Liquidation of closed banks at faster pace last year – PDIC

MANILA, Philippines - State-run Philippine Deposit Insurance Corp. (PDIC) said liquidation of closed banks was faster in 2016 compared with the previous year’s performance.

PDIC president Cristina Que Orbeta said the time it took from the takeover of closed banks to payment of deposit insurance ranged from three to 15 working days in 2016, depending on the size of the bank and the state of its records.

This was shorter than the turn-around time recorded in 2015, which ranged from 12 to 22 working days.

In 2015, the BSP shuttered 14 banks with 70,541 insured deposit accounts holding an accumulated amount of P1.2 billion.

More banks were closed by the BSP in 2016.

Twenty-two banks, with an aggregate insured deposits of P2 billion covering 72,484 deposit accounts, were shuttered last year.

Half of these were taken over after the effectivity of Republic Act 10846 on June 11, 2016. The law amended the PDIC Charter.

Under the new law, banks ordered closed by the Monetary Board transition directly from bank closure to liquidation. Banks closed starting June 11, 2016 were no longer subject to the 90-day receivership period and thus, no longer subject to rehabilitation.

“This will benefit creditors including depositors with uninsured balances, as PDIC is now authorized to immediately convert closed bank assets into cash, thereby reducing asset management costs and increasing bank assets,” the PDIC said.

RA 10846 also authorizes PDIC to immediately assign encumbered assets of the closed bank as payment to secured creditors without need for approval of the liquidation court.

PDIC said this would help expedite the settlement of claims of secured creditors and further reduce asset administration expenses.

“Faster liquidation will improve creditors’ chances of recovering their claims from closed banks,” Orbeta said.