“The first step we took was to account for our employees. Employees from nearby branches were asked to go look for their peers and give them initial relief goods. They had to travel by car but could not pass because cadavers were everywhere. They had to walk.”
Gilda Pico, the president and CEO of the Land Bank of the Philippines, recalls the aftermath of Typhoon Yolanda in the Philippines in 2013.
“We have a two-storey building in Tacloban and the entire roof was destroyed. There were several cadavers in the branch premises,” says Ms Pico.
Land Bank is not a typical bank, with its significant involvement in natural disaster relief, as well as a mandate to promote inclusive growth and improve the quality of life of small farmers and fishermen. Despite focusing on a comparatively low-return business and its full government ownership, which to many is a synonym of inefficiency, the bank is carrying out its mandate successfully while generating income. Land Bank’s 2014 net income exceeded its 2013 figures.
Land Bank was the first bank to reopen after Typhoon Yolanda so as to support local governments. It also used the air force to deliver four mobile ATMs to affected areas immediately after the cyclone hit.
Staff sympathy
Staff management in the disaster’s aftermath was challenging. Employees stationed nearby were called to man Land Bank’s affected operations. “It was difficult to ask affected staff to work when their mind was in their own homes. It was really very difficult,” says Ms Pico.
Land Bank was also instrumental in dealing with 2011’s Typhoon Sendong. In addition to providing relief goods, it worked with non-governmental organisation Habitat for Humanity to establish the Recovery through Livelihood training programme, which teaches typhoon survivors productive labour skills. By 2014, two of the groups trained in food processing and transport operations became registered co-operatives and were producing steady income.
In a country as geographically disjointed as the Philippines – it is made up of 7107 islands – Land Bank’s success is owed to its impressive reach. It is the only local bank present in all 81 Filipino provinces. And in areas where having a branch is impossible due to distance or lack of amenities, Land Bank either sets up centres with ATMs, cash deposit and bill payment machines or uses the government postal service to extend its reach.
Growing support
Land Bank is also set on redefining banks’ traditional support of the agriculture sector. It aims to stimulate entrepreneurial spirit by focusing on value chains and business. “We want to develop an entrepreneurial mindset among our farmers, to equip and empower them to recognise opportunities, create value, manage risk, and market their goods and services,” says Ms Pico.
One of Land Bank’s objectives is to break farmers’ ties with traders who underpay for produce. To that end, it launched the Food Supply Chain Programme, which links players in the food supply chain.
“We want to link farmers to processors and end users so that they have a ready market for their produce at a mutually agreed price that is fair to all parties concerned,” says Ms Pico. Farmers get good value for their products and processors will in turn have a regular source of raw materials. The end users will ultimately benefit.
Sound monitoring
Land Bank also uses conduits and non-governmental organisations to reach unbanked rural communities. The firm has partnerships with 1500 co-operatives in the countryside and 400 rural banks. To reach farmers outside co-operatives, Land Bank has started working with other organisations, including irrigators’ associations, with whom it has created a special direct lending programme.
What makes Land Bank successful is rigorous monitoring of its conduits and clients alike. With the former, Land Bank periodically checks all conduits’ promissory notes. It lends to conduits at low interest rates – as a wholesaler of loans – so that they in turn can lend to small rural borrowers at low rates.
Land Bank recently started providing retail lending as well to reach more farmers and fishermen, especially those who are not co-operative members, says Ms Pico.
Client loans are not easily granted. Borrowers need to provide 10% to 20% of equity for the project they want funding for. This can be in the form of land, equipment or anything that can be used in the project.
“If they don’t give you any equity and you just give them the loan, they can easily run away from the obligation. The important thing is that they have a stake in the business. We don’t just extend loans to anyone,” says Ms Pico.
