p1.pdf 1 12/8/12 11:22 AM new 1-20.indd 1 1/16/13 8:40:45 AM p2.pdf 1 12/8/12 11:15 AM

Copyright©2012 by Banking Corporation

Published by China Banking Corporation, China Bank Building, 8745 Paseo de Roxas corner Villar Street, City, 1226 .

No part of this book may be transmitted in any form or by any means electronic, chemical, mechanical, including photocopying, any information storage or retrieval system without prior permission in writing from the copyright owners.

ISBN 978-971-95485-0-8

Cover and book design: Jules Perez OP Communications, Inc.

Photographers: Wig Tysmans Mario Babiera Dojo Palines Jonathan Mallari Enrico Perez China Bank Aperture Club

new 1-20.indd 2 1/16/13 8:40:45 AM BY RAUL RODRIGO

MESSAGE BY FOREWORD BY MESSAGE BY PETER S. DEE GILBERT U. DEE HANS T. SY p3.pdf 1 12/8/12 11:16 AM

new 1-20.indd 3 1/16/13 8:40:45 AM 1 p4.pdf 1 12/8/12 11:21 AM

new 1-20.indd 4 1/16/13 8:40:46 AM CONTENTS

6 MESSAGE FROM THE PRESIDENT By Peter S. Dee

8 FOREWORD By Gilbert U. Dee

10 MESSAGE FROM THE CHAIRMAN By Hans T. Sy

12 OVER NINE DECADES OF TRUST AND PARTNERSHIP

14 PART ONE A DIFFERENT KIND OF BANK, 1920-1960

16 CHAPTER 1 Beginnings, 1920-1924

42 CHAPTER 2 Setting the Values, 1924-1940

72 CHAPTER 3 Rising from the Ashes, 1940-1960

106 PART TWO 218 PART THREE CHALLENGE AND RESPONSE, ENDURING PARTNERSHIPS 1960-2010 220 THEIR SUCCESS IS OUR BUSINESS 108 CHAPTER 4 Brave New World, 1960-1980 246 VISION AND MISSION

146 CHAPTER 5 248 CORE VALUES A Time Of Troubles, 1981-1989 250 ACKNOWLEDGEMENTS 178 CHAPTER 6 The Fundamental Things Apply, 251 SOURCES 1990-2010 252 INDEX p5.pdf 1 12/8/12 11:20 AM

new 1-20.indd 5 1/16/13 8:40:46 AM p6.pdf 1 12/8/12 11:16 AM

MESSAGE FROM THE PRESIDENT BY PETER S. DEE China Bank President and CEO 1989 to Present

Our Distinctive Values

In 1920, my grandfather Dee C. Chuan, my great- uncle Albino SyCip, and several of their good friends and colleagues founded China Bank. Over the next nine decades, the Bank has changed a lot—particularly during the forty years since I joined China Bank in 1972. It has become much larger in terms of branches, manpower, and assets—and much more professional, dynamic and up- to-date with banking technology. It has become a much younger (in terms of its median age) and more forward- looking bank. But some things have not changed—and I hope they never will. These things are the values that our forefathers and founders believed in—and they built these values into the DNA of the Bank. They believed in a Bank that had unimpeachable integrity, solid teamwork, a conservative attitude toward risk, consistent caring for our customers, especially during hard times, and a positive working atmosphere that makes us feel like we are family. My grandfather, my father George Dee, my granduncle Dee K. Chiong, Albino SyCip, and their many colleagues built a bank where the employees were unusually close to one another and to management. Likewise, our relationship with our clients was also special in the sense that their trust and confidence in our bank, built and nurtured over the years, gave them the feeling that we were there for them, in good and bad times. We value relationships,

6 A M A T T E R O F T R US T

new 1-20.indd 6 1/16/13 8:40:46 AM p7.pdf 1 12/8/12 11:06 AM

with our employees, officers, and stockholders, as well as and shareholders’ funds. We took their lesson to heart. our clients, and this has made us a strong and resilient Perhaps we cannot grow our assets as fast as others might, bank. We have loyal, competent, and dedicated men but our customers know that with us, their money is safe who have made China Bank a significant part of their and the Bank takes only calculated risks. At all times, lives. . . .because many of them have spent many years China Bank will remain strong and ready to look after their of their productive lives with the Bank, including myself, interest and serve them to the best of our ability. Thus, our we consider the Bank our second home. I think this, motto: Your success is our business. in itself, speaks volumes of what our Bank is all about. During my forty years with the Bank, I have tried to In the old days of our forefathers and veterans like DP uphold the distinctive China Bank values as best as I can. I Loh, LL Pan, TS Wang, Johnny Coreces, Yap Tian Say, Tan have done my best to pass them on to the next generations Kim Liong—who worked with us in Binondo for over sixty of ChinaBankers. Our values are the reason for our success. years—and a long list of other ChinaBankers inculcated a Our values are the reason why our numbers over the last strong sense of integrity, character, humility, and decency few decades have been very very good; year after year, we into our lives and culture. We had clients in Binondo who are always among the top banks in terms of profitability, would just leave their bags or bayongs full of money at the capital adequacy, efficiency, and customer satisfaction. counter and ask our tellers to count it and deposit it into But to me, this Bank is about more than just the their accounts, coming back later to collect their deposit numbers. To me, it is about happiness. At the end of the slips. What better sign of trust can one find? I would like day, we want to make our clients happy, our shareholders to think that even now, our people enjoy a very high level happy, and our employees happy. Above all, we have of trust and confidence from our customers, and I am very someone up there watching over us! happy about that. Our generation before us would never tolerate any instance of dishonesty within the Bank. They taught us never to do anything that might endanger our depositors’

T H E C HIN A B A N K STOR Y Message from the president 7

new 1-20.indd 7 1/16/13 8:40:47 AM FOREWORD BY GILBERT U. DEE China Bank Chairman of the Board 1989 to 2011

China Bank Is Different

On May 5, 2011, I stepped down as chair of the China Bank board. After twenty-two years in that position, I felt that it was the right time. I am not getting any younger, and I feel the younger generation of Bank leadership, spearheaded by our new chairman, Hans Sy, is more than ready to take the reins. Hans is very capable, full of energy, and astute about both business in general and about banking; I am confident that the Bank will continue to do very well under his leadership. I can cut back on my duties at China Bank, secure in the knowledge that it has done very well in the past two decades. We have left a good record and an impressive legacy. Our net income was P261.97 M in 1989. In 2010, our net income was P5 B, and the Bank continues to grow. All of our performance numbers are among the best in the industry—our capitalization, profitability, and our efficiency ratios such as net income to our head count and net income to the number of our branches. Other top bankers often come up to me and ask: “Gilbert, how does China Bank do it?” What they mean is: How do we get this kind of performance, which is out of proportion with the number of our branches and the size of our assets? I just smile and say: “We just work a little harder than others do.” I think this is true—but of course it is not the whole story. I think the most important ingredient in our success

p8.pdf 1 12/8/12 11:19 AM 8 A M A T T E R O F T R US T

new 1-20.indd 8 1/16/13 8:40:47 AM p9.pdf 1 12/8/12 11:19 AM

is that we are very blessed with our people. Over the past him a little more leeway for his loans with us. In some three decades, we have built up a strong and tightly- cases, we are even willing to extend this client additional knit core of banking professionals who believe in our capital so that he can recover faster. We have always been corporate values, live up to them, and pass them on to the willing to bet on a businessman or businesswoman with next generation. The best example I can think of is our good character and strong values, and these clients have COO, Ricardo Chua. I think Ric is the heart of the Bank; rewarded our faith in them many many times. he is very brilliant, hardworking, and honest—what more This Bank has many clients who are loyal to us, because can you ask for? we have been willing to help them out during their times Ric, and many like him, exemplifies the values that of need. They feel that we are more than a bank. They make China Bank special. These values include hard feel that we are also their friends, and so they continue to work, team work, and honesty. These values to me are give us their business. This is the brand of banking that I nonnegotiable. These values will always be there. We, for learned from my late father, Dee K. Chiong. He was the instance, have always been very strict about honesty, from kind of banker who built relationships with our clients that 1920 up to the present. If we ever find any instance of were long, deep, and strong. He taught us all that loyalty dishonesty within the Bank, we deal with it immediately goes both ways. I would like to extend a special thanks to and severely. And because we are so strict about integrity, all of our clients, because their support helps make China our clients trust us to look after their interest no matter Bank strong. what. As I step back from the chairmanship, I am very Our other nonnegotiable is our focus on the customer confident that China Bank will perform very well in the and on looking after his welfare even in bad times—or, I future. Chairman Hans Sy has the drive to grow the Bank, should say, most especially during bad times, because that and I think that in the next twenty years, the Bank will is when a businessman needs his bank the most. Other perform even better than it did during the last twenty. For banks will call in their loans the instant a client gets in the Philippine economy, there will always be good years, trouble. China Bank is different. If we feel that a client is bad years, and so-so years—but through it all, China Bank honest, diligent, and smart, and if he is only undergoing a will remain strong, solid, and a good friend to its clients. temporary dip in his fortunes, then we are willing to give

T H E C HIN A B A N K STOR Y Foreword 9

new 1-20.indd 9 1/16/13 8:40:48 AM MESSAGE FROM THE CHAIRMAN BY HANS T. SY China Bank Chairman of the Board 2011 to Present

The Future of China Bank

I’ve been with China Bank for over twenty-five years now. Quite frankly, when I came into the Bank in 1986, it was at its lowest point. People didn’t know what the future of the Bank held. The problems were not just in China Bank, but nationwide—it was probably the lowest point ever for the whole Philippine economy. The entire banking sector was in trouble. But fortunately we (and the country) recovered, and now we are one of the strongest banks in the country. During the 1997 financial crisis and the latest one in 2008, China Bank was barely affected. That is because the tradition of the Bank is to be conservative. That is the legacy that was handed down to us by the founders, Dee C. Chuan and Albino SyCip. It is really the spirit of China Bank. We make sure that, whatever situation we may end up facing, we are going to be okay. We take risk management very seriously. Everything we do, we thoroughly check each and every item; of course, that means more work. But we can assure everybody that we will all be able to sleep soundly at night. My family says that I fit here at China Bank very well because I’m known as the very conservative one in the family. I’m not the type who would just jump into something without checking every area, nook and corner. I suppose that is the engineer in me coming out. But also, I am following my father’s footsteps very closely. He’s conservative. People nowadays would say that

p10.pdf 1 12/8/12 11:08 AM 10 A M A T T E R O F T R US T

new 1-20.indd 10 1/16/13 8:40:49 AM p11.pdf 4 12/8/12 11:10 AM

Source: Bloomberg

we Sys are so big, we’re so aggressive. But if you really study time. For me to be chairman of the Bank, following in the the history of SM—we’ve been in that business for more footsteps of men like Dee C. Chuan, Albino SyCip, Dee K. than fifty years—my father would never leverage too much. Chiong, and Gilbert Dee, is quite an honor. He ensured that whether we are in good times or bad times, Now that I am chairman, my intention is to really push we will see growth. And that is why we have been doing well. the Bank into the future. I want China Bank to remain So I am like my father when it comes to conservativeness: we conservative, but we still need to move forward. We have will grow slowly but surely. done a lot, but we need to take things to the next level. When I joined China Bank’s board in 1986, I didn’t know Competition is always going to be there. At the end of the much about banking at that time. I learned a lot from Gilbert day, I want to look into new revenue streams to see how they Dee and Peter Dee. Gilbert is the one who showed me that, in can contribute to the growth of the Bank. banking, relationships are very important. From Mr. Gilbert, What excites me about working here is the idea that I learned how to look at the characters of people applying once, in the 1950s and the 1960s, China Bank was THE for loans. He does not base it on just the numbers. He has a bank—the biggest private commercial bank in terms of feel for people. assets. And I look forward to, one day, making China Bank Peter Dee is very hardworking, very diligent. He set a THE bank again—well, not necessarily the biggest bank but great example for me in terms of the willingness to do the definitely, the most successful and productive. hard work, and being a conservative banker. Gilbert and Peter In terms of productivity, China Bank these days is are very different personalities, and they balance each other actually the best performer. When you look at all indicators very, very well. They’re a very good team. Together, they’ve and ratios other than size, we’re leading. done a lot of good for the Bank. One of the main reasons But to me, even though we are doing well in terms that my father was so determined to acquire more and more of productivity, that’s not enough. I still want us to go up shares of China Bank was that he was so confident about its several notches in terms of size. Once we grow into the top management. Gilbert and Peter Dee have had a large role in five banks in terms of assets, and also the most productive, its success and in teaching me about banking. then we would have returned to the ranks of the major Very recently, Gilbert Dee decided to pass on the position players that we belonged to four decades ago. We would be of chairman of the board to me. I suppose he felt that it was recognized as THE bank.

T H E C HIN A B A N K STOR Y The Future of China Bank 11

new 1-20.indd 11 1/16/13 8:40:50 AM OVER NINE DECADES OF TRUST AND PARTNERSHIP

1920 1940 1952 Dee C. Chuan leads a group of top Chinese- On October 27, 1940, Bank founder Dee C. Chuan, Albino, who is now sixty-four, gives up the China Filipino businessmen to establish China Bank, at the age of 52, dies of tuberculosis in California. Bank presidency to George Dee Se Kiat, but which opens for business on August 16, 1920. His son George Dee Se Kiat takes over as head of remains chairman and general manager. Dee K. the Dee family. Chiong becomes senior vice-president. 1924 Albino SyCip joins China Bank on a full-time basis 1941 1954 and will be its chairman for decades; over the On December 8, 1941, the Pacific War begins with Dong Pao Loh becomes manager of the Bank’s next 53 years, he will define and exemplify its the bombing of Pearl Harbor. On December 21, Cebu branch. DP Loh becomes an institution in distinctive values. the Philippines is invaded. Cebu business, becoming friend and banker to many local tycoons. 1925 1942 From the beginning, it maintains an international In April, 1942, the Japanese military shuts down 1955 perspective. China Bank opens its China Bank and liquidates its assets. Albino China Bank breaches the P100 M mark for the branch. SyCip and George Dee Se Kiat are arrested and first time, with P109.597 M in resources and spent months in jail. P70.292 M in deposits. It is the biggest local 1929 private commercial bank. The Bank opens a branch in Shanghai. 1945 On July 23, 1945, Albino SyCip and around forty of 1960 1931 the Bank’s old employees reopen China Bank. China Bank is still the biggest local private The Great Depression hits the Philippine banking Albino is president and general manager; George commercial bank. It has 7.2% of all the assets in sector; hit by runs, a rival bank goes under, but Dee Se Kiat is vice-president. the commercial banking system, with P174.417 China Bank weathers the crisis unshaken. M in resources. 1947 1935 China Bank is listed on the local stock 1965 China Bank has P21.537 M in resources and is exchange. China Bank has P287.446 M in resources and by now one of the country’s biggest banks. It P207.933 M in deposits. It has a profit of provides key financing for many of the country’s 1948 P7.144 M on gross income of P24.663 biggest businesses. China Bank has lent heavily to build the local economy, extending P182.84 M to various reconstruction efforts and economically strategic sectors. China Bank opens its first Cebu Branch.

p12.pdf 1 12/8/12 11:18 AM 12 A M A T T E R O F T R US T

new 1-20.indd 12 1/16/13 8:40:51 AM 1969 1990 2007 China Bank becomes the first bank in Southeast China Bank transfers its corporate headquarters China Bank enters into a bancassurance joint Asia to process deposits on-line, using the IBM to Paseo de Roxas, Makati. venture with Manulife. 360. 1991 It acquires Banking Corp. with 75 1970 China Bank acquires its universal bank license. branch licenses then launches China Bank China Bank is still the biggest local private Savings, Inc. a year later. commercial bank, with P565.997 M in resources. 1996 It has 4.1% of the assets in the commercial China Bank accesses offshore capital markets for 2009 banking system. the first time by issuing US$50 M Floating Rate Stern Stewart & Co. cites China Bank as one of Certificate of Deposit (FRCD). the top 100 listed companies in Southeast Asia in 1975 delivering shareholder value for the period 2002- The Bank increases its Filipino ownership 1997 2008. The Bank’s market capitalization ranks up to the 70% level required by Central Bank In July, the Asian economic crisis begins. fourth largest among local banks. regulations. This paves the way for the Bank’s The peso’s devaluation hurts importers and major branch expansion program. manufacturers badly. As they struggle to adjust, 2010 China Bank finds ways to help its clients. China Bank celebrates ninety years of banking. 1978 On May 2, 1978, Albino SyCip, ninety-one, passes 2004 2011 away due to pneumonia. His successor as Henry Sy Sr. becomes honorary chairman. China Bank is awarded Best Wealth chairman, George Dee Se Kiat, passes away the Management House in the Philippines by following year. 2005 The Asset Magazine. China Bank offers internet banking and The Bank receives for the second time the remittance services. 1980 Gold Award in Corporate Governance from the On December 24, 1980, Bank chairman Dee K. Institute of Corporate Directors (ICD). Chiong passes away due to a heart attack. The 2006 next generation of leadership, Gilbert and Peter China Bank completes its first international Hans T. Sy becomes chairman of China Bank. Dee, begin to take over the reins. US$53 M secondary share offering. 1988 The Bank starts a rapid branch expansion. China Bank introduces Tellerphone, the first phone banking service in the country.

p13.pdf 1 12/9/12 11:12 AM T H E C HIN A B A N K STOR Y 13

new 1-20.indd 13 1/16/13 8:40:52 AM p14.pdf 1 12/8/12 4:05 PM

14

new 1-20.indd 14 1/16/13 8:40:52 AM PART ONE A DIFFERENT KIND OF BANK 1920-1960

p15.pdf 1 12/8/12 4:06 PM 15

new 1-20.indd 15 1/16/13 8:40:53 AM 2 p16.pdf 1 12/9/12 11:10 AM

16

new 1-20.indd 16 1/16/13 8:40:54 AM C HA PTE R ONE Beginnings 1920-1924

The young lumber magnate Dee C. Chuan leads a group of top Chinese-Filipino tycoons in creating a new kind of bank for the Philippines.

Lumber king-turned- banker and philanthropist: Dee C. Chuan wanted a different kind of bank, one that would help Chinese businessmen access financing on an unprecedented scale. With the support of friends who shared his passion and vision, China Bank came to be. Dee C. Chuan was only 31 years old then.

p17.pdf 1 12/9/12 11:10 AM 17

new 1-20.indd 17 1/16/13 8:40:55 AM p18.pdf 1 12/8/12 4:07 PM

Beginnings 1920-1930 O

18 Beginnings: 1920-1930 A M A T T E R O F T R US T

new 1-20.indd 18 1/16/13 8:40:55 AM p24.pdf 1 12/8/12 3:06 PM

“Many Chinese known by their countrymen to be worth half a million pesos are unable to get credit from the present banks.” —DEE C. CHUAN

T H E C HIN A B A N K STOR Y Beginnings: 1920-1930 19

new 1-20.indd 19 1/16/13 8:40:56 AM p20.pdf 1 12/9/12 11:08 AM 20 Beginnings: 1920-1930 A M A T T E R O F T R US T

new 1-20.indd 20 1/16/13 8:40:57 AM