Legacy Group cites 3 reasons

CEBU - Increased and heavy withdrawals, because of the Christmas season, is among the three reasons cited by the six banks reportedly under the Legacy Group that declared a bank holiday starting last Monday.

The six rural banks that declared a holiday in Cebu and nearby provinces in the Visayas finally broke their silence yesterday to end speculations on the cause of the situation.

The officials of Pilipino Rural Bank, Rural Bank of Carmen, Philippine Countryside Rural Bank, East Asia Bank, Bais Rural Bank and Supreme Rural Bank appointed Cebu-based lawyer Inosencio Dela Cerna as its official spokesperson.

De la Cerna, in an interview over radio station dyLA, yesterday said that on top of the increased and heavy withdrawals experienced by the banks, which may be attributed to the Christmas season, the global financial crisis and bad debts are also major factors in the corporate decision to declare a bank holiday.

De la Cerna however assured the public, especially the depositors, that they are “initiating efforts to address the situation in the earliest possible time.”

According to De la Cerna, the management of the various banks are working hand in hand with the Bangko Sentral ng Pilipinas and the Philippine Deposit Insurance Corporation to ensure that the depositors will get their money back.

He could not however give a definite answer as to how soon it will happen, because it will allegedly depend on the BSP’s response to their notice to go on a bank holiday.

“We urge the depositors to exercise patience as the concerned banks are doing everything it can to alleviate the situation,” De la Cerna said.

The lawyer also could not give a definite answer on the question whether or not the banks will still resume operations.

He said that this will be a matter that the BSP will decide on.

According to him, BSP and PDIC investigators are due next week to investigate whether the declaration for bank holiday was right.

He could not also tell whether these banks are losing, because he said the declaration of a bank holiday does not necessarily follow that it is losing.

The said rural banks under the Legacy Group went on a holiday starting last Monday, a decision that shocked depositors.

Depositors flocked to the banks to inquire what had happened, but no bank officials were willing to talk to them.

The bank managers claimed that they knew nothing about the decision to go on a holiday. They claimed that they too were shocked by what had happened.

De la Cerna supported the managers’ claims saying that they really did not know anything about it because it was a corporate decision.

Meanwhile, the president of the Cebu Rural Banks Association, Daniel Arcenas, assured their clients that this incident is isolated only to one group.

Arcenas told dyLA that there were only 10 out of 800 rural banks nationwide that declared a holiday and three out of 40 in Cebu.

Arcenas said that rural banks are independently ran, managed and owned.

He called on the public not to panic because this is only isolated to the banks under the Legacy group.

According to him, 95 to 98 percent of the rural bank operations in the country remained normal.

Business As Usual

Meanwhile, Karen Pitoy, manager of Rural Bank of Carmen corrected reports that they imposed a limit for those who transact business at them.

Pitoy said “it’s business as usual at their bank in Carmen.”

She assured the depositors in Carmen that they will serve of all transactions at their bank.

Yesterday afternoon, Pitoy met some depositors and explained them the status of the bank.

Maambong Resolution

Provincial Board Member Victor Maambong has urged the BSP and the PDIC to initiate prompt and appropriate actions in order protect small depositors of the two rural banks in Cebu that recently declared a holiday.

In his proposed resolution, Maambong is also pushing for stricter government supervision of the financial markets, including a more stringent monetary oversight on all banking and financial institutions.

Maambong said that the looming spectre of bank runs, credit collapse, manufacturing meltdowns, and company closures will be obviated.

In his resolution, Maambong wants that BSP to probe and dig deeper into question of where the funds, capital or deposits of the said banks went.

Last Monday, the Philippine Countryside Rural Bank, Inc (PCRBI) and Pilipino Rural (PR) Bank in the towns of Liloan and Argao, Cebu and cities of Lapu-Lapu and Mandaue suddenly closed down without prior notices to their clients.

The following day, the Rural Bank of Bais (now Supreme Rural Bank) also declared bank holiday.

Maambong said the sudden closure of the rural banks signalled “a tremor of financial shock” to local financial and credit market that might affect their relationship with small and marginal depositors and ordinary small scale businessmen as well as Overseas Filipino Workers (OFWs).

“It is not the wish of this representation to foment panic and fear but only to raise concern over the stability of our financial system,” Maambong explained. —/NLQ (THE FREEMAN)