Banco Filipino waits for rescue loan funds from Banko Sentral

DEPOSITORS TOLD TO WAIT
Banco Filipino waits for rescue loan funds from Banko Sentral

For the second day, thousands of worried depositors of Banco Filipino waited for their money—or an explanation.

They got neither.

The self-declared bank “holiday” that started Tuesday continued with the thrift bank still waiting for the Banko Sentral ng Pilipinas (BSP) to rescue it with an emergency loan and to defuse what it called a “smear campaign” that has set off heavy withdrawals.

Banco Filipino executives and BSP pointed to each other as the one to give an explanation for the bank’s financial troubles, which are the subject of a court case and a P75-billion rebuilding plan, which Banco Filipino badly needs after it was “illegally” closed in 1985.

Malacañang said it would not intervene.

The BSP has the “competence and supervisory powers over banks,” said presidential spokesperson Edwin Lacierda.

He said the Palace has “every confidence in BSP Governor Amado Tetangco.”

In Cebu City, an irate depositor told radio dyLA he had a P2-million deposit and was worried over what would happen to his money.

Another mother, who just deposited P18,000 in her grade-school son’s account for his tuition in June, wanted to know if she could use the money in time for enrollment.

Banco Filipino has three branches in Cebu, part of a nationwide network of 62 branches.

In its last March 14 memo from BF executive vice president Maxy S. Abad to “all concerned,” the bank said, “We have been suffering from extraordinarily financial panic caused by a well-orchestrated smear campaign quoting BSP as the source of inaccurate and malicious imputations.”

Abad said the bank is “asking the BSP to stave off the heavy withdrawals by denying the derogatory news articles attributed to them and by providing emergency loan assistance after submitting sufficient collateral.”

Banco Filipino, owned by the Aguirre family, was founded in 1964, and grew to be one of the country’s largest banks with the slogan “Subok na Matibay, Subok na Matatag.”

It currently has about P17-billion worth of deposits in 62 branches, 32 in Metro Manila and 30 outside the metropolis.

The bank was closed for insolvency in 1985 by the Central Bank, just before the EDSA People Power uprising, but the Supreme Court in 1991 ruled the closure was illegal and arbitrary, and the bank reopened in 1994.

The BSP has asked Banco Filipino to clarify its financial situation and to respond to complaints from depositors across the country that many Banco Filipino branches were closed since Tuesday without explanation.

Banco Filipino director and former Securities and Exchange Commission head Perfecto Yasay Jr. blamed the BSP for the bank’s woes, citing in particular the non-implementation of a P25-billion rebuilding plan. Yasay said that while Banco Filipino branches are open Wednesday, they will not entertain withdrawals. “Bukas kami pero ipapahayag namin sa depositor di namin mapagbigyan ang withdrawals hanggang di maaksyunan ng BSP ang aming request for support at emergency loan (We will open but we will tell the depositors we cannot service their withdrawal requests until the BSP heeds our request for support and an emergency loan),” he said in a separate interview on radio dzBB. He also accused the BSP of mismanaging Banco Filipino, saying the bank’s management cannot move without the BSP’s approval. He said the bank had been under the BSP’s strict supervision since it reopened in 1994 after it was closed in 1985.

“Pag sinasabing we are mismanaged (If the BSP claims the bank is mismanaged), the BSP is the one mismanaging us because they are practically the ones making the decisions for us,” he said. Banco Filipino is seeking P25-billion worth of financial assistance and regulatory relief as compensation for what it alleged as the “illegal closure” of the bank in 1985 by the BSP.

Banco Filipino traced its woes to a Court of Appeals decision, which stopped the Makati Regional Trial Court from implementing an order that would have directed the BSP to provide about P19 billion in financial aid to the bank.

On Feb. 14, the CA special 10th division chaired by Associate Justice Hakim Abdulwahid issued a writ of preliminary injunction that stopped the Makati RTC Judge Joselito Villarosa from conducting further proceedings on the civil case that Banco Filipino filed to get P25 billion in rehabilitation assistance and P18.8 billion in damages from the BSP.

The appellate court ruled that the BSP and the Monetary Board “have a clear and legal right to be protected against the immediate enforcement of the assailed order, and stand to suffer grave and irreparable injury” from the continuance of the proceedings in the case.

The case stemmed from a 1985 order of the BSP’s predecessor, the Central Bank of the Philippines, which closed the Banco Filipino for being insolvent.

The Supreme Court in 1991 ruled the closure was illegal, arbitrary and made with grave abuse of discretion. Eight years later, the high court decided with finality that the bank was entitled to damages arising from its illegal closure.

In 2009, the Supreme Court allowed the Makati RTC to proceed with hearing the P18.8-billion damage suit filed by the Banco Filipino. The case remains pending but its resolution was effectively stopped by the appellate court injunction./INQUIRER WITH A REPORT FROM AILEEN GARCIA-YAP

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