PDIC denies P204-million claims of Legacy Bank depositors

MANILA, Philippines - State-run Philippine Deposit Insurance Corp. (PDIC) announced yesterday that it has denied P204 million worth of claims from depositors of 12 affiliated banks of the controversial Legacy Group.

PDIC president Jose Nograles said in a statement that the government-owned deposit insurer has turned down 4,175 claims from depositors of the Legacy banks as of end-January.

He pointed out that 83 percent of the total claims amounting to P125 million consisting of 3,500 claims were accounts not found in bank records.

Nograles has cautioned the depositing public anew to conduct their transactions only inside bank premises and with authorized bank personnel, or risk non-payment of deposit insurance.

“This came on the heels of recent complaints received against unauthorized activities of certain individuals purportedly bank employees, directly soliciting bank deposits from the public outside bank premises,” he stressed.

He pointed out that PDIC pays deposit insurance only on valid deposit accounts.

While there is adequate prudential regulation that provides the necessary safety net for depositors, he said the depositing public still needs to be more aware and cautious in their bank transactions in order to protect themselves.

“If a transaction is made outside bank premises, the depositor has no way of ascertaining if the funds actually flowed into the bank and if the transaction is recorded in its records,” he explained.

The BSP issued Circular Letter No. 2008-071 prohibiting transacting outside bank premises without prior approval from the BSP, pursuant to Section X213 of the Manual of Regulations for Banks.

Nograles said investigations conducted by the Senate and the House of Representatives unearthed a scheme where depositors of the Legacy banks transact with so-called agents of the bank.

However, examination of the books of the banks revealed that some funds coursed through agents were diverted and a number of transactions not recorded in the books of the banks.

“PDIC had no recourse but to deny such claims in accordance with provisions of the law,” the PDIC chief lamented.

PDIC has launched a “Be A Wise Saver campaign” together with the Bangko Sentral ng Pilipinas (BSP), the Bankers Association of the Philippines, the Chamber of Thrift Banks, and the Bankers Marketing Association of the Philippines that promotes the Seven Habits of a Wise Saver.

Among the Seven Habits is Habit No. 5, “Transact only inside the bank with authorized personnel.”

PDIC is upgrading its claims settlement operations as part of efforts to become a world-class organization in depositor protection.