BSP urged to proactively protect depositors

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) was urged yesterday to proactively protect millions of bank depositors by taking “forceful preemptive measures” against erring banks and their owners and officers.

Rep. Arnel Ty of Liquefied Petroleum Gas Marketers Association, who is a member of the House committee on banks, made the call in the wake of the recent series of bank closures.

“There is a need for regulators to take forceful preemptive actions against unsafe and unsound banking practices in order to protect depositors, encourage savings, reinforce public confidence in banks, and build up the industry,” he said.

He said lawmakers are ready to help regulators, “if they need specific amendments to our banking laws and extra powers to enable them to rigorously supervise banks and deal with institutions in apparent trouble.”

He lamented that in most cases, the BSP closes an erring bank when its owners and offices have already defrauded their depositors of their hard-earned money and life savings.

Ty described the belated discovery of massive fraud at the collapsed LBC Development Bank as “appalling.”

“We’ve been taken aback by the shameless embezzlement of deposits at the now defunct LBC Development Bank, supposedly carried out at the behest of no less than the institution’s chief executive officer,” he said.

The Philippine Deposit Insurance Corp. (PDIC) has filed syndicated estafa charges against the president and five borrowers of LBC Development Bank, with the BSP on Sept. 9, 2011.

Based on the criminal complaint filed with the Department of Justice, bank president Ma. Eliza G. Berenguer, and borrowers Benito Ramon V. Araneta, Ma. Lourdes Senn, Ernesto G. Barrios, Charito S. Zambales, and Francisco A. Climent helped themselves to at least P229.5 million in bank funds.

According to the PDIC, Berenguer, from October 2006 to January 2008, directly instructed the bank’s other principal officers to divert bank funds to the deposit accounts owned by the five borrowers and maintained with other institutions.

The Bureau of Immigration has already been issued a “lookout order” to prevent the six individuals from leaving the country.

Through Resolution 1749, Ty had pushed for a congressional inquiry into the bank’s collapse, which affected 321,516 savers who lost an aggregate of P6.09 billion in deposits.

He said LBC Development Bank was the latest addition to a growing list of erring financial institutions that were padlocked after defrauding tens of thousands of depositors.

Before this, he said more than 35,000 depositors lost a combined P713 million in Capital City Bank in Cavite, Rural Bank of Gainza in Camarines Sur, Rural Bank of Majayjay in Laguna, Rural Bank of Buenavista in Agusan del Norte, and Consolacion Rural Bank, also in Laguna.

The BSP had padlocked the five banks.