PDIC gives Bancommerce 1 week to decide on Urban Bank fate

The Philippine Deposit Insurance Corp. (PDIC) has given the Bank of Commerce (Bancomerce) up to next week to formally declare whether or not it intends to pursue the rehabilitation of troubled Urban Bank.

PDIC president and chief executive officer Norberto C. Nazareno said during a press briefing that the government needs a commitment from Bancommerce to be able to determine what to do with the bankrupt bank.

In the event Bancommerce decides to back out, Nazareno said government will open Urban Bank to another bidding process. In a public bidding held last year, Bancommerce won over six other bidders including three foreign banks.

The PDIC is also planning to invite Urban Bank’s major depositors to form a consortium that will rehabilitate then reopen the bank to allow depositors to withdraw their money.

If that is not viable or if there are no takers, government will be forced to liquidate Urban Bank, Nazareno said, adding that a liquidation is an "undesired situation" and is government’s last option since it will put the bank’s depositors at a disadvantage. Liquidating a bank is a long process and there is no guarantee that depositors will get back all their deposits.

PDIC is also talking with major Urban Bank depositors other than Petron Corp., the Manila Electric Corp. (Meralco), and San Miguel Corp. to find out if they are interested in acquiring the bank.

Petron and San Miguel have similar P1-billion deposits while Meralco has P500 million. They have rejected a proposal by government for them to acquire a stake in the bank.

But they all agreed to the rehabilitation plan of Bancommerce which, among others, will allow them to withdraw 25 percent of their deposits every three or five years when the bank is finally operational.

Bancommerce president and chief executive officer Raul de Mesa told The STAR in an earlier interview that they were suspecting all activities related to the rehabilitation and acquisition of the bank’s assets and liabilities "until the bank if freed of all its complex legal issues and controversies."

De Mesa lamented that further delays would only affect Urban Bank’s viability while continuing the uncertainty for its depositors.

Another scenario presented by Nazareno was the probability of Urban Bank president Teodore Borlongan getting bank the bank after a legal battle.

While the PDIC chief executive admitted that this is possible, it will have to be thoroughly scrutinized by the Bangko Sentral ng Pilipinas (BSP).

"And they should have the money to rehabilitate and reopen the bank, which was the original reason why they declared in the first place the bank holiday last April 25," he added.