PDIC puts 23 rural banks under receivership

MANILA, Philippines - The Philippine Deposit Insurance Corp. (PDIC) has placed a total of 23 banks under receivership as of end October this year. That is equivalent to 59 head offices and branches of rural banks throughout the country.

Affected are 81,238 bank accounts with deposit liabilities worth P2.7 billion.

Estimated insured deposits (EID) were placed at P2.5 billion while insured deposits paid (IDP) so far amounted to P408 million. The PDIC insures deposits worth P500,000.

Last year, the total number of banks closed reached 31, or higher than the 25 banks padlocked in 2008.

In 1999, government shut the doors of 33 banks with assets worth P3.5 billion and liabilities worth P4.8 billion.

Available data shows that the estimated realizable value of assets (ERVA) of the 492 banks under receivership and liquidation with the PDIC was placed at P31.94 billion end 2008. ERVA is the projected recoverable amount from the assets of the closed banks given the available documents and information on the status of the assets of the bank. 

However, unconfirmed reports indicate that there were few takers for the troubled banks thus resulting in huge losses to the government. As long as government fails to dispose of the closed bank assets, it will have to shoulder all costs pertaining to its closure and liabilities to the banking public.

Last year, the PDIC formed a help desk to entice troubled banks to place itself under electronic auction. The held desk will also collate under secrecy the interested buyers of banks held under receivership for sale.

Unfortunately, nothing has been consummated as the distressed banks “priced themselves to high” or set a high premium on its foreclosed or troubled state.

“We would prefer to open more branches rather than acquire something that is not worth buying,” rural bankers told The STAR.

Banks can open five branches at a time on areas outside Metro Manila and other restricted areas set by the Bangko Sentral ng Pilipinas (BSP). Upon completion, banks can apply from another five branch licenses.

Another banker said that rural banks could realistically open a maximum 15 branches a year. “It is an exercise easier and cheaper than buying foreclosed banks,” they added.

Likewise, closed banks also results in losses for bank depositors if their deposits exceed the insured limit. Delays are often experienced due to the process of authentication and payments.

There are a roughly 600 rural and cooperative banks accounting for the total of 2,195 rural bank head offices and branches as of June 2010, with only 64 located within the National Capital Region.

The banks closed this year are: Apex Rural Bank (Bulacan) Inc.; Rural Bank of Laoac (Pangasinan) Inc.; Rural Bank of Ivisan (Capiz); EuroCredit Community Bank (A Rural Bank); Bani Rural Bank (Pangasinan) Inc.;

BMS Rural Bank Inc.; Cooperative Bank of Camarines Sur; Rural Bank of Ozamiz City Inc.; Cooperative Bank of Nueva Ecija; Rural Bank of Bangued (Abra) Inc.; Rural Bank of San Antonio (Zambales) Inc.; Penafrancia Savings and Loan Association;

Rural Bank of Saint Joseph (Baras) Inc.; Rural Bank of Isulan (Sultan Kudarat); Rural Bank of Milaor Inc.; Rural Bank of Pitogo (Quezon); Rural Bank of San Antonio de Padua (Laguna); Rural Bank of Sta. Cruz (Marinduque);

Cooperative Bank of Lanao del Norte; Rural Bank of Ayungon (Negros Oriental); Rural Bank of Lagonoy (Camarines Sur); Rural Bank of Hinigaran (Negros Occ.); and the Assemblyman Rafael B. Legaspi Rural Bank of Aklan Inc.