BSP OKs liquidation of ExportBank

MANILA, Philippines - The central bank has given its go-signal to the planned liquidation of the shuttered Export and Industry Bank (Exportbank), following two failed auctions, the state deposit insurer said on Tuesday.

“The Philippine Deposit Insurance Corp. (PDIC) has been directed by the Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) to proceed with the liquidation of the closed Export and Industry Bank,” PDIC said in a statement.

With the BSP green light, PDIC may now file before the court a petition for assistance in the liquidation. PDIC executive vice president Cristina Orbeta said the assistance is meant for the “orderly” liquidation process of the Exportbank.

Under Section 30 of Republic Act No. 7653, liquidation pertains to the conversion of a company’s assets to “money” which will be used to settle the liabilities of the failing lender to various stakeholders.

The process may involve the selling of assets through bidding or negotiated sale in order to raise proceeds.

“We will start liquidation as soon as possible for the benefit of the creditors,” Orbeta said in a text message.

When asked later on in a phone call how long will the rehabilitation take, Orbeta said: “There is no timeline required under the law. But once we finish, we will file a report before the court, detailing the proceeds of the liquidation.”

“From there, we will have to wait for the court to decide on who will be the valid recipients of the proceeds. PDIC, by itself, cannot just give away money to creditors, it should be the court that will decide,” she explained.

The BSP padlocked Exportbank on April 26 last year after it failed to service depositor claims. As of end-2012, the lender’s assets amounted to P13.65 billion against liabilities worth P24.67 billion. This indicated deficiency of P11.02 billion.

Immediately after its closure, Exportbank was taken over by PDIC as a receiver tasked to determine the bank’s fate, either through rehabilitation or liquidation.

Two successive auctions for the lender’s rehabilitation however failed.

The first was on Oct. 28, 2012 when the state deposit insurer declared a failure of bidding after no bid was received from pre-qualified banks which first expressed interest to revive Exportbank.

On the second try last March 20, even letters of interest from pre-qualified bidders were not received.