Amando M Tetangco, Jr: Launch of the Albay Mayon Credit Surety Fund
Speech by Mr Amando M Tetangco, Jr, Governor of the Bangko Sentral ng Pilipinas (the
central bank of the Philippines), at the launch of the Albay Mayon Credit Surety Fund (CSF),
Legaspi City, Albay, 12 August 2010.
* * *
Governor Joey Salceda, distinguished leaders of the various sectors in Albay, members of
cooperatives in Albay, fellow workers in government, special guests, marhay na aga sa indo
gabos! Good morning.
On behalf of the Members of the Monetary Board and my colleagues at the Bangko Sentral
ng Pilipinas, we welcome Albay province under the leadership of Governor Salceda to the
Credit Surety Fund movement or what we call CSF.
With today's launch, the Albay Mayon Credit Surety Fund becomes the 12th CSF to be
created since 2008.
With CSF, entrepreneurs gain access to bank loans even without collaterals. Before CSF,
financially-challenged entrepreneurs source funds from informal lenders at very high interest
rates.
CSF is also a positive for banks. Even without collaterals, bank loans made under CSF are
effectively insured against default by the surety fund set up jointly by the LGUs and other
partner organizations.
You may ask, does it really work? Well, based on our experience from the first 11 CSFs it
works!
I will share some CSF updates with you:

As of 31 July 2010, the eleven (11) CSFs set up ahead of Albay are in the Provinces
of Aurora, Bohol, Cavite, Compostela Valley, Davao del Norte, Davao Oriental,
Negros Occidental, Negros Oriental and North Cotabato as well as in the Cities of
Cebu and Iloilo.

The combined assets of the cooperatives and NGOs who are members of the first
eleven (11) CSFs is valued at P8 billion, about P2.6 billion of which represents
equity.

These eleven CSFs are made up of one hundred seventy-three (173) cooperatives
and three (3) NGOs with total membership of close to 200,000. The sheer financial
muscle and reach of the CSFs speak of the tremendous potential of the Program.
 The total trust fund of the eleven (11) CSFs have reached P98 million, including
P51 million contributed by the cooperatives and NGOs. This translates to a total
potential loan of P511 million at any one time.

Total loans booked under the program reached P53 million. These loans not only
helped end-user borrowers finance the needs of their businesses but helped their
immediate communities as well. Loan applications amounting to P156 million are in
various stages of processing and approval.
Given these numbers, it is safe to say that CSFs have gained traction. For this, we thank our
LGU partners, as well as our institutional partners that includes the Land Bank of the
Philippines, the Development Bank of the Philippines and the Industrial Guarantee and Loan
Fund. We also acknowledge IGLF's support for the training of contributing cooperatives on
credit appraisal and monitoring, basic accounting, marketing, and credit risk management.
The University of the Philippines' Institute of Small Scale Industries has already conducted
ten runs of these training courses which have benefited 243 cooperative and NGO members.
Nevertheless, we will be the first to say that CSF is not perfect. In this imperfect world, there
is always room for improvement. The key is to have all parties involved follow procedures
faithfully, starting with those who will screen and evaluate the loan applications.
In the case of Albay, we see a perfect fit with CSF. Based on our monitoring, loans to deposit
ratio in the entire Bicol Region remains low. For instance, while deposits have reached
P53 billion in 2009, loans were at P14 billion. Clearly, you have a loyal and growing base of
depositors and yet your loans to deposit ratios are low. Possibly, the guarantee provided by
the credit surety fund for bank lending could well be the catalyst that will move lending
forward here in Bicol.
With the dynamic leadership provided by Governor Salceda and other Albay LGU officials, I
am confident Albay Mayon CSF will serve as a positive catalyst that will further accelerate
the development of the Bicol Region. As reported earlier, Bicol's 2009 GDP already
increased by an impressive rate of 8.2%, the highest among the 17 regions in the
Philippines. We can look forward to a repeat performance.
With the CSF in place, we hope Albay's MSMEs will develop at a more balanced and
sustained pace. This should exert a positive influence on the continuing development of the
Bicol Region.
And so, once again, we welcome Albay and Governor Salceda to the CSF movement. We
also look forward to learning much from your CSF as you start implementation of this
empowering collateral-free credit program for micro, small, and medium enterprises.
Mabuhay ang Albay! Mabuhay ang mahal nating bansang Pilipinas! Maraming salamat sa
inyong lahat!