Plantersbank Model

Plantersbank Chairman Ambassador Jesus P. Tambunting

In 1972, banker Jesus P. Tambunting decided to strike out on his own and buy a small development bank in Bulacan with an asset base of P500,000. That bank is now Planters Development Bank, and under the leadership of Tambunting as chairman, it has become the country’s largest private development bank, with P33 billion in total assets, P4 billion in capital, and a nationwide network of 63 branches.

What makes Plantersbank’s success so remarkable is that when the bank chose to focus on SMEs, there were no business models to follow. Tambunting relates that they had to “learn by trial and error and improvise along the way.” Today, it is the Plantersbank model that is the shining example in the field of SME finance.

In 2004, the Management Association of the Philippines (MAP) honored Tambunting as its Management Man of the Year for 2003, and in his acceptance speech, he spoke about the pioneering strategies that have made Plantersbank a highly respected industry leader:

“How did we do it?” How did we transform our focus on the small entrepreneur into a dynamic force for the growth and transformation of our bank?

First, we were single-mindedly focused and committed to SMEs. From the shareholders down to the last staff member, lending to SMEs has become a passion and way of life at Plantersbank. We kept operations simple and strove for excellence.

Second, we learned to improvise and devise innovative approaches to lending to SMEs. Because SMEs do not have reliable financial statements, our lending officers learned to use surrogate indicators. Also, we took advantage of government subsidies and incentives where these were available.

Third, we managed our credit risks. We consciously built a diversified loan portfolio. Because of the inherently higher risks in SME lending, we required our loans to be secured by hard collaterals and/or guarantees from government guarantee institutions, which also served as effective mechanisms to ensure financial discipline among our borrowers.

Fourth, we were always profit-driven. While we found purpose and fulfillment in dealing with SMEs, we never lost sight of the fact that we had to make profits to stay in business.

Fifth, we maintained a long-term orientation and a developmental perspective. We did not hesitate to walk the extra mile to ensure our clients' success. We did much hand holding in helping clients improve and strengthen their operations.