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BSP orders closure of two rural banks

THE BANGKO SENTRAL ng Pilipinas (BSP) ordered the closure of Batangas-based Maximum Savings Bank., Inc., mandating the Philippine Deposit Insurance Corp. (PDIC) to take over the rural bank.

The lender was prohibited from doing business on Nov. 7 pursuant to Section 30 of the amended Republic Act. No. 7653 or the New Central Bank Act, according to a circular letter from the central bank.

“Maximum Savings Bank, Inc. has a network of three branches with its main branch located in Batangas City and the other branches located in Sabang and Calapan City, both in Oriental Mindoro,” the BSP said in a statement.

Aside from Maximum Savings Bank, AMA Rural Bank of Mandaluyong, Inc. was also ordered to shut down. The latter has said it will challenge the closure and will seek ways to resume their operation.

“AMA Bank assures our clients, employees, and stakeholders that we are fit to operate in every capacity. We challenge the closure as unreasonable. Guided by legal measures, we are exploring all possible courses of actions to resume our full operations and continue to serve you,” the bank said in a statement on Sunday.

With its main branch in Mandaluyong, AMA Rural Bank of Mandaluyong has a total of 10 branches that are in Pasig; Cainta and Morong, Rizal; Bacoor, Cavite; San Pablo and Calamba in Laguna; Baliuag, Bulacan; San Fernando, Pampanga; and Baguio City.

“The bank’s management regrets this development as the bank based on its latest financial statement filed with the Bangko Sentral ng Pilipinas (BSP) is the 15th largest rural bank in the country in terms of assets with total resources at P2.76 billion as of end September 2019,” the bank said.

“The bank is considered as the fifth largest in capitalization with P1.04 billion, and a net loan portfolio of P1.90 billion, consisting mainly of teacher salary loans, estimated to be the 13th largest among rural banks. The bank is liquid with its shareholders’ capital injection of an additional P405 million, and a total deposit due from BSP/other banks amounting to P246 million,” it added.

The BSP assured depositors of both shuttered banks that the PDIC will be “ready to serve” valid deposit claims and complete the processing of claims in accordance to PDIC’s guidelines.

Moreover, the central bank assured that the shutdown of both rural lenders will not do harm to the Philippine banking system considering their “relatively small sizes.”

“As of 30 June 2019, their total assets are equivalent to only 0.02% and 0.002%, respectively, of the total assets of the banking system. The overall Philippine banking system remains sound and stable with ample liquidity and high level of capitalization as BSP continues to promote good governance among its supervised institutions to ensure the soundness of the banking system and to protect the interest of the banking public,” the BSP said.

Despite the closure of more rural banks this year, central bank data showed that total assets of small lenders grew 4.9% to P275 billion from P262 billion as of end-June last year. — L.W.T. Noble

The post BSP orders closure of two rural banks appeared first on BusinessWorld.

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