PDIC to sell P58-B non-financial assets

MANILA, Philippines - State-run Philippine Deposit Insurance Corp. (PDIC) is pursuing the liquidation of non-financial assets worth P58 billion to beef up the government’s buffer fund to pay off insured deposits of banks ordered closed by the Bangko Sentral ng Pilipinas (BSP).

PDIC president Valentin Araneta said in an interview with reporters that the agency would pursue the aggressive liquidation of non-financial assets consisting of loans as well as real and other properties acquired (ROPA) is a key part of the agency’s five-year roadmap.

 “These assets should be turned into cash and added to the insurance fund in the case of corporate assets or pay off the creditors in the case of closed banks’ assets,” Araneta stressed.

The agency’s loans from corporations and closed banks stood at P44.3 billion as of end-December last year while ROPA from enterprises and closed banks reached P14.7 billion.

 “No less important are the manpower and resources of the organization that can be freed up to focus its regular mandates. These assets are also very costly to administer and sustain,” he explained.

Araneta pointed out that the agency is pursuing legislative issues such as the institutionalization of the required Deposit Insurance Fund (DIF) and for more flexibility for the board to determine the DIF requirements.

The DIF backs up the insured deposits of the banking system. It is invested in Philippine government securities and government guaranteed instruments prescribed in the PDIC charter.

The agency’s deposit insurance fund posted a double-digit growth of 10.3 percent to P74.89 billion or 4.9 percent of the country’s total insured deposits as of end-May from P67.89 billion or 4.8 percent of the total insured deposits in end-May last year.

Under the PDIC 2016 Roadmap, the agency is pursuing the early detection of bank weaknesses and fraud to prevent bank failure and at the same time strengthen and enhance the financial and service capabilities of PDIC.

Last year alone, 29 banks were closed by the BSP with a total of P26.4 billion of outstanding deposits accounted for by over 290,000 bank accounts of which nearly P13 billion were insured.

He said the total deposits of the closed banks were equal to 1.6 percent of the total national budget for 2011.

 “Our concern here is not only for the insured deposits but for all the deposits because of the disruption that the closures inflict on our banking system and the destruction it causes on the value and the savings of depositors, as well as the costs to the insurance fund,” he lamented.