Urban Bank directors testify versus Bartolome, Borlongan

Top officials of failed Urban Bank face more legal troubles as directors of the bank complained they were kept in the dark by Urban Bank chairman Arsenio Bartolome III and president Teodoro Borlongan as to the real financial condition of the bank.

In an affidavit submitted to the Makati Regional Trial Court, 10 directors of Urban Bank testified they were never informed that the bank was in financial straits, prompting a number of them to even deposit millions of pesos just a few days prior to the closure of the bank.

The directors who testified against Bartolome and Borlongan are Isidro Consunji, Juvencio Dizon, Francisco Eizmendi, Dee Hua Gatchalian, Noel Laman, Alberto de Larrazabal, Eric Lee, Benjamin de Leon, Ferdinand Lim and Carlos Salinas.

In their joint affidavit, the directors said "records show some of the directors placed substantial amounts of new money or rolled over maturing placements in April 10, 17, 18, 19, 24 and 25."

Urban declared a bank holiday last April 26 and was then closed by the Bangko Sentral ng Pilipinas (BSP) and placed under receivership by the Philippine Deposit Insurance Corporation (PDIC).

The directors claimed they were informed of the bank’s situation only last April 23, 2000, and by that time, all other remedies were out of reach.

The directors added that in an earlier meeting last March 23, Borlongan even told them of the bank’s plan to acquire and merge with Panasia Bank.

They added Borlongan blamed the withdrawal which peaked in the second and third week of April last year on heavy withdrawals by individual Chinese depositors reacting to newspaper reports that the bank was being downgraded into a thrift bank.

The directors said they were surprised to find out from the BSP and the PDIC last August 22 that Urban Bank incurred past due loans of more than P1 billion; that as early as February 2000 up to the date of the closure of the bank, Urban Bank has been suffering from serious liquidity problems; and the management of Urban Bank had resorted to interbank borrowings, and the management of Urbank Bank had resorted to interbank borrowings in huge amounts in February, March and April 2,000 in order to meet its liquidity problems.

As a result of the news blackout, the directors could not ask for financial assistance from BSP and PDIC, which required a board resolution before an emergency loan is approved.

The PDIC and the BSP closed Urban Bank subsequently, pinning down the bank’s fall to the latter’s absorption of the bad loans of its investment unit, Urbancorp Investments Inc.

The PDIC and BSP has since then filed a number of estafa cases against Borlongan and Bartolome, among them buying P4.6 billion of Urbancorp’s receivables.