Mon­e­tary Board or­ders Ru­ral Bank of Loreto shut

Business World - - BANKING & FINANCE - Melissa Luz T. Lopez

THE CEN­TRAL BANK has shut­tered a ru­ral bank in the Di­na­gat Is­lands, mark­ing the first to be or­dered closed this year.

In a state­ment, the Philip­pine De­posit In­sur­ance Corp. (PDIC) an­nounced that it has taken over the op­er­a­tions of the Ru­ral Bank of Loreto, Inc. yes­ter­day.

This fol­lows the de­ci­sion of the Mon­e­tary Board — the high­est pol­icy-set­ting body of the Bangko Sen­tral ng Pilip­inas (BSP) — to shut down the lender’s op­er­a­tions through an or­der is­sued on Feb. 9. As reg­u­la­tor of the lo­cal bank­ing sys­tem, the cen­tral bank can close down banks found un­vi­able to re­main in busi­ness.

The Ru­ral Bank of Loreto op­er­ates four of­fices around Di­na­gat Is­lands in Suri­gao del Norte. Its head of­fice is lo­cated in San Jose town, while three other units are in the mu­nic­i­pal­i­ties of Cag­di­anao, Libjo (Al­bor) and Loreto.

The provin­cial lender holds P5.95 mil­lion of de­posits, which is spread across 2,264 de­posit ac­counts. Nearly all de­posits are cov­ered by de­posit in­sur­ance at P5.94 mil­lion, the PDIC said.

Bank de­posits are in­sured up to P500,000 per ac­count, ac­cord­ing to the law.

Un­der the PDIC char­ter, the state in­surer steps in as re­ceiver of prob­lem banks and ac­quires the lender’s as­sets in or­der to pay out­stand­ing li­a­bil­i­ties to de­pos­i­tors. Upon as­sum­ing the as­sets, PDIC usu­ally con­ducts pub­lic bid­dings to dis­pose these prop­er­ties and raise funds which it will then use to set­tle out­stand­ing de­posits.

The PDIC is look­ing to auc­tion off at least P157 mil­lion worth of prop­er­ties this month through three sep­a­rate auc­tions to be held in Metro Manila and Davao, which in­clude res­i­den­tial, com­mer­cial and agri­cul­tural lots.

The in­surer raised a to­tal of P259.16 mil­lion in 2017 from sell­ing the as­sets in­curred from closed banks, as well as cor­po­rate prop­er­ties. Prop­er­ties worth P201.08 mil­lion raised pre­mi­ums worth P58.08 mil­lion, the PDIC said.

The cen­tral bank or­dered the clo­sure of six ru­ral banks and one thrift bank last year. In 2016, the reg­u­la­tor closed 22 lenders.

The BSP, PDIC, and the Land Bank of the Philip­pines have ex­tended the Con­sol­i­da­tion Pro­gram for Ru­ral Banks un­til 2019, as they seek to pro­mote merg­ers among ru­ral lenders based in one prov­ince or re­gion. These merg­ers are seen to for­tify the cap­i­tal and as­set base of the lenders, mak­ing them more liq­uid and fi­nan­cially sound.

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