Prospects for Urban Bank appear to dim

Urban Bank faces liquidation unless it finds a "white knight" before April 26, a year after it declared a bank holiday.

The possibility of liquidating the bank loomed even as Philippine Deposit Insurance Corp. (PDIC) president Norberto Nazareno said there are at least four groups, including three local commercial banks and a group of depositors that have expressed interest in taking over Urban Bank and implementing a rehabilitation plan to bring it back to profitability.

"We have to make a hard decision by April 26, we cannot open it without someone putting in money, if there are no takers, we have to liquidate it, we cannot keep on extending the deadline," Nazareno said.
The PDIC has given interested buyers until March 15 to firm up their proposals for the takeover of the bank. Nazareno said that from March 16 to April 15, PDIC will evaluate the proposals and hopefully reach a decision and announced the new owner on or before April 26.

Earlier this week, PDIC executive vice-president Ricardo Tan said the banks, "all within the region" were provided with the books of Urban Bank indicating its financial condition to help them firm up their proposals to resuscitate the bank and bring it back to profitability.

He declined to name the interested parties, saying the banks wanted complete confidentiality.

Nazareno said the PDIC wants to avoid liquidation as an option since this will take years to implement.

Should efforts to revive Urban Bank fail, the first to recover their money in the failed bank are those with money in trust funds, then the bank has to pay taxes due before depositors, creditors, employees and common shareholders are paid.

Urban Bank was supposed to be merged with the Bank of Commerce (BOC) but the latter withdrew its bid because it did not want the new management to get embroiled in legal hitches still hounding the bank’s former top officials led by Arsenio Bartolome and Teodoro Borlongan, chairman and president of the bank, respectively.

The Department of Justice (DOJ) filed with the courts, recently new charges of estafa involving P1.8 billion against 11 Urban Bank officers led by Bartolome and Borlongan. – Rocel Felix