PDIC shells out P6.13B to pay 80% of BF depositors

MANILA, Philippines - State-run Philippine Deposit Insurance Corp. (PDIC) has already settled about 80 percent of the insured claims of depositors of the Aguirre-controlled Banco Filipino Savings and Mortgage Bank exactly five months after the bank was ordered closed by the Bangko Sentral ng Pilipinas (BSP).

In a statement, PDIC said it has shelled out P6.13 billion as settlement of insurance claims of Banco Filipino depositors representing about 80 percent of the closed bank’s total estimated insured deposit of P7.76 billion.

The government-owned deposit insurer said the insurance claims of 135,983 or 79 percent of the total deposit accounts of 172,323 have been settled as of Aug. 11.

Of the total amount paid, PDIC said P5.96 billion covering 51,091 deposit accounts were settled during the ongoing onsite claims settlement operations while P168.33 million covering 84,893 accounts with balances of P10,000 and below were paid directly to depositors.

The PDIC reported that the onsite claims settlement operations for Banco Filipino has already been completed for 57 branches. Operations for the last five branches are still ongoing and scheduled to be completed on Aug.19.

According to PDIC, depositors who were unable to file their claims during the onsite claims settlement operations may start filing their claims at the PDIC Office in Makati City on Aug. 31.

Banco Filipino managed to lure 177,652 depositors with accounts amounting to P15 billion wherein 53 percent have accounts with deposits below P5,000 each.

The BSP ordered the closure of Banco Filipino last March 17 and placed its under the receivership of PDIC.

Banco Filipino has questioned the closure order before the Court of Appeals and reiterated that it has P30 billion worth of real estate assets or more than enough to cover its deposit liabilities amounting to P15 billion.

Last April 1, the BSP filed criminal charges against bank directors and offices for falsification, grant of illegal loans, and major violations of banking laws, rules and regulations. Charged were chairman and president Teodoro Arcenas Jr., vice chairman Albert Aguirre, executive vice president Maxy Abad, executive vice president Catherine Aguirre-Hernandez, senior vice president Roberta Afable and directors Yasay Orlando Samson, Adelaida Adduru-Bowman, Francisco Rivera and Ramon Montano.

Last April 5, the BSP informed the Court of Appeals that there was an urgent need to shut down Banco Filipino after the erstwhile largest savings bank in the country operated as a pyramid or “Ponzi” scheme wherein they used new deposits to pay old deposits as bank officers and lawyers enriched themselves.

In a 170-page comment or opposition filed before the appelate court, the BSP and some members of the Monetary Board said there was no option left but to order the closure of Banco Filipino last March 17 after it continued to engage in a Ponzi scheme where withdrawals were funded by later deposits.

The central bank told the appelate court that the bank lured depositors by offering six percent to as high as 14-percent interest for special savings deposits while most banks were paying only 1.8 percent to 3.3 percent. Instead of investing the deposits, the BSP explained that Banco Filipino used the deposits to pay the interest of old deposits and its day-to-day operations, making its operations akin to a Ponzi or pyramiding scheme which are considered fraudulent investment operations.

A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors. It was named after Charles Ponzi who became notorious for using the technique in the early 1920s.

The appelate court has thumbed down the request of the stockholders of the closed bank to reopen the beleaguered Banco Filipino through the issuance of a temporary restraining order (TRO) or writ of preliminary injunction against the closure order issued by the BSP last March 17.

The bank with the popular slogan “Subok na Matibay, Subok na Matatag” was founded in 1964 by Don Tomas Aguirre.

In its website, Banco Filipino claimed that it was ordered closed by the central bank in 1985 due to alleged insolvency despite the bank’s outstanding performance. As early as 1966, Banco Filipino emerged as the biggest savings bank in the country with 92 branches prior to its closure. In 1994, the bank opened 15 of its 92 branches and has now 62 branches nationwide.

Banco Filipino has been seeking P25 billion worth of financial assistance and regulatory reliefs as well as P19 billion as compensation for its alleged illegal closure of the bank in 1985.

PDIC earlier reported that its buffer fund or deposit insurance fund (DIF) stood at a comfortable level of P65.2 billion as of end-March this year, sufficient to cover 4.5 percent of the P1.4 trillion total insured deposits.

PDIC president Valentin Araneta earlier reported that total bank deposits posted a healthy growth of 8.9 percent or P411 billion to P5.003 trillion comprising of 37.1 million accounts in the first quarter of the year.

Araneta said about 97 percent of the total accounts with deposits worth P884.86 billion or 17.7 percent of the total deposits are are fully covered up to the maximum deposit insurance coverage (MDIC) of P500,000

He pointed out that three percent of the total accounts with deposits amounting to P4.118 trillion or 82.3 percent of the total deposits are partially insured.

According to PDIC, deposits that are P15,000 and below comprise 75.4 percent of total deposits in terms of number of accounts, but is only one percent of total deposits in terms of amount.

On the other end of the deposit range, deposits over P2 million are only 0.8 percent of total deposits in terms of total accounts but takes up 67.3 percent of deposits in terms of amount.