April 6, 1828, the King of Spain issued a decree establishing a public bank in the Philippines
The increasing trade between Spain and the Philippine Islands created a need for a banking facility in the Spanish colony. A first attempt to establish a colonial bank came in 1828. Ferdinand VII, King of Spain, issued a decree establishing a public bank in the Philippines to meet the requirements of increasing commerce and trade in the islands on April 6, 1828.
Yet the actual formation of the bank did not occur until the middle of the century, under the auspices of then colonial governor Antonio de Urbiztondo y Eguia, who took up his post in 1850.
Urbiztondo established the bank the following year in the Royal Custom House in the fortress town of Intramuros. The bank was named El Banco Español Filipino de Isabel 2 in honor of the reigning queen of Spain.
Presently known as Bank of the Philippine Islands, it is originally called El Banco Español Filipino de Isabel 2 named after Queen Isabela II, the daughter of King Ferdinand VII.
The bank is first in the Philippines and Southeast Asia.
The establishment of BPI, originally known as El Banco Español Filipino de Isabel II, ushered in the start of the Philippine banking and finance industry. The bank back then performed many functions—from providing credit to the National Treasury to printing and issuing currency—making it in effect, the country’s first Central Bank.
As the first and only public bank in the Philippines—and perhaps the first public bank in all of Southeast Asia —El Banco Español Filipino de Isabel 2 was granted the authority to issue the first paper money in the Philippines. The first time the Philippine peso was printed in the country were originally called pesos fuertes (PF), or “strong pesos”
First printed on May 1, 1852, they were redeemable at face value for gold or silver Mexican coins. Before 1852, a multitude of currencies were used, most notably the Mexican peso.
The first deposit with the bank was also done on that day by a man named Fulgencio Barrera. Three days later, a Chinese man named Tadian became the first borrowing client of the bank after the bank discounted to him a promissory note amounting to ten thousand pesos fuertes.
Before the establishment of El Banco Español Filipino de Isabel 2, the functions of banks were performed, though on a limited scale, by the obras pias (Spanish for “pious works”).
Obras pias were an accumulation of bequests whose donors had specified that the funds be used for charitable, religious and educational purposes.
Some of the funds were managed by confraternities that invested capital in secular activities like underwriting cargoes for the galleon trade.