Hard work, devotion to mission, and competence in the job: these are three qualities that nations as well as institutions require that their leaders possess for high levels of performance. Get any one of these qualities in smaller quantities relative to the others – imagine a tripod with three different legs! – and the achievements become tilted, less satisfactory, and inadequate.
This truism struck me recently as I listened to the orations about a good man whose passing was mourned in one of the country’s major banking institutions – the Land Bank of the Philippines. Basilio Estanislao was not well known nationally but he had a profound impact on that institution that he led as president and chief executive officer from 1973 to 1986.
“A poor start.” In 1963, President Diosdado Macapagal launched a land reform program that promised to break up large landholdings and redistribute them to tenants. The minimum 75 hectares allowed as retention to owners hardly made an advance in the land reform program. In all the cases in which a president had tried to institute land reform before, the landlord controlled legislature frustrated the effort.
That reform program also created the Land Bank of the Philippines. But it was inadequately capitalized and it was conceived primarily as a financial institution that would facilitate and finance the transfer of land titles from landlords to tenants. With that limited function, the bank was destined in the way of failed financial institutions before it, like ACCFA (agricultural credit and cooperative farmer’s association) and its successor, ACA (the agricultural credit administration). These earlier institutions were designed to finance agricultural cooperatives and ended up bankrupt due to poor management and imprudent lending schemes.
The Land Bank operated with a skeletal force of employees in an office on one of the upper floors of the Magsaysay Foundation building on Roxas Boulevard that also housed the USAID Mission. That was an indication that it was turning out as a government agency much dependent on USAID support. Its capital was eroded with a small amount of land transfers in its portfolio.
“A renewed beginning.” President Ferdinand Marcos changed all this when he declared a more substantial land reform program that allowed a breakup of large agricultural land holdings with seven hectare land retention to owners. He also amended the charter of the Land Bank. The new charter came on the heels of a study of what could be done to make the Land Bank financially stable so that it might better carry out its mission of being an arm of the land reform program.
Cesar Virata, then minister of Finance, recommended the appointment of Basilio Estanislao as president of the renewed institution. In the trying days of his first few weeks in office as secretary of Finance, he first met Estanislao, then a career central banker. As newly installed secretary, he had to implement the government’s letter of intent with the International Monetary Fund to float the peso. (This economic policy shift made exporters happy but importers, including companies with high foreign exchange debts, unhappy.)
During those first trying days as Finance secretary, Virata had to convene the Monetary Board (as its presiding officer) on a Friday of that critical week so that, as the Central Bank superintendent of banks, Estanislao could deploy examiners to all banks to assure that no additional entries were made into their books as the peso was floated. Through this work and subsequent reports on the status of banks and their clients as well as other tasks in which they worked together pertaining to banking policy, Virata gained a good assessment of Basilio Estanislao – his hard work, dedication and competence.
In its strengthened role as a financial institution, the Land Bank was given the instruments by which it could succeed in its larger mission of financing long term land transfers and promoting rural development. The bank could provide credit resources to farmer-owners and at the same time channel the flow of funds of former land owners to investments in housing, education, commerce and industry. But still, it would take wise and prudent leadership to succeed.
“Land Bank becomes an established government financial institution.” Bringing his past banking experience into his work, Basilio Estanislao set about as president of the bank to gear the bank’s important mission of helping farmers and land reform beneficiaries. He hired the core staff and steered the directions of the bank’s program to serve the larger mission which was to help in the agrarian reform program.
As president of the Land Bank, Estanislao responded to the demands of the agrarian reform program. He recommended the creation of several subsidiaries of the bank to meet the specialized needs of various areas and segments of banking, including the specialized needs of the land reform program. Having been granted a universal banking license, the Land Bank secured added flexibility to perform enhanced banking functions to lend for agricultural, industrial, homebuilding and home-financing projects. It also had a mandate to lend to farmers’ cooperatives and associations to facilitate production, marketing and the purchase of commodities. And when the original Land Bank guarantee program did not work, he supported the creation of the Philippine Crop Insurance Corp.
With these functions, the bank was assured that it could engage in profitable banking that would enable it to play its social mandate as a bank for countryside development. Thus, the link to land reform and to the upbringing of the rural sector was served well.
“Critical foundation years.” The years when Estanislao headed the bank, laid the foundations for the future growth of the institution to the present time. He built the professional staff and inculcated in the bank a strong banking and mission culture. He instituted supporting institutions to meet the special challenges related to its mission. He put great emphasis on professionalization that included the virtue of honesty, integrity and accountability. In the thirteen years that he was in charge, the bank did not grant any behest loan.
Finally, in the words of Cesar Virata, who served as chairman of the Land Bank throughout this time and who also memorialized his former colleague, Basilio Estanislao was “the father and mentor of the bank” in organizing for the challenging tasks that the bank faced ahead of it.
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