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BSP’s Monetary Board shuts down Rural Bank of Pagbilao’s operations

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FACADE of the Bangko Sentral ng Pilipinas (BSP) along East Avenue, Quezon City, October 27, 2014 — BW FILE PHOTO

THE CENTRAL BANK has ordered another provincial bank to shut down its operations, marking the eighth lender to fold this year.

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) has ordered the closure the Rural Bank of Pagbilao, Inc. last Friday after it was found to be unfit to remain in business.

The Philippine Deposit Insurance Corp. (PDIC) has stepped in as receiver for the lender effective yesterday, it said in a statement.

The Rural Bank of Pagbilao runs three branches within Quezon province. The lender holds P110.05 million worth of deposits spread across 3,324 accounts as of end-June, according to PDIC data.

Of the amount, P95.82 million are considered as insured deposits.

PDIC’s takeover paves the way for the state-run insurer to acquire the bank’s assets in order to pay outstanding liabilities to depositors.

Bank deposits are insured up to P500,000 per depositor, according to the PDIC charter. Funds used to settle valid deposit insurance claims are drawn from the Deposit Insurance Fund managed by the PDIC.

Those with personal deposit accounts worth P100,000 or lower can avail of early payment, provided they do not have unsettled dues or other obligations with the fallen lender.

The state insurer also collects and resolves loans from borrowers and disposes of the bank’s remaining assets through its regular public biddings and negotiated sale, which will be used to settle claims beyond the P500,000 limit.

The Quezon-based bank is the eighth to be ordered shut this year, more than the seven which the BSP closed down in 2017.

Other lenders which folded this year include the Rural Bank of Sta. Elena, Inc. from Camarines Norte; the Tiaong Rural Bank, Inc., Empire Rural Bank, and Women’s Rural Bank, Inc. from Batangas; Bangko Buena Consolidated, Inc. of Iloilo; the Rural Bank of Initao, Inc. from Misamis Oriental; and the Rural Bank of Loreto, Inc. in Dinagat Islands.

The BSP has been pushing small banks to pursue mergers in order to keep serving their markets while remaining on good footing. State agencies are currently offering a Consolidation Program for Rural Banks until 2019, which targets to fortify the capital and asset base of these small banks via a merger in order to make them more financially sound. — Melissa Luz T. Lopez