PDIC nixes loan to Veterans

The Philippine Deposit Insurance Corp. (PDIC) has refused to grant Philippine Veterans Bank a P3.5-billion loan to finance its acquisition of thrift bank Bankwise. In a telephone interview with BusinessWorld, PDIC President Ricardo M. Tan said they received a financial request from Veterans Bank last year in preparation for its bid to acquire Bankwise. He said PDIC cannot extend a loan greater than P600 million to Veterans Bank. "We can provide them assistance of about P500 million to P600 million," he said, adding "the balance has to come from other sources." Mr. Tan said the limit is determined from the amount of insured deposit the bank has. "We need to put a cap on the assistance," he said. Mr. Tan said the PDIC extends assistance to banks who are in danger of closing only if "that bank is essential to the community for reasons of financial stability." In this case, he said the closure of Bankwise "will not fail the community because it can be adequately served by other banks." Also, Mr. Tan said PDIC only grants emergency loans when the closure of the bank at stake will result in a crisis. He said neither of the two conditions are present given the size of Bankwise. He said without Bankwise, Veterans Bank is in a good financial position. Indeed, in a text message on Sunday, Veterans Bank President and chief executive Ricardo A. Balbido, Jr. said "Veterans Bank is very liquid." Veterans bank is a private commercial bank owned by World War II veterans. It ranked 27th among the country’s 42 commercial banks last year. Bankwise, meanwhile, has had financial problems and sought special permission from the Bangko Sentral ng Pilipinas not to publish a statement of condition. In a previous interview Mr. Balbido had said Veterans is interested in Bankwise because of its P1.5-billion private deposit. "It is a good source of funds," he had said. - Ma. Elisa P. Osorio/BusinessWorld