9:38 pm | Thursday, October 20th, 2011
LA TRINIDAD, Benguet—The Cooperative Development Authority (CDA) has
sought the help of the Bangko Sentral ng Pilipinas (BSP) after learning
that the collapse of the LBC Development Bank in September hurt the
finances of some Baguio-based cooperatives.
One cooperative reportedly lost as much as P25 million. Another lost P3
million, "but the insurance coverage offered to redeem the money was not
even half of what we lost," one of its officials told the Inquirer last
week.
Franco Baoang, acting CDA Cordillera director, said the agency may need
new guidelines and quarterly appraisals of the banking industry to help
cooperatives make informed decisions about their transactions.
Aside from depositing money or securing loans, many cooperatives also
lend money to members which require a stable supply of funds, said
Martin Manodon, CDA Cordillera spokesperson.
'Usually sound'
"Usually, a cooperative's assets are sound because the members
themselves are the ones who invest actively in [its] projects," Manodon said
Baoang said the common problems arising from managing cooperative
financing are internal because of poor accounting or wrong business
decisions.
But the LBC bank case showed that the fate of cooperatives is also
vulnerable to external forces, such as transactions with poorly managed
banks or an economic crisis.
The Inquirer could not get independent verification of the losses from
the local branch of LBC, a thrift bank, which was placed under
receivership by the Philippine Deposit Insurance Corp. on Sept. 9.
Miguel Luma-ang, general manager of the Cooperative Bank of Benguet,
said the LBC example strengthens a campaign to draw the assets of all
cooperatives in the country under the custody of a central cooperative
bank facility.
Merge for strength
In 2010, the BSP issued a policy statement urging rural banks, thrift
banks and cooperative banks to merge to become competitive against
commercial banks owing to the perceived fragility of smaller,
independent banks, information supplied by the Cooperative Bank of
Benguet showed.
Luma-ang, who is also president of the Benguet Provincial Cooperative
Development Council, said his bank is valued at P720 million from the
investments of 90 cooperatives. The bank started with 165
member-cooperatives.
Baoang said regular information about the economy and the strengths and
weaknesses of commercial banks could be incorporated in the CDA's
training programs that are offered to 2,000 Cordillera cooperatives.
Vincent Cabreza, Inquirer Northern Luzon
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