The government and the Bankers Association of the Philippines (BAP) called on the public yesterday to remain calm as they assured that the banking system was "sound and stable" amid rumors of a run in several banks following the closure of Urban Bank this week after nearly half of its deposits was withdrawn.
"Depositors need not worry about their cash placement in the banks as the local banks are not in any trouble at all," the Bangko Sentral ng Pilipinas (BSP) said in a statement.
Finance Secretary Jose T. Pardo, who chaired an emergency meeting of the Monetary Board in the absence of BSP Gov. Rafael B. Buenaventura, assured that the entire banking system remains sound and there is no systemic risk.
Among the banks reported to be experiencing heavy withdrawals were Philippine Bank of Communications (PBCom) and International Exchange Bank (iBank), both medium-sized commercial banks.
BSP Deputy Gov. Alberto Reyes Jr. categorically assured that iBank and PBCom which suffered heavy withdrawals are "very solvent" and that "their management is very competent."
Reyes said that iBank and PBCom's "present problem is part of wild rumors spread by irresponsible people."
Last night, the Monetary Board allowed iBank to remain open today (Saturday, April 29) to service any depositor who still wants to withdraw his money. The BSP has released another P2 billion to iBank to service its depositors today.
Reyes revealed that iBank's heavy withdrawals which reportedly started in Davao was part of a "well-funded scheme" started by some Filipino-Chinese who had invested in Westmont Investment Corp. (Wincorp) and ASB Realty.
In fact, Reyes said the BSP is seeking the help of the National Bureau of Investigation (NBI) to investigate the Davao incident which triggered the bank run in Manila.
BAP president Placido Mapa also gave his assurance that the BAP is prepared to provide the necessary liquidity support to banks that may be suffering from a liquidity squeeze.
iBank president Ramon Sy assured the public that there is no truth to the rumor being circulated through text messaging and by some quarters that iBank is going to be downgraded from a commercial bank to a thrift bank.
"The bank continues to grow, and in fact is looking at the possibility of acquiring other banks. We are a commercial bank and will continue to be so," Sy said.
The BSP said the soundness of the local banking system is one of the key factors that enabled the country to weather the Asian financial crisis.
Reyes, in a letter to PBCom president and chief executive officer Isidro Alcantara said that the bank is in a generally satisfactory financial condition as of March 31 this year.
"The bank (PBCom) is in compliance with all the BSP rules and regulations especially the capital requirement for commercial banks,"Reyes said.
PBCom said it ended 1999 with total resources of P40 billion and a capital of P4.7 billion, making it the highest capitalized commercial bank, way above the required capital of only P2.8 billion.
Meanwhile, Malacanang ruled out any disturbance in the local banking system, even as it stressed that the country's monetary institutions can ably assist ailing banks get back on their feet.
In a statement, Press Secretary Ricardo "Dong" Puno Jr. said that both Pardo and Buenaventura have made it clear that the "banking system is secure."
He said the BSP, the Philippine Deposit Insurance Corp. and the Securities and Exchange Commission are there to lend whatever assistance they can provide in this case.
"In fact, let us not write Urban Bank off because it is simply in the process right now where it may actually be able to come back later on assuming that they are able to conclude certain arrangements which I understand continue to be under negotiation," Puno said. -