Seven banks now closed

Published by rudy Date posted on December 13, 2008

The Monetary Board yesterday closed down three more rural banks identified with the Legacy group and placed them under the receivership of Philippine Deposit Insurance Corp.

Yesterday’s action brought the total number of closed banks associated with the same group to seven this week.

The board held another special meeting yesterday to discuss the situation of the banks, which “it has been monitoring before the global financial turmoil because of potentially unsafe and unsound practices.”

The three rural banks placed under PDIC receivership were Cebu-based Bank of East Asia and Philippine Countryside Rural Bank and the First Interstate Bank in Tacloban City.

The Bangko Sentral said three more banks had declared a holiday, meaning they were unable to serve clients. They are Dynamic Bank, or Rural Bank of Calatagan, and San Pablo City Development Bank in Batangas and Nation Bank in Bacolod City.

Central bank sources said the three that declared a bank holiday were not under receivership because they may either be still seeking approval of their financial assistance or that the documentation to place them under the care of PDIC had not yet been completed.

The central bank said it was “investigating these banks to determine their financial condition and viability as well as violations of banking laws that may have been committed.”

Earlier closed and placed under receivership of the PDIC were Rural Bank of Parañaque, which was closed Tuesday, Rural Bank of Bais in Negros Oriental, Pilipino Rural Bank in Cebu and Rural Bank of San Jose in Batangas.

The Chamber of Thrift Banks and Rural Bankers Association of the Philippines expressed support for the central bank action, saying it took away a lot of uncertainty from depositors.

The central bank said the receivership would enable PDIC to take over the banks’ assets and protect the interest of bank depositors.

The central bank said the banks represented a tiny fraction of the banking system and that the Philippine banking system remained stable, highly capitalized and highly liquid.

PDIC president Jose Nograles assured the depositing public that the agency would pay all valid claims for deposit insurance.

Nograles said the money to be paid to depositors of a bank under receivership is insurance payment funded from the PDIC’s Deposit Insurance Fund.

The four banks closed earlier this week had over 64,000 accounts. –Eileen A. Mencias, Manila Standard Today

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