Borrowers of closed banks told to pay loans with PDIC

MANILA, Philippines -  Government-owned Philippine Deposit Insurance Corp. (PDIC) yesterday reminded borrowers of closed banks to settle their financial obligations with the state-run insurer instead of the owners and officers of the closed financial institutions.

PDIC president Jose Nograles issued the warning after reports reached PDIC’s statutory liquidator that former owners and officers of some closed banks are approaching bank borrowers to collect loan payments.

“Borrowers are advised not to make such payments. Loan payments made directly to former owners or officers of the closed banks or any persons other than authorized PDIC Representatives are not considered valid payments. Hence, these loans will be considered unpaid and still outstanding,” Nograles stressed.

He pointed out that officers, employees, agents, and representatives of closed banks are no longer authorized to transact business or enter into any contract for and in behalf of the bank in whatever capacity once the PDIC has taken over the closed bank.

He added that borrowers of closed banks should pay loans and other obligations only to the PDIC deputy receiver or the PDIC assistant deputy receiver stationed at the bank premises, satellite offices or at the PDIC head office in Makati City.

Nograles also encouraged borrowers to report former owners and officers of closed banks collecting and demanding payment of loans.

The PDIC has so far taken over eight banks since the start of the year. Banks placed under receivership by the PDIC include Rural Bank of Manjuyod (Negros Oriental) Inc., GMA Rural Bank of Cavite Inc., Rural Bank of Bingawan (Iloilo) Inc., Rural Bank of Mapandan (Pangasinan) Inc., Rural Bank of Norzagaray (Bulacan) Inc., Rural Bank of Zapote (Las Piñas City) Inc., Ibalon Rural Bank (Tabaco, Albay) Inc., and Rural Bank of Baler (Aurora) Inc.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that the number of banks operating in the Philippines were reduced by 33 in the first nine months of last year on the back of the continued consolidation of major players in the industry as well as the closure of problematic banks.

Data released by the central bank showed that the number of banks stood at 764 as of end-September last year from 797 as of end-September in 2009 and nine banks fewer that the end-June number of 773.

The BSP said the number of banks continued to decline due to mergers and consolidations as well as the exit of weaker players in the banking system.

Data showed that the number of universal and commercial banks was steady at 38 while the number of thrift banks was also unchanged at 73.

However, the number of rural banks fell to 661 from January to September last year compared to 653 in the first nine months of last year from 686 in the same period in 2009 due primarily to the closure of weaker banks.

The BSP reported that the number of branches of universal and commercial banks, thrift banks, and rural banks increased by 176 to 8,740 in the first nine months of last year from 8,564 in the same period in 2009.

The PDIC and the BSP last year launched a P5-billion incentive scheme to spur mergers and consolidations in the country’s rural banking industry under its Strengthening Program for Rural Banks (SPRB).