Major business groups support reopening of Urban Bank

Several major business groups threw their support yesterday for beleaguered Urban Bank and urged the Bangko Sentral ng Pilipinas (BSP) to spur its reopening.

The Bankers Association of the Philippines (BAP) led the call, saying the delay in Urban Bank’s reopening only worsened concerns that the private institution may have been a victim of political vendetta, or economic manipulation meant to expand the industry power of some businessmen close to the administration.

A senior BAP official said the group’s general membership is hoping that the fears created by Urban Bank’s closure under questionable circumstances be resolved immediately.

Cherry Bernaldo, president of the Financial Executives Institute of the Philippines, and past president Josue Camba echoed BAP’s position, saying the controversy surrounding Urban Bank has also made the public jittery.

Skittishness among depositors, they pointed out, could affect other medium-sized banks and send the industry into another crisis.

The Federation of Bank Depositors of the Philippines, led by Salvacion Figueroa, noted that trust and integrity are the most valued traits in the banking sector.

They urged the BSP to come clean with the reasons for Urban Bank’s closure in the light of a privilege speech by Rep. Mike Defensor, charging national officials of violating the bank’s right to due process.

The BSP, the federation officer said, should convince the public that banking rules and regulations are being enforced fairly and impartially in the country.

Otherwise, Figueroa stressed, both depositors and investors could shy away from the industry, with reports of favoritism and collusion among some powerful business groups and government banking officials.

Urban Bank chairman Archit Bartolome and president Ted Borlongan told the Justice Department last week that the cases filed against them are "baseless and nothing more than political harassment," because of former President Fidel V. Ramos’ being the bank’s honorary chairman.

Their claim was backed up by Allied Bank president and former Philippine National Bank (PNB) president Peter Favila who, in a speech before the Ateneo Business School, said that the transactions that led to "economic sabotage" charges, "have nothing illegal in them."

Favila said Urban Bank followed accepted industry practice. The BSP questioned the transfer of receivables from Urbancorp Investments Inc. (UII) to Urban Bank, accusing the bank of accepting "trash receivables."

The BSP rules and circulars, however, have permitted since 1993 the practice wherein quasi-banks purchase unregistered commercial papers.

Urban Bank also pointed out that regular BSP audits of its operations never underscored the practice as irregular or illegal.

In fact, Bartolome noted, the BSP auditors, only months before the bank’s closure, had rated the credit risks of most of the loans as acceptable, with only a five percent loan-loss provision.

In his privilege speech, Defensor (Liberal Party, Quezon City) sought the ouster of BSP Governor Rafael Buenaventura on the grounds of conflict of interest and whimsical, irresponsible actions in the case of the closure of Urban Bank.

Defensor cited several inconsistencies that allegedly indicated a hidden agenda behind the closure of Urban Bank.

The gravity of the BSP errors regarding Urban, he added, may be compared to the Marcos government’s crackdown on Banco Filipino, which was recently ruled by the Supreme Court to be unjust.

The High Court has ordered the government to compensate Banco Filipino and its majority shareholder, the Aguirre family, for damages incurred in the bank’s unjust closure.

Defensor’s strongly-worded privileged speech said that BSP and Monetary Board actuations in Urban Bank’s case sent a wrong message to Filipinos–"that thuggery pays."

He accused Buenaventura of orchestrating the bank’s closure and of delaying its reopening, at the expense of more than 15,000 depositors.