BSP closes another problematic rural bank

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has ordered the closure of another problematic rural bank based in Ilocos Sur, bringing to nine the number of problematic banks shuttered this year.

BSP Deputy Governor Chuchi Fonacier said the Monetary Board has issued Resolution 1312.B prohibiting the Rural Bank of Galimuyod (Ilocos Sur) Inc. from doing business in the Philippines as mandated under Republic Act 7653 or The Central Bank Act, as amended.

Fonacier said state-run Philippine Deposit Insurance Corp. (PDIC) has been designated as receiver and has been directed to proceed with the liquidation of the problematic thrift bank in accordance with RA 3591 or the PDIC Charter, as amended.

In a separate bulletin, PDIC took over the closed bank with office address at Barangay Poblacion, Galimuyod, Ilocos Sur last Sept. 9.

The PDIC Charter provides that a bank placed under liquidation shall in no case be re-opened and permitted to resume banking business. It also states that banks closed by the Monetary Board shall no longer be rehabilitated.

Upon placement of a bank under liquidation, the powers, functions and duties of the directors, officers and stockholders of the bank are terminated. Accordingly, the directors, officers, and stockholders shall be barred from interfering in any way with the assets, records and affairs of the bank.

“Therefore, anyone in possession of any asset and/or records of the closed Rural Bank of Galimuyod is advised not to allow or honor any transaction affecting the same without the consent of the receiver and to immediately turnover the said assets and/or records to the designated deputy receiver,” the PDIC said

So far this year, the BSP has ordered the closure of the Rural Bank of Polomolok (South Cotabato), Banco Rural De General Tinio in Nueva Ecija, Farmers Savings and Loan Bank based in Bulacan, Metro-Cebu Public Savings Bank, the Rural Bank of Mahaplag (Leyte), the Rural Bank of Salcedo (Ilocos Sur), the Rural Bank of San Lorenzo Ruiz (Siniloan), and the Rural Bank of San Nicolas (Pangasinan).

To strengthen the sector, the central bank has rolled out  of the Rural Bank Strengthening Program (RBSP) to enhance the operations, capacity, and competitiveness of the industry.

The regulator earlier raised the minimum capital requirements for rural banks to at least P50 million to enhance the operations, capacity and competitiveness of small banks.