PDIC earns P75 million from sale of assets

MANILA, Philippines — State-run Philippine Deposit Insurance Corp. (PDIC) has earned about P75 million from the sale of properties, including agricultural lots, formerly owned by closed banks as of the third quarter.

The PDIC sold a total of P67.1 million from the auction of 55 properties held by shuttered banks, and generated a premium of P7.5 million from the disposal of these properties, of which 31 are vacant residential lots, eight subdivision lots, seven commercial lots with improvements, seven residential lots with improvements, and two agricultural lots.

As the state’s liquidator, the PDIC manages and disposes of the remaining assets of closed banks. Proceeds from the auction are channeled into a pool of funds where the shuttered banks can source their payments to creditors and uninsured depositors.

Further, the PDIC as a deposit insurer acquires assets from financially assisted banks. What it collects from the sale of corporate-owned assets is invested in the Deposit Insurance Fund, or DIF, where the agency gets its payment for claims.

The PDIC moved its public bidding of assets owned by closed banks and corporate institutions online in response to the challenges posed by the pandemic on disposal mechanisms.

In the electronic portal, participants are only required to sign up in the PDIC’s registry and then take part in the public bidding.

The PDIC’s portal also features an inventory of assets up for liquidation, making it available for individuals going on property hunting.

The PDIC manages the DIF, its capital, which it taps to cover for accounts that will be affected by bank closures. Last year the DIF grew by around nine percent to P214.8 billion from P196.5 billion in 2019, enough to pay off uninsured depositors in cases of shutdown.

At such an amount, the DIF can insure around seven percent of deposits in the banking system worth P3.07 trillion. The PDIC tries to sustain a level between 5.5 and eight percent to promote confidence and stability among private depositors.

According to the PDIC, the lower limit of 5.5 percent covers anticipated and unanticipated risks under usual circumstances, while the upper limit of eight percent makes up for additional threats to the banking system as a consequence of the expected and unexpected risks.

For its part, the PDIC works on expanding the DIF every year through several measures like the sale of assets held by closed banks.