Bridging the Gap
Early banking and finance in Iloilo
The development of the sugar industry in Western Visayas and the subsequent development of Iloilo as the regional capital of the area brought about the establishment of banks and other financial institutions in it.
There were three major banks operating in Iloilo City at the end of the 19th century under the Spanish rule. They were the Hongkong and Shanghai Bank, Chartered Bank, and the Banco de las Islas Filipinas. The Hongkong and shanghai Bank, or Hongkong Bank, as it was popularly called, was the first banking institution in Iloilo and the first bank outside Manila. Until a branch of the Spanish colonial bank, Banco de las Islas Filipinas was established in 1897, the two British banks were the only banks operating in Iloilo.
The Hongkong and Shanghai Bank was established in Iloilo on April 2, 1883 to facilitate the development of the sugar industry and other agricultural crops in the region. It gave financial assistance to Iloilo traders by extending import and export facilities and offering financial assistance for agricultural facilities, especially those related to the sugar industry. Among those primary businesses were the the granting of loans and discounts, overdrafts, and the buying and selling of bills and exchange (Business Day, November 11 1985)
On April 4, 1883, the Chartered Bank opened a sub-agency in the Port of Iloilo. The business into which the bank initially entered was the granting of export finance for sugar and hemp shipments, but it also extended facilities to firm dealing in pig-iron,anchor, copper, cordage, tobacco,coffee and rice (McKenzie 1985)
In March 1897, another bank opened a branch in Iloilo, the Banco de las Islas Filipinas. It handled different kinds of banking transactions and granted loans to sugar cane planters. The bank was a Spanish bank whose complete name was Banco de Islas Filipinas da Isabel II.
The above-mention banks were the instrumental in the development of the country's and of the region's economies, having the resources to assist the financing of machinery imports used for large-scale plantation of crops. The largest involvement of the three banks was the sugar industry located around Iloilo and in the Island of Negros.
When the Philippine Revolution broke out in 1896, the Chartered Bank and the Hongkong Bank suffered very little both in Iloilo and elsewhere for the Filipino revolutionaries carefully respected British lives and properties. The case of Banco de las Islas Filipinas, however, was different due to the fact that it was associated with the Spaniards. It therefore, had to suspend operation during the revolutionary times.
During the first years of the American occupation, there was marked shortage of currency in the Philippines. As a remedy, the military government allowed the then established banks – Banco de las Islas Filipinas, Chartered Bank and the Hongkong Bank to furnish the necessary cash. This was achieved by lifting of a ban on the importation of Mexican silver pesos, which formed the basis of the Philippines' currency system.
Later, after the signing of a free trade agreement between the Philippines and the United States in 1909, substantial American funds were injected into the country, which not only helped revamp the local economy but enabled the Americans to participate actively in the running of commercial and agricultural ventures. This development improved the clients for viable banking operation and laid the groundwork for more banking activities and opportunities in Western Visayas and the country, at large.