID YOU KNOW...
...that the use of gold for barter was very common in the pre-Hispanic period of Philippine history?

…that as a universally accepted currency, gold was used in the form of barter rings and tiny engraved coins called piloncitos?

…that early Filipinos often finalized transactions involving land through the use of long chains made of gold?

…that Arab merchants who reached the Philippines through India and other Southeast Asian kingdoms brought the idea of the "yellow money" as a means of exchange?

…that as part of this "yellow money," cowry shells were so rare that the merchants often had facsimiles of them made from other materials, like the golden cowry shells from Siam (Siam was the old name of Thailand)?

…that Chinese immigrants entering Manila brought with them porcelain chips which they used for betting?

…that these chips could well have been an antecedent of today's plastic casino chips?


Oldest Existing Business House

DID YOU KNOW...
...that the first bank in the Philippines, El Banco Español Filipino de Isabel 2, was established on August 1, 1851 like the present-day corporation?

…that the bank was quasi-public in nature and had an authorized capital of P400,000, consisting of 2,000 shares of stock (with each share valued at 200 pesos fuertes)?

…that among the first directors of the bank was a representative of the business community who was designated by the Spanish government?

…that the bank director representing private business was Antonio de Ayala of the business group called Ayala y Cia?

…that Ayala y Cia, established in 1834, was the forerunner of the present-day Ayala Corporation, the oldest existing business house in the Philippines?



The First Loan

DID YOU KNOW...
...that in keeping with its quasi-public character, El Banco Español Filipino de Isabel 2, the first bank to be established in the Philippines and Southeast Asia, granted the Spanish colonial government in the Philippines with an interest-free loan amounting to 200,000 pesos fuertes in 1864?

…that the amount was equivalent to half of the bank's authorized capital at that time?

…that although the government specified that the loan be subject to a 6 percent interest, it was the bank's stockholders who decided to give the government the funds at no cost?

…that this loan was the first of a number of accommodations extended by the bank to the colonial government in the Philippines?


The New Philippine Currency

DID YOU KNOW...
...that after the declaration of Philippine independence in Kawit, Cavite on June 12, 1898, Emilio Aguinaldo, the first president of the Philippine Republic, adopted a new currency for the new government?

…that one-peso and five-peso notes were printed as Republica Filipina Papel Moneda de un Peso and Cinco Pesos, respectively?

…that with the printing of the new bank notes came the minting of three variations of a dos centimos de peso copper coin by the Aguinaldo administration?

…that the new Philippine currency ceased to be used after the capture of Aguinaldo by the American forces in Palanan, Isabela?



The First Banking Corporation

DID YOU KNOW...
...that the first extension in the corporate life of the first bank in the Philippines, El Banco Español Filipino (originally named El Banco Español Filipino de Isabel 2), was formalized by no less than the king of Spain in 1876?

…that the Spanish king at that time was Alfonso XII, son of former queen Isabella II, after whom the bank was named in 1851?

…that the establishment of a submarine telegraph cable connecting Luzon to the Spanish peninsula in 1880 enabled bank customers in the Philippines to start having direct contact with those in Spain, France, China, Hongkong, French Indo-China, and Singapore?

…that the first direct exchange of bank drafts was made in 1881 between El Banco Español Filipino in the Philippine Islands and the Banco Hispano-Colonial in Barcelona, Spain?


The Arranque Market and the Bank

DID YOU KNOW...
…that El Banco Español Filipino (originally called El Banco Español Filipino de Isabel 2) was the first bank in the Philippines to extend a loan to the government for the construction of a public market?

…that the Arranque market in what is now the Santa Cruz district of Manila was the first market to be constructed using part of a loan granted by El Banco Español Filipino?

…that the bank gave a loan amounting to 300,000 pesos fuertes for the construction of the Arranque market?

…that the bank was also the first to extend financing for community health services through a loan given to the Hospital de San Juan de Dios in Manila?

…that El Banco Español Filipino imposed a mere 4 percent interest for a 90-day promissory note of Hospital de San Juan de Dios instead of the over 8 percent interest prevailing at that time?



Tobacco in the Philippines

DID YOU KNOW...
…that for more than 100 years starting the 18th century, the cultivation and sale of tobacco in the Philippine islands was the exclusive prerogative of the Spanish colonial government?

…that in Luzon, the government restricted the growing of tobacco to designated areas such as the Cagayan Valley and Nueva Ecija?

…that in the spirit of liberalism, the government abolished this monopolistic control in 1882?

…that after the lifting of the restrictions on tobacco, private investors like the Compañia General de Tabacos de Filipinas (or Tabacalera for short) assumed greater involvement in the business?

…that Tabacalera became one of the long-time clients of El Banco Español Filipino, the first bank to be established in the Philippines and Southeast Asia?


The Rebel Coins

DID YOU KNOW...
…that even before the establishment of formal banking in the Philippine Islands during Spanish times, there was already an abundance of Mexican and other Latin American coins circulating in the Philippines?

…that such abundance of coins was a result of heavy importation of goods from Mexico?

…that most of these were so-called "rebel coins" because they were minted in countries that had rebelled against Spain?

…that in order to legalize the circulation of these coins, the Spanish captain-general in the Philippines issued a decree in 1828 requiring the countermarking of the coins with the inscription "MANILA" on the obverse side?

…that when the independent Latin American countries gained the recognition of Spain, the practice of countermarking was discontinued in the Philippine Islands starting in 1837?



The Chinese in Philippine Trade

DID YOU KNOW...
…that in the late 1800s, the export-import trade in the Philippines was dominated by British merchants while the retail traffic was in the hands of the Chinese?

…that the principal center of retail business in the Manila suburbs then was Rosario Street (now Quintin Paredes) while the finest of American and European shops were found on Escolta?

…that the island of Binondo, on the northern side of old Manila, was the hub of economic activity in the late 1800s?

…that even El Banco Español Filipino (originally called El Banco Español Filipino de Isabel 2), the first bank in the Philippines, relocated its head office to Binondo because Intramuros had become economically inactive?

…that the bank moved to No. 4 Plaza Cervantes in Binondo in January 1892 after acquiring a prime property from the Dominican friars in September 1891?


The First Tramway

DID YOU KNOW...
…that the first tramway service in the Philippines, Compañia de los Tranvias de Filipinas, was able to convert its horse-drawn tramway lines to a steam-operated street railway system with funds provided by El Banco Español Filipino in 1887?

…that these trams served the commuting public starting in 1888?

…that the steam-powered tramway lines were later replaced by an electric railway system run by the Manila Electric Rail and Light Company (MERALCO) in 1905?

…that in 1886, the colonial government in the Philippines decided to phase out all Mexican money in circulation in the islands because they had lower value compared to the coins minted in Manila?

…that Spain extended the application of her Code of Commerce to the Philippines in 1888, making it the first legislation to deal directly with Philippine banking?



Royal Decision-Making

DID YOU KNOW...
…that in the 1800s, policy decisions for El Banco Español Filipino, the first bank in the Philippines, had to go all the way up to the royal authorities in Spain?

…that even the decision to establish the first branch of the bank was contained in a royal order issued in 1896 by the Spanish central government?

…that the royal order specified that only when its capital had reached P2 million could the bank consider putting up additional branches in the Philippines?

.…that as soon as the bank was granted a second extension of its corporate life in 1896, it had to take on the added responsibility of assisting the insular government with interest-free loans of up to P500,000, which was a fortune at that time?

…that the bank's financial accommodation for the government was limited to a period of not more than six months each calendar year?


Act No. 52

DID YOU KNOW...
…that soon after the Philippines was ceded by Spain to the United States in 1898, El Banco Español Filipino, which operated as a Spanish public bank since 1851, changed its nationality and became a Philippine institution?

…that the regulation of local banking began when the Philippines became a colony of the United States?

…that when the US military government took over the administration of the Philippines in 1899, four banks (two local and two foreign) were in operation, and they had total combined resources of P40 million?

…that this regulation was reflected in Act No. 52 of the Philippine Commission which provided that all banks in the Philippine Islands were to be examined by the Insular Treasurer?

…that the regulation and suspension of banking activities fell under the American regime's "police power" provision because the US considered banking as a matter of public interest?



The Philippine Currency Under American Regime

DID YOU KNOW...
...that a standardized value for the Philippine currency was begun only during the American regime? In 1903, the United States Congress passed two laws that established a gold standard unit for the Philippine Islands, and an automatic gold exchange standard intended to maintain the parity of the silver peso with the gold standard peso. With the passage of these laws, the Philippine currency was officially pegged to the gold exchange standard. Philippine money had different names under different regimes. Under Spain, Philippine currency was collectively called pesos fuertes, the Spanish term for "strong pesos." Under the American regime, Philippine money was called "Philippine Currency," although it was more popularly called "Peso Conant," after Charles Conant, the man who suggested its introduction.


The Bank of the Philippine Islands

DID YOU KNOW...
...that the change in the corporate name of El Banco Español Filipino was based on the provisions of a law passed by the Philippine Commission in 1907? The bank was originally called El Banco Español Filipino de Isabel 2 when it was established in 1851 as the first bank in the Philippines and Southeast Asia. But following the provisions of the Treaty of Paris in 1898, in which Spain was forced to cede the Philippines to the United States, the bank had to change its nationality to that of the ceded territory. Thus, the bank shed off its Spanish character and became a Philippine institution. Act no. 1790, which was passed by the Philippine Commission on October 12, 1907, gave the stockholders of the bank the authority to change the name of their institution to the Bank of the Philippine Islands. The change in the name eventually took effect on January 1, 1912.



William H. Taft and BPI

DID YOU KNOW...
...that El Banco Español Filipino retained certain rights and franchises during the cross-over to the American regime because of the intercession of two prominent Americans? When the US took over the administration of the Philippines as its new colony, a move was made to take out from El Banco Español Filipino the exclusive privilege to issue bank notes (or paper money) in the Philippine Islands. But William H. Taft (the US secretary of war) and Monsignor Jeremiah Harty (the archbishop of Manila) helped explain to the American public and government officials about the bank's traditional role as an issuer of Philippine bank notes since the Spanish regime. Their influence led to the passage of a law (Act no. 1790) in 1907 that allowed the bank to continue issuing Philippine bank notes (Taft was the first American civil governor of the Philippines, who later became president of the US).


BPI in Zamboanga

DID YOU KNOW...
...that it was with the encouragement of an American general that the second branch of El Banco Español Filipino was established in Zamboanga? Gen. John J. Pershing, the famous American military governor of Zamboanga, encouraged the bank's management to open a branch in that part of Mindanao. The branch was finally established in February 1912, a month after the bank was officially renamed "Bank of the Philippine Islands" (BPI). That branch of BPI was eventually designated by the insular government as the official depository of funds for the province of Zamboanga and of the Zamboanga custom house. Gen. Pershing chose to locate his official residence on the second floor of the BPI branch in Zamboanga City.








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