PDIC challenges reopening of Orient Bank

The Philippine Deposit Insurance Corp. (PDIC) said yesterday it will challenge the order of the Court of Appeals (CA) to reopen Orient Bank of the family of Jose Go, even as Bangko Sentral Sentral ng Pilipinas (BSP) Governor Rafael Buenaventura said the legal team of the central bank will be consulted to come up with a response on the move to reopen the failed bank.

"The decision is not final and executory," Buenaventura said in reaction to the CA ruling the other day which stopped the PDIC from liquidating the bank.

PDIC president Norberto Nazareno said the state insurer is confident it can overturn the CA order.

"We will file a motion for reconsideration with the Court of Appeals. We will tell them again that the Monetary Board of the BSP thoroughly reviewed the proposed rehabilitation plan of Orient Bank and made a decision based on that."

If necessary, he said they will elevate the matter to the Supreme Court.

The CA said in its order that the PDIC and BSP acted in haste in ordering a liquidation of Orient Bank. It noted that the ad hoc committee tasked to review the bank’s case came out with its findings just 24 hours after the bank submitted its revised rehabilitation plan.

The BSP ordered the closure of Orient Bank on Oct. 14, 1988 and put in under receivership with the PDIC which subsequently, decided to liquidate the bank on grounds its owners led by Jose Go mismanaged the bank.

The PDIC said then that Orient Bank was insolvent with liabilities of about P7 billion exceeding its assets of over P1 billion. The liabilities also included P2.9 billion in trapped deposits of thousands of depositors.

Orient Bank experienced heavy withdrawals in early 1998, prompting it to declare a bank holiday on Feb. 14.

The PDIC and BSP then seized the assets of the failed lender. Tycoon Lucio Tan who owns majority of Philippine National Bank acquired Orient Bank through one of his banks, Allied Banking Corp. in the bidding conducted by PDIC. All of the bank’s 52 branches were transferred to Allied Bank.

Nazareno said that with this, he could not possibly see how Orient Bank intends to regain its assets. He said that PDIC completed payment of the insured deposits of Orient Bank while uninsured deposits were turned over to Allied Bank.

Reacting to the decision of the Court of Appeals declaring the illegality of the closure of Orient Bank, a Bank of Commerce official said "this is precisely what Bank of Commerce wanted to avoid."

It will be recalled that Bancommerce dropped its merger plan with Urban Bank because of the latter’s problems. – Rocel Felix