BSP shuts down another rural bank

The Bangko Sentral ng Pilipinas (BSP) has ordered the closure of a problematic rural bank in Lipa City, Batangas, bringing to two the number of banks shuttered so far this year.

The central bank’s Monetary Board issued Resolution 297-A prohibiting Empire Rural Bank Inc. from doing business in the Philippines and directing the PDIC to take over the closed bank.

Empire Rural Bank is a single-unit rural bank located at 154 C.M. Recto Avenue, Poblacion Barangay 4, Lipa City, Batangas.

Latest available records showed the bank had 564 deposit accounts with total deposit liabilities of P36.4 million. Total insured deposits amounted to P31.6 million, equivalent to 86.8 percent of total deposits.

Empire Rural Bank is the second bank ordered closed by the BSP this month.

Last Feb. 9, the BSP closed down the Rural Bank of Loreto (Surigao del Norte) Inc.

The rural bank is based in Purok 1, Barangay San Juan, San Jose, Dinagat Islands, Surigao del Norte with three branches in Cagdianao, Libjo (Albor), and Loreto.

Earlier, BSP Deputy Governor Chuchi Fonacier said the government will continue to provide incentives under the Consolidation Program for Rural Banks (CPRB) to encourage mergers and consolidations among small banks, particularly rural banks, to further strengthen and enhance the viability of the banking system.

Rural banks play an important role in providing essential financial services to the community, particularly in their specialized or niche markets, and in promoting financial inclusion and financial stability.

The CPRB aims to improve financial strength, enhance viability and generate better return to shareholders; strengthen management and governance; generate synergies and economies of scale through common infrastructure, systems and resources; as well as expand the market reach of rural banks.