Two more rural banks shut down

MANILA, Philippines - Two more rural banks folded up early this month, bringing to 14 the number of weak players ordered closed by the Bangko Sentral ng Pilipinas (BSP) this year.

BSP Deputy Governor Nestor Espenilla Jr. has issued Circular Letters numbered 2015 – 75 and 2015 – 76 ordering the closure of the Rural Bank of Caba (La Union) Inc. and the Peñafrancia Rural Bank of Calabanga (Camarines Sur) Inc.

Espenilla said both banks were placed under the receivership of the state-run Philippine Deposit Insurance Corp. (PDIC).

Espenilla said the BSP has issued resolutions prohibiting both rural banks from doing business and placing their assets and affairs under receivership.

The BSP has shut down 14 rural banks this year, matching the number of banks ordered closed by the central bank last year.

The bank regulator has closed down the Community Bank (Rural Bank of San Alfonso) Inc., Community Rural Bank of Magsaysay (Davao del Sur) Inc., Rural Bank of Labrador (Pangasinan) Inc., Rural Bank of Magsingal (Ilocos Sur) Inc., Rural Bank of Pres. Roxas (North Cotabato) Inc., Rural Bank of Sta. Magdalena (Sorsogon) Inc., Siargao Bank (A Rural Bank) Inc., Surigaonon Rural Banking Corp., Farmer’s Rural Bank Inc. in Batangas, Xavier-Punla Rural Bank Inc., Rural Bank of Buguias, and Rural Bank of Calasiao.

Last July, the BSP together with PDIC and Land Bank of the Philippines launched the Consolidated Program for Rural Banks (CPRB) to further encourage mergers and consolidations among rural banks.

The Countryside Financial Institutions Enhancement Program (CFIEP) has set aside P25 million to support the financial advisory, business process improvement, and capacity-building support services necessary to ensure the attainment of the program’s objectives.

CPRB is different from the Strengthening Program for Rural Banks (SPRB) Plus that is aimed to strengthen the banking system and to minimize bank closures.

The BSP and PDIC approved the extension of the SPRB Plus with certain operational refinements after banking industry associations pushed for the program’s extension.

The SPRB Plus is an enhanced version of the original SPRB launched in 2010 exclusively for rural banks.