Baguio-based thrift bank ordered closed

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) has ordered a Ba­guio-based thrift bank closed and placed under receivership of the Philippine Deposit Insurance Corp.

This developed as Permanent Plans, a pre-need firm headed by the Madrigal-Vazquez family, has decided to take the option of settling planholders’ claims because of serious financial problems.

BSP deputy governor Nestor Espenilla said the financial problems of Accord Savings Bank Inc. were “deep and long-standing” and made worse by an ownership dispute.

“We have been working with them quietly to put a proper rehabilitation program in place but ultimately to no avail,” Espenilla said.

“It hasn’t helped that there were ownership disputes,” the BSP official said.

In the end, Espenilla said Accord had to be closed because it was already insolvent and no longer had the financial ability to continue operations.

“The bank couldn’t continue to operate without exposing depositors and creditors to further risk,” Espenilla said.

The BSP has been closing down one rural bank after another since late last year, but not all these banks were related to the Legacy Group, whose owners had reportedly duped clients through pyramiding schemes.

Espenilla stressed Accord was not related to the Legacy Group.

The BSP’s order, contained in Resolution 55, was dated April 19. The order covered Accord’s nine branches.

The BSP resolution indicated that Accord was shut down because of the failure of its owners to “restore the bank’s financial health and viability despite considerable time and due process given to them.”

The BSP order said the bank had insufficient realizable assets to meet liabilities and could not continue in business without risking the interests of depositors and creditors.

As the receiver, the PDIC would immediately start the inventory of accounts as well as take over the bank’s records to ensure that they were not tampered or lost.

Meanwhile, movie director Ben Yalung said he had already sold his holdings in the shuttered thrift bank.

“I have nothing to do with Accord Savings Bank. I sold all my holdings in the bank to (Rolando) Alaya-ay,” he said.

Yalung was reacting to news reports that the bank was still under his name.

“In fact, Alaya-ay who bought the entire bank failed to pay the entire amount until recently,” Yalung told The STAR. He declined to reveal the amount involved.

The deed of sale between Yalung and Alaya-ay was executed in 2006. The bank had declared assets of over P500 million prior to the sale.

Alaya-ay also controls EquityLink Holdings Inc., which also operates the Philippine Farmers Bank Inc., Winbank Inc. and Growers Bank.

The Chamber of Thrift Banks (CTB) said Accord had been dropped from its membership roster because of the bank’s failure to pay dues as well as submit a statement of condition (SOC) and other documents proving its financial health.

At Malacañang, Press Secretary Cerge Remonde said they would do everything to assist uniformed personnel victimized by the Legacy scam.

“Rest assured that the government will do what it can to see to the needs of all the victims of Legacy, not just soldiers and policemen,” he said.

End of Permanent

Juan Miguel Vazquez, president of Permanent Plans and head of the Philippine Federation of Pre-need Plan Companies Inc., said they decided to wind down operations and stop selling new plans as early as February. The company, however, informed the SEC of its decision only last March 18 even as it stopped selling on Feb. 5.

“Permanent Plans no longer believes in the viability of the pre-need pension industry as currently set up and given the adverse operating environment it finds itself in,” Vazquez said.

The Securities and Exchange Commission issued Monday night an order prohibiting Permanent Plans from selling new plans. This followed the corporate regulator’s announcement during the resumption of the Senate hearing on the state of the pre-need industry that it had stopped Prudentialife Plans from selling pre-need plans.

Vazquez said the SEC order caught him by surprise, saying such was unnecessary given the company’s decision not to sell new plans anymore and limit its activity to servicing claims of its planholders.

“That is why on April 15, 2009 instead of filing a capital build-up plan, Permanent Plans formally informed the SEC that it has chosen to avail of the early and orderly settlement of claims option,” Vazquez said.

But SEC found Permanent Plans’ proposal unacceptable.

“Our concern is the protection of all our planholders and settle promptly and efficiently their claims,” Vazquez said.

“A major factor to this decision was a 35 percent loss of our trust funds last year as a result of the ongoing global financial crisis,” he said.

To make up for this for loss, Vazquez said Permanent Plans would beef up its capital and trust funds with additional assets in order to settle fully all the claims of planholders. “We expect to pay all our planholders in the form of cash and other assets in the next four to six months.” ­ – With Zinnia dela Peña, Ted Torres, Marvin Sy, and Artemio Dumlao