Mindanao rural bank first to close this year

The Bangko Sentral ng Pilipinas (BSP) closed down a four-unit rural bank in Mindanao as the regulator continues to push merger and consolidation as part of the strengthening of the country’s banking industry.

The central bank’s Monetary Board has issued a resolution prohibiting the Rural Bank of Loreto (Surigao del Norte) Inc. from doing business in the country.

The shuttered bank was placed under the receivership of the state-run Philippine Deposit Insurance Corp. (PDIC).

The deposit insurer took over the rural bank based in Purok 1, Brgy. San Juan, San Jose, Dinagat Islands, Surigao del Norte with three branches in Cagdianao, Libjo (Albor) and Loreto.

Latest available records showed Rural Bank of Loreto had 2,264 deposit accounts with total deposit liabilities of P5.95 million. Total insured deposits amounted to P5.94 million equivalent to 99.9 percent of total deposits.

PDIC assured depositors that all valid deposits and claims shall be paid up to the maximum deposit insurance coverage of P500,000.

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.

Last year, the BSP ordered the closure of seven problematic banks compared to 22 banks in 2016 as it continued to weed out weak players in the industry.