Bangko Sentral probes bank run

The Bangko Sentral ng Pilipinas (BSP) is investigating reports of a bank run at a small thrift bank with over 10,000 depositors.

First Savings Bank, with head offices in E. Rodriguez Avenue in Quezon City, was hit with heavy withdrawals on Monday that lasted until the end of banking hours yesterday.

Until 3 p.m. yesterday, FSB branches were still servicing depositors, except at its Divisoria branch which stopped services before the end of banking hours.

At 6 p.m. yesterday, FSB declared a bank holiday.

Reports reaching the BSP indicated that the withdrawals started in its Divisoria branch, eventually spreading to the bank’s Tanay branch. The bank has one other branch in Cubao, for a total of four branches.

According to BSP deputy governor Alberto Reyes, however, the BSP has received no official communiqué from the FSB management, although BSP examiners had started to validate reports coming out of the bank.

"We have sent our examiners over and we expect a report tonight," Reyes said. "Until then, we will not be able to make any decisions."

Reyes said, however, that FSB posed no risk to the banking system. Based on BSP records, he said the bank had total asset base of P213 million, with a deposit base of around P193 million and over 10,000 depositors, mostly small and medium-sized depositors.

"It’s a small bank so we are not worried about systemic risks," Reyes said. "But these are small depositors so it is understandable for the situation to be intense."

Based on its financial statement published on the BSP website, FSB’s total assets amounted to P213 million as of June 23, 2004 against total liabilities of P215 million. The bank, however, had no investments on government securities or any other debt or equity instruments.

However, FSB is heavily concentrated on lending to small and medium enterprises.

Reyes said the bank has made no official statement on whether it intended to declare a bank holiday. If it does, however, he said the depositors will be covered by the new provisions of the deposit insurance law that raised the cover from P100,000 to P250,000.

As a general rule, Reyes said the Philippine Deposit Insurance Corp. (PDIC) is usually ready to pay for the deposit insurance of bank depositors within two weeks of the declaration of a bank holiday.

FSB is one of the smaller thrift banks in the country with no major operations or foreign currency deposit unit (FCDU) outside of normal thrift banking operations.

The bank started having problems, however, when the patriarch of the Yujuico family died earlier this year. Banking sources said that the heirs of the late patriarch had decided to sell their interests in the bank.

Sources said FSB had attracted a group of investors earlier this year but the negotiations did not lead to anything solid.

As of press time, reporters have been trying to reach bank officials but no responsible official was willing to make clarifications or entertain queries from the media.

Closing its doors

More than a hundred of depositors, most of them vendors at the Divisoria market, trooped to the FSB branch in Manila to withdraw money, but the bank refused to release cash and closed down the establishment.

Until the bank management issues any assurance, disappointed depositors vowed to stay in front of the FSB branch located along C.M. Recto in Binondo, Manila.

All bank personnel, including the guards, locked themselves inside the bank when depositors started to arrive as early as 9 a.m.

Aurora Pangan said she heard over the radio about the alleged refusal of FSB to release money so she decided to check it out for herself.

Pangan even showed The STAR three bank books, belonging to her and her children.

"Nananawagan po kami kay President Gloria na tulungan kaming makuha ang pera namin. Hindi naman po kami humuhingi sa gobyerno. Pera po namin ito," said Pangan, who sells vegetables at the Divisoria market.

Her call was echoed by onion vendor Felomina Tubat, who often deposits P50 to P100 daily.

"Pinaghirapan namin yung pera namin. Minsan nga nahuhuli pa kami ng pulis dahil binabawalan kaming magtinda kaya masakit sa loob namin na mawala ang inipon namin," Tubat said.

Initially, bank tellers released at least P30,000 to depositors with deposits of more than P50,000. Some of the depositors have deposits of as much as P600,000.