A lot of unanswered questions on rural banks

There was an interesting report that came out in The Philippine STAR’s Business section last Thursday that was headlined, “Deposit claims of 15 closed banks to reach P14 B – PDIC.” Now who was it that said that rural banking is mere peanuts? If you ask me, that’s a huge figure that the Philippine Deposit Insurance Corp. (PDIC) has to pay. According to PDIC president Jose Nograles, “62 percent of the deposit accounts involved in the closure of the 15 rural banks were accounts with P100,000 and below.” So consequently, 38 percent have deposits over the P250,000 figure, which means these depositors can only get back the minimum of P250,000 set by law for the PDIC to pay. 

At least if it concerns the depositors’ money, the PDIC is getting its act together. But the big question that the thousands of people who deposited their life savings in these 15 failed rural banks want to know is, why did these rural banks collapse in the first place? As far as the rural banks of the Legacy Group are concerned, there are so many rumors running around the coffeehouses of Cebu, and the only way to separate fact from fiction is for the Senate to investigate this case already. When they do, it promises to be one of the most entertaining made-for-the-Senate episodes of lies, politics and corruption!

We’re sure that with the banks of the Legacy Group alone, the Senate will have their hands full. But then there’s the Rural Bank of Subangdaku (RBS) in Mandaue City that folded up only last Jan. 5, which promises to be just as entertaining, even if it is not part of the Legacy Group. This is the rural bank owned by the Gaisano family and run by the wife of the Lapu-Lapu City mayor, Mrs. Paz Radaza. In fairness to Mrs. Radaza, she has always been a banker… call it unfortunate that the RBS failed under her management. But what happened to the RBS doesn’t augur well on her political plans to take over the mayorship of Lapu-Lapu City from her husband, Mayor Arturo Radaza, who is now on his last term of office.

Already, Councilor Junard “Ahong” Chan, an independent Lapu-Lapu City councilor, has begun asking Mrs. Radaza pointed questions on why the RBS failed. Rumors are thick that an “insider” withdrew some P40 million from the RBS just a few days before the rural banks of the Legacy Group declared a holiday. One of the reasons the RBS management gave as to why they declared a bank holiday was that they were also affected by the massive withdrawals that hit the Legacy banks. Is this really true or not?

Councilor Chan says “RBS is legally accountable to any non-disclosure of its real financial status to its clients, which is lying to the highest degree!” Indeed, the lack of transparency by the officers of RBS has only worsened their problems. First, they came up with a notice on Jan. 5 about their self-imposed declaration of the bank holiday, leaving a cell phone number for depositors to call. Irate depositors later reported to the newspapers that no one answered on that number. That’s an unforgivable lie to irate depositors!

Later, it was publicized that the board of directors of RBS had accepted the resignation of Mrs. Paz Radaza for “health reasons.” So what we’d really like to know is, “Is Mrs. Radaza really ill?” I doubt it. If she was really that sick, then she should also resign as chairman of the Association of Barangay Councils (ABC) in Lapu-Lapu City because that job is more physically taxing than the job of president of a rural bank. In a press statement, Mrs. Radaza merely stated that she would issue a more in-depth statement at the proper time so that the public may know.

There was also a report that said that the reason why the RBS collapsed was due to a P1.2-billion loan that was either fictitious or granted by the management without a proper approval. What’s really the score here? No doubt, if and when the Senate investigates these rural banks, it promises to raise more than just our eyebrows. Already, the fate of Mrs. Radaza to become the next mayor of Lapu-Lapu City will depend on whether they would tell us the whole truth about what happened to the RBS.

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The Sinulog festivities have come and gone so now it is time to buckle up and prepare for that much anticipated recession that would lead us to an economic depression. Unfortunately, the not-so-good news we have is that our beloved Ricardo Cardinal Vidal is now at the Chinese General Hospital and Medical Center in Manila where he was flown last Jan. 6 after suffering some back and neck pains. The 77-year-old Archbishop of Cebu is suffering from osteoporosis and diabetes, which requires him to take insulin now. The Cardinal’s diabetic condition ought to alert the Department of Health that a great number of Filipinos have diabetes and that include this writer. Let’s hope his Eminence would recover soon and return to Cebu.

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For e-mail responses to this article, write to [email protected]. Bobit Avila’s columns can also be accessed through www.philstar.com. He also hosts a weekly talkshow, “Straight from the Sky,” every Monday, 8 p.m., only in Metro Cebu on Channel 15 of SkyCable.