Eight rural banks stop operations — BSP

December 11, 2008 | By admin |

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) Thursday announced that eight rural banks have declared bank holidays, three of which have been taken over by the state deposit insurer for inability to service withdrawals.

In a statement released last night, the BSP said Negros Oriental-based Rural Bank of Bais, Cebu-based Pilipino Rural Bank and Rural Bank of San Jose in Batangas have been placed Thursday under the receivership of the Philippine Deposit Insurance Corp. (PDIC).

The receivership order meant the responsibility of recouping the bank’s unpaid loans has been transferred to the PDIC.

Another rural bank, the Rural Bank of Parañaque, was earlier reported to have been placed under receivership.

The BSP also said four other banks have been declared on holiday. Operations are temporarily suspended when a financial institution declares a bank holiday.

These are the Philippine Countryside Bank based in Cebu, Dynamic Bank (Rural Bank of Calatagan) in Batangas, San Pablo City Development Bank and Nation Bank in Bacolod City.

Six of the banks are affiliated with the Legacy group, a financial services firm engaged mainly in the pre-need business.

Businessman and Sto. Domingo (Albay) Mayor Celso delos Angeles, Jr. is a major shareholder of the group.

“The [central bank] is investigating these banks to determine their financial condition and viability as well as violations of banking laws that may have been committed,” the regulator said. “The [BSP] will take appropriate action based on the findings.”

The regulator noted that the spate of closures in the rural banking sector was not an indication of the overall health of the banking system as rural banks represent only a tiny fraction of the banking system.

“This reaffirms the [BSP’s] assessment that the banking system remains stable, highly capitalized, and highly liquid.” - BusinessWorld