BSP closes Banco Filipino

MANILA, Philippines — The Monetary Board (MB), the policy-making body of the Bangko Sentral ng Pilipinas (BSP), has placed Banco Filipino Savings and Mortgage Bank (BF) under the receivership

of the Philippine Deposit Insurance Corporation (PDIC) to provide immediate relief to its 177,652 depositors, 97 percent of whom are small depositors fully covered by deposit insurance of up to P500,000 each.

This is the second time since it was established in 1964 that BF was put under PDIC receivership in accordance with Section 30 of Republic Act (R.A.) No. 7653, the law creating the autonomous BSP.

Majority of the seven-man board voted to close BF due largely to its inability “to pay its liabilities as they become due in the ordinary course of business, insufficient realizable assets to meet its liabilities, and cannot continue in business without involving probable losses to its depositors and creditors.”

“The MB took note of the failure of the Board of Directors/management of BF to restore the Bank’s financial health and viability despite considerable time given to address its financial problems, and after according the Bank the requisite due process. It has, therefore, decided to prohibit BF from doing business in the Philippines and to place its assets and affairs under receivership,” the BSP said.

“The BSP is coordinating closely with PDIC so that deposit insurance can be paid out as soon as possible. In this connection, the condition, coverage, and quality of the records and documents of BF will be material in ensuring immediate service to depositors,” the BSP added.

This means that depositors with account balances of P5,000 and below, without loans and whose last known addresses are reflected in bank records, need not file their deposit insurance claims as PDIC will immediately process and start mailing payments through postal money order within a week.

It was said that depositors with balances of P5,000 and below represent 53 percent of total account holders.

All other depositors are required to file their deposit insurance claims with PDIC. BSP said PDIC will issue appropriate announcements to guide BF depositors to file their claims for deposit insurance.

While other information and claims forms may be downloaded from the PDIC website at www.pdic.gov.ph. The PDIC may also be reached at telephone numbers 841-4630 to 4631.

As receiver, PDIC is preparing to immediately take over all the BF offices starting with the head office today and secure the records and documents at the bank premises. PDIC’s take over will also prevent the further dissipation of the bank’s assets and assure maximum benefits to its depositors and creditors.

At the same time, the MB also “authorized the filing of appropriate cases, if warranted, against BF’s directors, officers and/or other individuals who may be found liable for violation of banking laws and BSP rules and regulations.”

Since it has been deemed insolvent, the BSP thumbed down BF's request for a special liquidity facility, also known as emergency loan, worth P1.4 billion. The BSP as a rule cannot grant or release emergency loans if the applicant bank is deemed insolvent, meaning the bank has more liabilities than assets.

Emergency loans are granted at "normal periods" for the purpose of assisting a bank under financial pressures, provided that the bank applying for the facility was not insolvent and has the assets to secure advances.

The BSP loan releases are limited to 50 percent of a bank’s outstanding deposits and must be collateralized. These loans are given in two tranches and must be settled in full after 91 days but it may be extended for another three months after an MB approval.

BF has a pending financial assistance package from the BSP amounting to P25 billion, including regulatory relief.

The bank operates 62 branches nationwide. It was first ordered closed in 1985 but was reopened in 1992 after the Supreme Court declared the closure illegal.(ManilaBulletin)