PDIC takes over First Savings Bank

The Philippine Deposit Insurance Corp. (PDIC) took over yesterday First Savings Bank Inc., a small bank servicing mostly public market vendors and small depositors.

The Bangko Sentral ng Pilipinas (BSP), in its Resolution No. 1265, ordered the bank’s closure and placed it under PDIC receivership due to its inability to pay liabilities as they become due in the ordinary course of business, insufficient realizable assets to cover liabilities and inability to continue its business without involving probable losses to its depositors or creditors.

BSP Deputy Governor Alberto Reyes said the closure of First Savings Bank is an isolated case and that its assets represent less than one percent of the consolidated resources of the thrift banking system.

Established in 1965, First Savings Bank with head office in E. Rodriguez, Quezon City, has three branches located in Cubao, C.M. Recto and Tanay, Rizal.

As of June 30, 2004, the bank has 10,609 deposit accounts amounting to an estimated deposit liabilities of P193.93 million. Based on the bank’s latest report, almost all accounts are fully insured at the new maximum deposit insurance cover of P250,000.

Meanwhile, two senators sought an inquiry into the collapse of First Savings Bank.

Senator Mar Roxas said he learned that the BSP had actually put First Savings under close monitoring and surveillance since 2002.

"This case interests us because BSP officials were aware the bank had been having problems. They had wanted to take pre-emptive action, except they were reluctant because of precedents wherein (BSP) officials later became the subject of nasty lawsuits," Roxas said.

"We intend to find out whether or not there is a need for us to introduce amendments to our banking laws, including the BSP charter, in order to give officials the confidence they need to act pre-emptively in dealing with banks in apparent trouble," Roxas said.

For his part, Senator Manny Villar called on the BSP and other regulators to intensify their vigilance in monitoring local banks to avert possible bank runs similar to the one that hit First Savings Bank.

Villar, chairman of the Senate Committe on Finance, stressed that the BSP should adopt a pro-active stance in monitoring small and medium-sized banks that might be on the brink of financial trouble and protect small and medium investors from losing their hard-earned savings.

PDIC is currently conducting an inventory of assets and records of the bank. It has also started assessing and examining the bank’s deposit records in preparation for the servicing of claims of insured deposits. The start of claims servicing will largely depend on status of the bank’s deposit records keeping.

The PDIC committed to fasttrack the examination of deposit records. If these are in order, PDIC will initiate payment of claims within seven working days from bank closure.

First Savings Bank depositors should prepare documents supporting insurance claims for presentation as may be requested by PDIC. Information on deposit claims is available at www.pdic.gov.ph. Or through the Depositors Assistance Bureau at 841-4050.