2 more rural banks close – central bank

The Bangko Sentral ng Pilipinas (BSP) closed on Thursday two more rural banks—this time in Pampanga—after they declared a bank holiday.

The central bank said in a statement that it placed the Rural Bank of Santa Rita and the Rural Bank of Bacolor under receivership of the Philippine Deposit Insurance Corp. (PDIC).

The receivership enables the PDIC to take over the banks’ assets to protect the interest of bank depositors and to start processing deposit insurance claims.

But the central bank pointed out the rural banking sector in Pampanga remains strong and healthy.

There are 20 remaining rural banks in that province with a combined asset base of more than P8 billion, deposit base of P6 billion and close to P1.5-billion worth of capital accounts.

“As a whole, these rural banks have consistently recorded healthy-double digit growth rates in deposits received and loans granted between December 2007 and September 2008,” Bangko Sentral said in the statement.

The capital adequacy ratio, or CAR, of the rural banks in Pampanga stood at 20 percent, higher than the central bank’s requirement of 10 percent.

The capital adequacy ratio – also the ratio of a bank’s capital to its risk – reflects a bank ability to absorb losses.

Central bank appeal

Meanwhile, the central bank advised the public to avoid making sweeping judgment on the condition of individual banks or pass baseless rumors.

The central bank earlier closed 13 rural banks of the Legacy group as it could not service withdrawal of deposits.

Central bank Gov. Amando Tetangco Jr. also said the rural banking sector remain sound and stable despite the recent closure of some rural banks.

“Rural banks are quite active in the areas of microfinance, phone banking and remittance and continues to be profitable,” Tetangco told reporters.

Central bank Deputy Governor Diwa Guinigundo earlier said a bank that declares bank holiday means it could not service withdrawal of deposits and could be hit by the financial crisis globally. The bank holiday could also caused by the lack of public confidence and mismanagement of the financial institution.
— Maricel E. Burgonio, Manila Times