Misamis Oriental rural bank closed

The Bangko Sentral ng Pilipinas (BSP) has ordered the closure of another problematic bank, the third so far this year, as it continues to rid the industry of weak players.

The central bank has issued Resolution 708.A dated April 30 prohibiting Rural Bank of Initao (Misamis Oriental) Inc. from doing business in the Philippines and was placed under the supervision of the state-run Philippine Deposit Insurance Corp. (PDIC).

Rural Bank of Initao is a single-unit rural bank located in Initao, Misamis Oriental. Latest available records showed the bank had 1,476 deposit accounts with total deposit liabilities of P46.4 million.

Total insured deposits amounted to P42.3 million, equivalent to 91.1 percent of total deposits.

PDIC assured depositors that all valid deposits and claims will be paid up to the maximum deposit insurance coverage of P500,000. Individual depositors with valid deposit accounts with balances of P100,000 and below will be eligible for early payment and need not file deposit insurance claims, provided they have no outstanding obligations with Rural Bank of Initao or have not acted as co-makers of these obligations.

For business entities and all other depositors who are required to file claims for deposit insurance, the schedule for filing of claims will be announced as soon as possible.

The BSP has so far ordered the closure of three rural banks this year. They are the Empire Rural Bank Inc. in Lipa City, Batangas as well as the Rural Bank of Loreto (Surigao del Norte) Inc.

BSP Deputy Governor Chuchi Fonacier has said the government would continued 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.