PDIC to examine 130,000 accounts of 12 rural banks

The Philippine Deposit Insurance Corporation (PDIC) has hired KPMG Manabat Sanagustin & Co. to help examine over 130,000 bank accounts in 12 banks shut down by the Bangko Sentral ng Pilipinas (BSP).

PDIC president Jose Nograles told reporters yesterday that the PDIC is scheduled to sign an agreement with KPMG, an audit firm accredited by the BSP to deal with banks and financial institutions.

Nograles said hiring KPMG would allow PDIC to speed up the examination of deposit accounts and allow authorities to start paying out deposit insurance claims by mid-February.

Nograles said the undertaking would cover the Rural Bank of Paranaque, Pilipino Rural Bank, Rural Bank of Bais (Negros Oriental), Rural Bank of San Jose (Batangas), Bank of East Asia, First Interstate Bank, Philippine Countryside Rural Bank, Dynamic Rural Bank, Nation Bank, Rural Bank of Carmen (Cebu), Rural Bank of DARBCI, and San Pablo City Development Bank.

“The simultaneous closures were unprecedented and the records so voluminous that more than half of the total manpower complement of the PDIC were fielded in 48 locations all over the country to undertake examination prior to payout,” Nograles said.

“We estimate that by using PDIC personnel alone given the sheer volume of records to be examined, the earliest we can start payout operations is September,” he added.

By hiring an external audit firm, Nograles said PDIC could cut down the time significantly and start the payout as scheduled by mid-February, adding that the pre-settlement examination was a pre-requisite to claims payout.

“However, as in any claim for insurance, the state deposit insurer needs to examine bank records and evaluate these to verify their validity before payout starts in order to safeguard the Deposit Insurance Fund (DIF),” Nograles pointed out.

Nograles said the DIF was the source of payout for claims for deposit insurance. The fund was estimated to be worth at least P60 billion and could well cover the claims of the depositors affected by the closure of the 12 banks.

KPMG Manabat Sanagustin & Co. is a member firm of the KPMG network of independent member firms affiliated with KPMG International.

“Given the track record of KPMG Manabat Sanagustin & Co., I am confident that the firm will help PDIC attain its mid-February target to start payout,” Nograles said.

Based on available data, Nograles said these small depositors represent about 62 percent of deposit accounts in these 12 closed banks.