Concerned bankers

They may talk about it only in whispers, perhaps careful not to piss off the powers-that-be, but I can tell you for sure that bankers aren’t happy with the Marcos administration’s move to reallocate their deposit insurance funds.

This was what I gathered from the bankers I bumped into at the Bankers’ Night last week.

I’m talking about the move of the Marcos government to reallocate P107.23 billion from state-owned deposit insurer Philippine Deposit Insurance Corp. (PDIC) for other government projects.

As I wrote in my column last week, the actual amount siphoned by the government from PDIC’s Deposit Insurance Fund (DIF) is P107.23 billion.

The DIF amounted to P310.08 billion as of end-2023. Thus, based on that amount, the DIF would be down to P202.85 billion if you slash it by P107.23 billion.

However, PDIC president Bobby Tan said the DIF’s current level is more than P250 billion, which he said is more than enough to meet the institution’s obligations to insured depositors.

At the Bankers’ Night, speaking to reporters, he also allayed concerns over the DIF, saying that bank deposits are safe and adequately covered.

But, as I said, bankers, whose premium payments are the reasons why there is a DIF in the first place, aren’t exactly comfortable with the move. Some were actually surprised that the government is touching money that essentially belongs to depositors.

“Because it is our depositors’ money, not the government’s, it is private sector money and it should not be meddled with by free-spending legislators,” said a ranking official of a major bank.

Another banker said that if the government would be tinkering with PDIC’s DIF, then banks’ insurance premiums – the amount that banks pay to PDIC so that their depositors’ money is insured – should be reduced.

PDIC builds up its DIF primarily through assessments of banks at an annual flat rate of one-fifth of one percent of their total deposit liabilities.

To illustrate, if a bank has total deposit liabilities of P2 trillion, its total deposit insurance premium to be paid to PDIC would be one-fifth of one percent of P2 trillion, which is roughly P4 billion.

Now I understand why banks aren’t exactly comfortable seeing their premium payments used for other projects other than the DIF.

As one banker said, “Ang laki ng binabayad namin!” In short, it’s not a small amount for them to just shrug it off.

More economic activities

The Department of Finance (DOF), in a statement it issued on Sunday perhaps to douse cold water on the issue, said the P107.23 billion which the government reallocated from PDIC will be used to boost economic activities.

“These projects will spur more economic activities that are expected to lead to higher deposits in banks and the growth of financial institutions to provide more financial products and services to Filipinos nationwide,” the DOF said.

Some of the projects the DOF cited include the Protective Services for Individuals and Families in Difficult Circumstances/Assistance to Individuals in Crisis Situations; the Philippine Food Stamp Program and the Financial Subsidy for the Purchase of Photovoltaic Mainstreaming or the Solar Home System.

The DOF said the funds have also supported counterpart financing for foreign-assisted projects.

These include the Panay-Guimaras-Negros Island Bridges; the Metro Manila Subway Project; the Philippine Multi-Sectoral Nutrition Project; the Mindanao Inclusive Agriculture Development Project; the Cebu-Mactan Bridge and Coastal Road Construction Project; the North-South Commuter Railway System; the Support to Parcelization of Lands for Individual Titling Project; the Teacher Effectiveness and Competencies Enhancement Project and the Philippine Fisheries and Coastal Resiliency Project, among others.

“These projects are envisioned to drive economic growth by generating employment, boosting incomes and reducing poverty, creating a positive multiplier for society,” the DOF said.

This all sounds good and reassuring for sure, but it doesn’t address bankers’ concerns. And I argue that it still doesn’t justify reallocating funds meant to keep our bank deposits safe.

Higher deposit insurance coverage

In any case, the PDIC said it plans to raise the deposit insurance coverage of P500,000 per depositor per bank this year. The amount has not changed since 2013.

It would be good to raise this amount to P750,000 or even up to a million per depositor per bank. This way, more depositors would benefit as more deposits would be insured. A higher insurance coverage per depositor would also help ensure the DIF would be used for the purpose it was intended for. In short, there wouldn’t be a reason for the government to touch the funds again.

PDIC’s Tan said raising the insurance coverage, which does not require legislation, will likely happen this year.

This, as I said, is good news for depositors.

Siphoned idle funds

As for the reallocated P107.23 billion, the Marcos administration must subject it to an audit by the Commission on Audit if only to assure the public, including bankers, that the money is indeed being put to good use.

And while we’re at it, other siphoned funds must likewise be audited – PhilHealth’s P90-billion idle funds, the Maharlika’s funds from the Development Bank of the Philippines and Land Bank of the Philippines and all the other idle funds they’ve touched or may soon be dipping their hands into, in the future.

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Email: [email protected]. Follow her on Twitter @eyesgonzales. Column archives at EyesWideOpen on FB.