BSP closes another rural bank

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has ordered the closure of another problematic bank, bringing to 11 the number of shuttered banks this year amid the heightened effort to weed the industry of weak players.

The central bank has issued a resolution prohibiting Rural Bank of Maigo (Lanao del Norte) Inc. from doing business in the Philippines and placing it under the supervision of the state-run Philippine Deposit Insurance Corp. (PDIC).

Rural Bank of Maigo is a single-unit rural bank located in Poblacion, Maigo, Lanao del Norte. It had 2,150 deposit accounts with total deposit liabilities of P73.25 million, of which 87.4 percent is insured.

BSP Governor Nestor Espenilla Jr. had said the regulator would not hesitate to close down banks to protect the public.

“Financial stability is something that we constantly advocate for our economy and to do that we have to strong measures. We had imposed a discipline of aligning our standards to global standards and we have also not hesitated to shut down banks that do not do what they are supposed to do in protecting the public,” he said.

Espenilla, who chairs the seven-member Monetary Board, said the BSP continues to weed out weak elements in the banking industry that create vulnerabilities to the Philippine economy.

“You know it is one of the toughest decision of the BSP whenever we have to close down a bank. But still it is our duty to protect the public from financial institutions that do not protect them,” Espenilla said.

Aside from the Rural Bank of Maigo, the BSP has ordered the closure of Pangasinan-based Malasiqui Progressive Savings and Loan Bank Inc., Rural Bank of Luna (Apayao) Inc., the Rural Bank of Pagbilao Inc., Rural Bank of Sta. Elena (Camarines Norte), Batangas-based Tiaong Rural Bank, Iloilo-based Bangko Buena Consolidated Inc., Batangas-based Women’s Rural Bank Inc., Rural Bank of Initao (Misamis Oriental) Inc., Empire Rural Bank Inc. in Lipa City, Batangas as well as the Rural Bank of Loreto (Surigao del Norte) Inc.

The government currently provides 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.

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.