BSP closes troubled rural bank

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has ordered the closure of Rural Bank of San Marcelino Inc. in Zambales, bringing to two the number of problematic banks shut down this year.

State-run Philippine Deposit Insurance Corp. (PDIC) has been designated as receiver with a directive to proceed with the takeover and liquidation of the closed rural bank in accordance with Republic Act 3591 or the PDIC Charter.

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.

Late last month, the regulator ordered the closure of the Rural Bank of San Agustin (Isabela).

Last year, the BSP closed down nine problematic banks including the Rural Bank of Galimuyod (Ilocos Sur), 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).

In 2021, the number of problematic banks ordered closed by the central bank almost tripled to 13 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 rolled out the Rural Bank Strengthening Program (RBSP) to enhance the operations, capacity, and competitiveness of the industry.