Rural bank, thrift bank ordered shut

THE CENTRAL BANK shut down two small lenders last week in keeping with its mandate of policing the financial system to “weed out” weak players.
The Bangko Sentral ng Pilipinas (BSP) decided to shut down the Rural Bank of Luna (Apayao), Inc. and the Malasiqui Progressive Savings and Loan Bank, Inc. last Thursday, bringing the number of shuttered banks this year to 10.
The Monetary Board ordered the bank closures in separate resolutions issued on Aug. 16. The Philippine Deposit Insurance Corp. (PDIC) stepped in as receiver of these banks last Friday.
The Rural Bank of Luna runs five branches across Cagayan province and holds P213.13 million deposits across 10,090 accounts as of June 30. Of the amount, P185.06 million of deposits are insured, according to PDIC data.
On the other hand, the Malasiqui Progressive Savings and Loan Bank is a single-unit thrift lender from Pangasinan. Total deposits amount to P73.5 million held under 1,064 accounts as of end-June. Around P67.5 million is covered by deposit insurance.
The central bank has the authority to shut down banks which are found unfit to remain in business. Meanwhile, the PDIC’s takeover paves the way for the state-run insurer to acquire the bank’s assets and pay liabilities to depositors.
Bank deposits are insured up to P500,000 per depositor, according to the PDIC charter. Funds used to settle valid deposit insurance claims are drawn from the Deposit Insurance Fund managed by the PDIC.
Individual depositors whose accounts carry P100,000 or lower can avail of early payment, provided they do not have unsettled dues or other obligations with the fallen lenders.
The PDIC will also resolve loans from borrowers and disposes of the bank’s remaining assets through its regular public biddings and negotiated sale, which will be used to settle claims beyond the P500,000 limit.
In a speech last week, BSP Governor Nestor A. Espenilla, Jr. said shuttering problem banks form part of the central bank’s duty to ensure stability.
“Financial stability is something that we constantly advocate for our economy… We have also not hesitated to shut down banks that do not do what they are supposed to do in protecting the public,” Mr. Espenilla said, noting that this has proven to be “one of the toughest decisions” as a regulator.
“Still, it is our duty to protect the public from financial institutions that do not protect them. In the end, as a result of these efforts, the banking system has been weeded out of weak elements that create vulnerabilities to our economy.”
Other lenders which have been shuttered by the BSP this year include the Rural Bank of Pagbilao, Inc. in Quezon; the Rural Bank of Sta. Elena, Inc. in Camarines Norte; the Tiaong Rural Bank, Inc., Empire Rural Bank, and Women’s Rural Bank, Inc. in Batangas; Bangko Buena Consolidated, Inc. of Iloilo; the Rural Bank of Initao, Inc. in Misamis Oriental; and the Rural Bank of Loreto, Inc. in Dinagat Islands.
The central bank shut down seven lenders in 2017. — Melissa Luz T. Lopez