PDIC takes over 2 Pampanga rural banks

MANILA, Philippines - The Bangko Sentral ng ng Pilipinas (BSP) on Thursday placed two Pampanga-based rural banks under the receivership of the state deposit insurer after they failed to service the withdrawals of their depositors. The two banks were the Rural Bank of Sta. Rita and Rural Bank of Bacolor. The Philippine Deposit Insurance Corp., the state deposit insurer, now has the responsibility of paying the banks’ obligations to depositors and creditors. The two banks were reported to have declared bank holidays in December after depositors rushed to withdraw their deposits, fearing the two banks would meet the same fate as the 13 rural banks that belonged or were linked to the Legacy group. The BSP padlocked 10 distressed banks last month that belonged to the Legacy group of businessman and Sto. Domingo (Albay) mayor Celso G. de los Angeles, Jr. These were the Rural Bank of Parañaque; Cebu-based Pilipino Rural Bank, Bank of East Asia, Rural Bank of Carmen and Philippine Countryside Bank; Rural Bank of San Jose in Batangas; First Interstate Bank in Tacloban City, Leyte; Dynamic Bank in Batangas; Laguna-based San Pablo City Development Bank; and General Santos-City-based Rural Bank of DARBCI. The central bank also closed three other rural banks that were linked to the Legacy group, namely, Bicol Development Bank, Nation Bank and Rural Bank of Bais. The BSP, however, maintained that with the exception of the two banks, the rural banking sector in Pampanga remains strong and healthy. There are 20 other rural banks in the province with combined assets of more than P8 billion; deposits of more than P6 billion; and close to P1.5 billion in capital accounts. The banks’ combined capital adequacy ratio (CAR) — a measure of their capability to absorb losses from the risks they have taken — stood at 19.9%, higher than the 10% regulatory minimum. "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," the BSP said in a statement. BSP Governor Amando M. Tetangco, Jr. also said the public should not make a sweeping judgment on the condition of rural banks in view of the Legacy banks’ example. "We don’t think this (spate of closures of rural banks) is a trend. The rural banking sector as whole remains stable," he told reporters on the sidelines of the general membership meeting of the Rotary Club of Manila Thursday. — Gerard S. dela Peña