House to probe failure of 15 rural banks

The House committee on banks decided yesterday to inquire into the failure of 15 rural banks owned by businessman-politician Celso delos Angeles and his Legacy group.

Makati Rep. Teodoro Locsin Jr. demanded the inquiry, saying it should be done before Congress approves the proposal to increase the amount of insured bank deposits from P250,000 to P500,000.

 “We have to make sure that what Celso delos Angeles and his Legacy group did to their rural banks and their thousands of deposits does not happen again,” he said.

 “This guy used the deposit insurance law in perpetrating a scam,” he said.

Locsin said depositors were offered an attractive scheme under which they earned an annual interest rate of 20 percent provided that their deposits did not exceed P250,000 each so they would be covered by the law.

 “The owners then ran the banks to the ground,” he added.

The Bangko Sentral ng Pilipinas has closed the 15 rural banks and has placed them under the administration of the Philippine Deposit Insurance Corp. (PDIC).

PDIC officials have announced that depositors’ claims have amounted to P14.4 billion. Assuming that each depositor is claiming the maximum amount of P250,000 covered by the deposit insurance law, this means that the failed banks had more than 57,000 clients.

Some of the banks are located in Metro Manila. Others are in Bicol, Cebu and Pampanga.

Locsin said he suspected that the proposed increase in deposit insurance was meant to bail out the Legacy group.

“We have to bring the full force of the law on Celso delos Angeles and his group. They milked the banks like cow,” he said.

PDIC president Jose Nograles, a brother of Speaker Prospero Nograles, told congressmen that the proposed higher amount of insured deposits would not cover clients of the failed 15 banks.

Locsin also questioned the higher deposit insurance proposal, saying it aims to solve a non-existent problem.

 “We are concerned about the banking system’s fragility that is not existing. The banks are solid, according to the president of Bank of Philippine Islands. Even their rivals are solid,” he said.

He revealed that Delos Angeles has sent text messages to his congressmen-friends urging them to vote for the proposal.

The businessman-politician is reportedly a close friend of an influential House leader.

PDIC’s Nograles said he supports the projected investigation into the failure of the 15 rural banks.

He said his agency is now attending to the claims of the banks’ depositors and is conducting an inventory of bank assets.

The committee on banks, chaired by Manila Rep. Jaime Lopez, has already endorsed the proposal to double the amount of insured bank deposits. Speaker Nograles is one of the authors of the proposal.