Hard-nosed banking style does not pay
This is the first of our profile stories on the country's movers and shakers in business. In partnership with the Management Association of the Philippines, we hope to portray individuals who have reached a certain level of success, not just by mere luck, but through failures or rejections that helped shape them.
About 17 years ago, veteran banker Joey Bermudez made a big mistake he had no idea would change him forever.
He was a senior lending officer in a local bank then. Since his performance was measured by how much revenue he brought into his company and how much of the loans he released turned out to be good, he was focused on growing his portfolio and minimizing the defaults.
Bermudez dealt with hundreds of clients, but there were only a few he could never forget.
One of them was a businesswoman from Pampanga whose P20 million loan application Bermudez worked hard to get approval for. The borrower spent the loan for the expansion of a farm she owned.
For the first few months, the borrower's performance was impeccable, paying amortizations as they came due, Bermudez recalled. But then, one of the client's ventures, a rural bank, collapsed and her family had to put in all their resources to save it. The farm, along with their other businesses, suffered, and she eventually defaulted on the bank loan.
As a loan officer, Bermudez's instinct was to collect. He started putting pressure on his client to pay up, berated her and badgered her ruthlessly in the most unholy hours of the day. Bermudez narrated how he would leave Manila at dawn to be at the woman's home before 6 o'clock in the morning just to make sure she was there or drop by her house to follow up on payments shortly before she retired to bed.
Sometimes, Bermudez would come home with payments, sometimes with nothing.
Then the thing he least expected happened. In a month after the bank had already foreclosed on his client's properties, the borrower died of cancer.
All the while, Bermudez dismissed all his client's excuses for not paying up, including her being sick, as alibis. He said he used all means, fair and less fair, just to collect and protect his bank.
It was only during the wake that he discovered how his client's condition deteriorated rapidly after the bank had foreclosed her family's properties and because she couldn't live with the pain and embarrassment it caused them.
"It was then I considered my behavior as a banker a mistake. It was wrong for me to be too inconsiderate to my client. In trying to adequately protect the interest of my bank, I threw compassion to the wind and behaved in a manner a professional and responsible banker shouldn't," Bermudez lamented.
"Realizing the mistake reawakened the human side of me as a person. Before that it was dead. The one inside me that was alive was the banker side-- the cold-nosed, hard-nosed and impersonal banker that I was."
Towards work, however, Bermudez had always been passionate. Back then, it was not an exaggeration to say that his work was his life, almost to the exclusion of his family.
The most important thing for him was the quality of his lending portfolio. To him, every default was a disaster he needed to respond to, with hammer and tongs. "I would go after a delinquent borrower like anything," he said.
However, more than his portfolio and his bank's profits, the damage wrought by the death of his client from Pampanga was really on his person.
"The situation made me feel so guilty. It devastated me, traumatized me. Worse, I felt too embarrassed to seek comfort and assurance from my family because they hardly figured in my priorities at that time," he said.
In fact, he added, the agony was unbelievable that for a while, he thought about quitting banking altogether.
"At the lowest point, I was thinking I killed my client. That my actions resulted to her death."
Bermudez knew he could no longer undo his mistake. He took a while off from work and resolved to just mitigate its effects.
At about the same time he reported back, he said he received a big promotion that he had long waited for.
On the surface, he was happy. But thinking about how irresponsible he had been, his guilt made him sick to the core. After years of experience, he believed he had "grown into a banker of substance but had greatly diminished as a human being."
The recovery plan
Bermudez couldn't fully celebrate his promotion unless he did what he had to do. He decided to meet with the family of the deceased borrower to discuss with them a rehabilitation plan he created to help them get back on their feet financially.
They discussed options and agreed to sell assets to generate money to service the family's debts and buy back their foreclosed assets, including their home and the farm.
The rehabilitation became Bermudez's crusade, an opportunity for him to give back and reclaim his personal esteem. He would spend his after-office hours, early mornings and even weekends trying to sell the rehabilitation plan to people he thought were receptive to funding.
After many tries, he found a sympathetic funder, who insisted the project was not hot in his list but agreed to take it anyway because he was struck by the kind of passion Bermudez showed in trying to argue his case.
"The toughest challenge now was getting my former bank to agree to the buyback structure that I had designed especially since I was the one who foreclosed the family's assets. Eventually, I got them to sign off on the buyback structure," he said.
Things turned out well after all. The family of the deceased borrower got their assets back and the bank was able to generate cash for the properties.
What he did, pulling all levers to make sure the foreclosures were in favor of the bank and that the bank was overly secure, was impressive from the standpoint of his superiors, Bermudez said.
But every time he looked back, he would wish he took the road less traveled by bankers.
He said he could have come up with a rehabilitation plan earlier and not have gone through the foreclosure process to give his client leeway and maybe, a little hope to live by.
Valuing his clients was a lesson he learned the painful way.
"The big change was my sensitivity to the customer's situation. I was never the same. Now my attitude is, if this is a relationship, it should be mutually beneficial. I need to be sensitive to the customer's situation," said Bermudez.
"Customers tend to appreciate bankers who show keen and sensitive human side. They're more comfortable dealing with bankers who are like that."
At the end of the day, Bermudez added, professional success always boils down to character, not one's extensive and colorful curriculum vitae or humongous wealth.
Lastly, Bermudez learned to positively channel his passion, to take a step back and detach himself from a problem to figure out how best to solve it.
"The biggest culprit then was my passion, which was misdirected," he shared.
"Passion is powerful. With passion, people can build. With it, people can also destroy. It is important that we adhere steadfastly to our moorings and keep our perspective. Otherwise, the fruits of our misdirected passion can set back our energies and make us less prepared to deal with the struggles that matter," he added.
Mr. Bermudez, 53, is chair of Maybridge Asia Inc., a multinational financial services company, and president of the Management Association of the Philippines for 2009.
Mr. Bermudez was in banking for almost three decades. He held key positions in Chinatrust (Philippines) Inc., Philippine Savings Bank, Standard Chartered Bank, and Philippine Commercial International Bank (now BDO).