BSP places Banco Filipino under receivership

Posted on March 18, 2011 12:08:30 AM

BSP places Banco Filipino under receivership

BANCO FILIPINO Savings and Mortgage Bank has been placed under receivership by the Bangko Sentral ng Pilipinas (BSP) after the thrift bank earlier this week stopped servicing clients due to funding problems.

"The Monetary Board (MB) in its meeting [yesterday] ... decided to place Banco Filipino ... under the receivership of the Philippine Deposit and Insurance Corporation (PDIC)," central bank deputy governor Nestor A. Espenilla, Jr. said in press briefing.
"PDIC has started taking over the Banco Filipino offices starting with the head office to secure the records and documents at the bank premises," he added.

The bank, said Mr. Espenilla, was found "unable to pay its liabilities as they become due in the ordinary course of business". It was also said to have "insufficient realizable" assets and its continued operations were ruled as probably leading to losses for depositors and creditors.

Mr. Espenilla downplayed concerns the closure would affect the financial system, saying: "Banco Filipino’s system is not broad. There is no systemic risk".
He said PDIC would be moving to pay the bank’s "177,652 depositors, 97% of whom are small depositors fully covered by deposit insurance of up to P500,000 each".
A PDIC statement put the number of depositors at a smaller 176,313.

It also said, "Insurance payment for accounts with balances of P5,000 and below comprising 53% of the bank’s total deposit accounts ... will start this week after takeover."

"This will be made through postal money order mailed directly to depositors via registered mail," the PDIC added. Insurance claims need not be filed by clients with updated addresses and no outstanding loans.

Depositors with balances of over P5,000, however, need to file claims, forms for which will be distributed in forums scheduled to start next week. No payment schedule was detailed.

Mr. Espenilla said central bank investigation found that Banco Filipino’s losses had averaged some P2 billion from 2007 to 2009. Expenditures were also "way above industry levels," he said, citing P131 million spent for legal services in the fourth quarter of last year.

"This is more than 61% of their gross income for the period," Mr. Espenilla claimed.
The bank’s deposit base totalled P17 billion as of end-December, pulled up by offers of high interest rates, but had dropped to P15 billion as of March 15 due to heavy withdrawals, the BSP official added.

Bank officials will be investigated and could face charges, Mr. Espenilla said
Banco Filipino Vice-Chairman Perfecto R. Yasay, meanwhile, said the bank was also considering a lawsuit against the BSP, which he has charged as wanting Banco Filipino to close anew.

"We will be filing a court action as early as tomorrow," he told BusinessWorld in a telephone interview.

The then Central Bank of the Philippines ordered Banco Filipino shut in 1985, saying the bank was unable to pay its loans. The Supreme Court ruled the closure illegal in 1991, allowing Banco Filipino to re-open in 1994.

The bank subsequently filed an P18.8-billion damage suit against the Central Bank Board of Liquidators and the BSP. Mr. Yasay has claimed the BSP does not want to provide P25 billion in funding ordered by a court given Banco Filipino’s refusal to drop the lawsuit.

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