Depositors urge Central Bank to close rural bank

MANILA, Philippines - Depositors complaining they can no longer withdraw their deposits from G-7 Bank Inc. on Tuesday demanded the central bank to close the Naga-based rural bank. The Bangko Sentral ng Pilipinas (BSP), however, said it cannot be pushed into doing that since there are procedures to follow. Around 30 depositors trooped to the central bank Tuesday to press their demand. A depositor told reporters she had been trying to pull out her funds from G-7 Bank since May but the bank could not serve her withdrawals even if it remains open. "We have been complaining for two months now but the BSP is not doing anything," the depositor said, while requesting anonymity. Amid rumors of a bank run in May, G-7 Bank, which is owned by businessman Fidel L. Cu, who also acts as its president, had announced that Finbar Asia Philippines, Inc. together with parent firm Finbar Securities Inc. was considering infusing $500 million into the bank. BusinessWorld tried to get Mr. Cu for comment but the bank president could not be reached. The depositor said the Ortigas branch of G-7 Bank asked her to come back on June 30 and July 15, assuring her that by time, it should be able to service her withdrawals since the infusion of fresh funds would have been completed. The bank, however, failed to live up to its promise. G-7 Bank used to be known as the Rural Bank of Nabua. It maintains six branches in Bicol and a branch in Pasig. BSP officials refused to comment on the case of G-7 Bank, but said the central bank in general does not just close banks that are having liquidity problems. "There is a process that we follow. A bank cannot be closed unless it is under the receivership of the PDIC (Philippine Deposit and Insurance Corp.)," said BSP Deputy Governor for Banking Supervision Nestor A. Espenilla, Jr. Section 30 of Republic Act No. 7653 or The New Central Bank Act outlined the grounds for a bank to be considered under receivership or liquidation. These are: inability to pay its liabilities and insufficient assets to meet its liabilities. An inability to pay liabilities, however, does not include "inability to pay caused by extraordinary demands induced by financial panic in the banking community." — Gerard S. dela Peña, BusinessWorld