BSP closes one more rural bank

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has closed down another problematic rural bank, bringing to three the number of institutions shuttered this year as it continues to weed out weak players in the industry.

BSP assistant governor Arifa Ala said the central bank’s Monetary Board issued Resolution 536.B last April 27 prohibiting the Binangonan Rural Bank Inc. from doing business in the Philippines pursuant to Section 30 of Republic Act 7653 or the New Central Bank Act, as amended.

Ala issued Circular Letter 2023 – 029 stating that state-run Philippine Deposit Insurance Corp. (PDIC) has been designated as receiver with a directive to proceed with the takeover and liquidation of the closed rural bank in accordance with RA 3591 or the PDIC Charter.

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.

This is the third rural bank ordered closed by the BSP this year. The regulator also ordered the closure of Rural Bank of San Marcelino Inc. last March and Rural Bank of San Agustin (Isabela) Inc. last January.

Last year, the BSP closed down nine problematic banks including the Rural Bank of Galimuyod (Ilocos Sur) Inc., 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, Rural Bank of Mahaplag (Leyte) , Rural Bank of Salcedo (Ilocos Sur), Rural Bank of San Lorenzo Ruiz (Siniloan), and Rural Bank of San Nicolas (Pangasinan).

In 2021,the number of problematic banks ordered closed by the central bank almost tripled to 13 from five in 2020 as the country has yet to fully recover from the impact of the COVID-19 pandemic.

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

Under the new capital structure, the minimum capitalization of rural banks would be P50 million for those with a head office and only up to five branches, P120 million for those with six to 10 branches, and P200 million for small banks with more than 10 branches.

Branch-lite unit of rural banks are not included in the number of branches.