BSP places more Legacy rural banks under PDIC receivership

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) on Friday closed four more rural banks that are either part of or "linked with" the Legacy group. In a statement Monday, the central bank said it has placed Bacolod City-based Nation Bank, General Santos City-based Rural Bank of DARBCI, Legaspi City-based Bicol Development Bank, and Cebu-based Rural Bank of Carmen under the receivership of the Philippine Deposit Insurance Corp. (PDIC). These banks, similar to others under the Legacy group, were found to have insufficient assets to cover liabilities, were illiquid and were performing "unsafe and unsound banking practices." The PDIC would now take over these banks’ assets to be able to pay off depositors and creditors. The BSP last week closed nine other rural banks under the Legacy group, namely: Rural Bank of Parañaque; Rural Bank of Bais; Cebu-based Pilipino Rural Bank, Bank of East Asia and Philippine Countryside Bank; Rural Bank of San Jose in Batangas; First Interstate Bank in Tacloban City, Leyte; Dynamic Bank in Batangas; and Laguna-based San Pablo City Development Bank. Of the 13 banks, three of them — Bicol Development Bank, Nation Bank and Rural Bank of Bais — were not part of the Legacy group but were "linked" to the group, the central bank said. The central bank’s Supervision and Examination Sector discovered in 2007 that the banks — among the major stockholders of which was businessman and Sto. Domingo (Albay) Mayor Celso G. de los Angeles, Jr. — were undertaking banking practices that could be disadvantageous to their depositors. The BSP had been monitoring these financial institutions even before the global financial crisis broke out. Its findings showed that the banks were capital-deficient. The central bank wanted to close the banks but they were able to secure a temporary restraining order from a regional trial court, which was affirmed by the appellate court. The Supreme Court overturned the lower court’s decisions, allowing the central bank to finally take action. - Gerard S. dela Peña, BusinessWorld