MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has closed down a problematic bank in Isabela, the first bank to be shuttered by the central bank this year.
BSP Deputy Governor Chuchi Fonacier said the central bank’s Monetary Board issued Resolution 3.A on Jan. 5 prohibiting the Rural Bank of San Agustin (Isabela) Inc. from doing business in the Philippines, as mandated under Republic Act 7653 or The Central Bank Act, as amended.
Fonacier said the Philippine Deposit Insurance Corp. (PDIC) has been designated as receiver and has been directed to proceed with the liquidation of the problematic thrift bank in accordance with RA 3591 or the PDIC Charter, as amended.
The PDIC Charter provides that a bank placed under liquidation shall in no case be re-opened and permitted to resume banking business. It also states that banks closed by the Monetary Board shall no longer be rehabilitated.
Upon placement of a bank under liquidation, the powers, functions and duties of the directors, officers and stockholders of the bank are terminated. Accordingly, the directors, officers, and stockholders shall be barred from interfering in any way with the assets, records and affairs of the bank.
In 2022, the BSP closed down nine problematic banks, including the Rural Bank of Galimuyod (Ilocos Sur) Inc., Rural Bank of Polomolok (South Cotabato), Banco Rural De General Tinio in Nueva Ecija, Farmers Savings and Loan Bank based in Bulacan, Metro-Cebu Public Savings Bank, Rural Bank of Mahaplag (Leyte), Rural Bank of Salcedo (Ilocos Sur), Rural Bank of San Lorenzo Ruiz (Siniloan) and Rural Bank of San Nicolas (Pangasinan).
The number of problematic banks ordered closed by the central bank almost tripled to 13 last year from five in 2020 as the country has yet to fully recover from the impact of the COVID-19 pandemic.
To strengthen the sector, the central bank has rolled out of the Rural Bank Strengthening Program (RBSP) to enhance the operations, capacity, and competitiveness of the industry.
The regulator earlier raised the minimum capital requirements for rural banks to at least P50 million to enhance the operations, capacity and competitiveness of small banks.
Under the new capital structure, the minimum capitalization of rural banks would be P50 million for those with a head office and only up to five branches, P120 million for those with six to 10 branches, and P200 million for small banks with more than 10 branches.