PDIC continues to beef up deposit insurance fund

MANILA, Philippines — The Philippine Deposit Insurance Corp. (PDIC) continues to build up its capital and main fund source for payout of deposit insurance to promptly respond to claims and maintain depositor confidence.

The state-run insurer reported its Deposit Insurance Fund (DIF) grew 15.3 percent to a new all-time high of P129.96 billion last year from P112.71 billion in 2015.

A higher level of DIF indicates PDIC’s greater ability to promote stronger depositor protection and contribute to the stability of the financial system.

PDIC said the DIF level in 2016 was equivalent to 5.8 percent of the estimated insured deposits (EID) on a monthly basis, better than the full-year target of 5.5 percent and the 5.6 percent cover in 2015.

At its current level, the DIF is considered adequate to cover deposit insurance under normal circumstances and to address bank resolution based on banking conditions as of end-2016.

For this year, PDIC updated its target ratio of the DIF to estimated insured deposits to a range of 5.5 to eight percent from a singular ratio.

PDIC was able to build up the DIF through investment management. As part of its prudent measures, PDIC invested most of its funds in the domestic market to minimize foreign market risks.

PDIC provides a maximum deposit insurance coverage of P500,000 per depositor per bank. To pay claims on insured deposits, it builds up the DIF primarily through assessments of member-banks at an annual flat rate of 1/5 of one percent of their total deposit liabilities.

The state-run deposit insurer has settled insurance claims of 2.5 million depositors amounting to P66.5 billion since the 1960s.