PDIC to strengthen deposit fund using WB model

The Philippine Deposit Insurance Corporation (PDIC) will use a modeling project with the World Bank to improve its capability for targeting and managing its deposit insurance fund, according to the Department of Finance. PDIC and World Bank officials met recently with Finance Secretary Cesar Purisima for a briefing on the Financial Modeling Project For Deposit Insurance. Through the World Bank's multi-donor grant facility Financial Sector Reform and Strengthening (FIRST) Initiative, deposit insurance experts design customized stress-testing and failure prediction models that should better measure the possible impact of bank failures on the deposit insurance fund and the larger financial system. The PDIC is the Philippines' organization for depositor protection. Banks are placed under its receivership by the Bangko Sentral ng Pilipinas when they become insolvent, are consistently undercapitalized, or when they engage in unsafe and unsound banking practices that put depositors' money at risk. The PDIC covers payments for deposits placed in banks that have shut down using the DIF. The PDIC generates cash from the sale of assets of the closed banks. Purisima believes the project will be “useful in enhancing PDIC’s monitoring and surveillance capabilities and thus in helping to maintain financial stability,” according to a news item on the DoF website posted Wednesday. The PDIC and the World Bank team will brief other deposit insurance agencies on the project at the Executive Council meeting of the International Association of Deposit Insurers, to be hosted by the PDIC from June 17 to 19 in Manila. The meeting will be followed by the international conference "Financial Inclusion: Challenges and Issues for the Deposit Insurer” on June 20. — BM, GMA News