Jesus Tambunting: Banker of SMEs

The chairman and chief executive of Plantersbank built one of the most successful banks in the country and a lasting legacy
By Lynda C. Corpuz

He considers himself fortunate not to have experienced a major disappointment or setback in his career, but Ambassador Jesus P. Tambunting admits though he has made a lot of mistakes. “But I consider all of them part of my lifelong journey as ‘banker for SMEs’ (small and medium enterprises),” Tambuting says. “What is important (though) is to recognize your mistake, learn from it, and move on,” he stresses.

And on he moved to strike on his own, when in December 1972, Tambunting took over the Bulacan Development Bank with the plan of relocating it to the Makati financial center and transforming it into a commercial bank catering to large corporate accounts. But the plan changed and marked the turning point in Tambunting’s banking career.

Abandoning the plan
Tambunting recalls how he and his able people were left with no choice but to cater to the small businesses in the province, many having no experience in dealing with banks. Educating them, especially the first time borrowers, eventually became the bank’s thrust. In due time, their lending operations grew and profits surged, and that made Tambunting realize that assisting SMEs and helping the local community as a result is his true calling.

With that, he abandoned the original plan to turn the bank into a commercial one and decided to keep it as a development bank focusing on SMEs, vowing no matter how big Plantersbank would grow, it will remain committed to SMEs. “The decision was not an easy one. I knew the challenges ahead but I also recognized the full potentials of SMEs, an underserved market then,” he recalls.

It was a risky, difficult, and costly move, yet Tambunting and his people were not deterred to focus on that strategy, with no working model to follow. Taking advantage of available government subsidies and looking for other funding sources from government and multilateral agencies (like the World Bank’s International Finance Corporation, the Asian Development Bank, and the Netherland’s Development Finance Company) helped the bank make the strategy a success.

Make that a resounding success. Plantersbank now ranks 19th among the 38 largest commercial banks and places among the top 250 corporations in the country. Tambunting also prides that the bank’s returns have consistently been on a par or even higher than the average of the banking industry. Plantersbank has also received numerous citations and awards from various institutions. With its SME lending model, the bank’s key people have been invited to share lessons with other overseas banking institutions.

Single-mindedly focusing on SMEs, Plansterbank though diversified its exposure to the sector in various ways, disbursing loans across various industries and locations, designing an array of SME-directed products and services, and developed other revenue sources. The bank addressed not only the SMEs’ business needs but also the personal requirements of the entrepreneur, his/her family, and employees. For instance, Plantersbank provides salary loans for the employees as well as housing and auto loans for the business owner, his family members, and associates.

To manage risks, Plantersbank also developed and customized loan products suitable for their clients’ working capital requirements and fixed asset acquisition. The bank maintains simple and understandable loan documentation, creates flexible amortization schedules to match the SMEs cash flows, and secures good collateral for its loans that puts disincentives to loan default and serves as an able mechanism for instilling financial discipline among its borrowers. In the event though that the collateral is not enough, Plantersbank takes out guarantees from government guarantee agencies.

Achieving success
“Deciding go on my own and establishing a bank that is the recognized leader in SME finance today is, I believe, my most significant accomplishment,” Tambunting says, as he outlines his and Plantersbank’s success.

Carefully planning where to go and how to get there is for them the key: to set their goals, objectives, and targets for the year and to identify the strategies and action programs to achieve these. The bank’s management share to their employees how they want things to be accomplished, and help them keep their focus, stay the course, persevere, and do whatever is necessary to deliver the desired results, Tambunting illustrates.

Tambunting also believes that to be wealthy, one must focus on what he or she truly desires. He points out that in a vast sea of opportunities, focus enables one to muster all resources and experience to achieve goals and mission set; but while focusing, diversifying is also crucial. “I believe that diversification and focus are not mutually exclusive, as diversification is a basic element of sound investment and management,” he explains.

Taking risk is also essential to business success, he points out. “You must be prepared to take risks but these should be calculated risks that you can manage and mitigate with appropriate measures,” Tambunting stresses, and adds such is a fundamental business principle, like for Plantersbank which growth and viability are based on sound and prudent risk management.

Making Plantersbank the best SME bank, not only in the Philippines, but in Asia as well, is the ambassador’s vision for the bank. The bank is working on upgrading the organization and introducing technology to raise efficiencies, expand capabilities, and lower SME’s lending cost. “For me, vision and execution are equally important. You can’t have one without the other. To attain your vision, you have to have the capacity to execute your strategies and action programs effectively,” Tambunting points out.

Giving back
Tambunting, who is also co-chairperson of the Philippine-British Business Council, member of the Philippine-US Business Council, and board of trustees of the Carlos P. Romulo Foundation and of the ABS-CBN Bayan Foundation, has more than to thank for, for all the success he achieved.

For one, he considers his parents as mentors for providing him many enriching experiences, and helping him shaped his character by sharing with him the values of discipline, hard work, honesty, integrity, and spirituality; the late Carlos P. Romulo for serving as his guardian during his years as a military school cadet and later as a student in the University of Maryland, US (where he finished his BS Economics degree), and whom he followed as his example as an accomplished diplomat, particularly during Tambunting’s 5½ years’ service as Philippine Ambassador to the United Kingdom; and his former boss, Manuel Morales, a former Monetary Board member and Plantersbank vice chairman, whom he considers as the “banker’s banker,” generously coaching him many lessons in banking and management, and whom he also regards as a teacher, adviser, and a good friend to whom he owes a good part of his professional success.

Plantersbank’s deep involvement in SME financing for more than three decades now serves not only their way of doing business in a profitable level, but to help develop a marginalized yet important sector to the economy and contribute to the country’s progress at that, Tambunting cites as his and the bank’s way of giving back.

On that note, he particularly cites a study of three banks in the world (Plantersbank included) that are making positive impact in their chosen market niche while realizing superior returns for shareholders – the very idea of double bottom-line banking. The study, which was presented at the Global Poverty conference at Harvard Business School in December 2005, also shows that from 1995 to 2004, Plantersbank also outperformed the banking industry in terms of asset and revenue growth, return on equity, net interest margins, cost efficiency, and NPL ratio. “For us, the study is an enduring recognition of the significant difference we are making in the lives of our SME clients, the communities we serve, and in nation-building,” Tambunting says, and adds the bank’s role is now evolving from purely financing SMEs to becoming an enabler of them – helping them realize their full potential, at the same time, reinforcing the bank’s double bottom-line orientation.

And more than resting on his laurels, Tambunting advises to young people that there’s nothing wrong with wanting to get rich, especially when the business environment offers a lot of opportunities to make money quick, and at times, easy. “But for me, being rich is not the only measure of one’s success. I believe that to be truly successful, you must be passionate and committed with what you do,” he says. And the path to lasting success is as simple as working hard, persevering, and being patient. “Lasting success doesn’t happen overnight,” Tambunting ends.