MANILA, Philippines -- Three days after going into a bank holiday and failing to service withdrawals of clients, Banco Filipino Savings and Mortgage Bank (BF) was finally placed under receivership of the Philippine Deposit Insurance Corp. (PDIC) on Thursday.

In a meeting on Thursday, the Monetary Board of the Bangko Sentral ng Pilipinas decided to place BF under receivership, saying the thrift bank has proven to be unable to rescue itself from its financial woes.

"The MB [Monetary Board] took note of the failure of the board of directors/management of BF to restore the bank's financial health and viability despite considerable time given to address its financial problems, and after according the requisite due process," the BSP said in a statement read by deputy governor Nestor Espenilla Jr. in a press conference.

In the press conference, Espenilla, head of the BSP's bank supervision division, said that BF has been losing since 2002, and that its losses averaged at P2 billion year since 2007. He said that in the last nine months, losses of BF has been averaging P277 million.

Moreover, he said, the liabilities of BF have far outweighed its liquid assets. The net realizable assets of BF has been standing at negative P8.4 billion, he said.

Espenilla said the BSP actually granted BF an emergency loan in 2002 worth P3.5 billion. Espenilla said that of the amount, P2.6 billion has remained unpaid.

The BSP executive said it has been the policy of the central bank to help an ailing bank recuperate from financial distress before placing it under receivership, noting that such a move has been consistent with the objective of helping maintain stability of the entire banking system.

Amid its bank holiday, BF was asking the BSP for another emergency loan, this time worth P3 billion, to help it from its financial distress. However, the BSP decided not to grant the emergency loan given its insolvency.

Due to its insolvency and the opinion of the Monetary Board that BF had no capacity to restore its financial health and pay the loan, the BSP's MB decided not to grant the loan. Espenilla said that for a bank to be granted an emergency loan, such a loan should be approved by at least five of the seven members of the Monetary Board.

Espenilla said BF did not get the required number of votes to get the emergency loan, but declined to be more specific about the exact figure.

"In deciding to place BF under receivership, the MB took the following into consideration: BF is unable to pay its liabilities as they become due in the ordinary course of business; BF has insufficient realizable assets to meet its liabilities; BF cannot continue in business without involving probable losses to its depositors and creditors," the BSP said in its statement.

Espenilla said the BSP has also found BF engaging in unsound banking practices.

BF was offering deposit interest rates that were much higher than market average, thus further placing its financial condition at risk. He said BF was offering deposit interest rates of between 6.5 and 14 percent compared with the market average of 1 to 2 percent.

Moreover, he said Banco Filipino has also engaged in unsound lending practices. Of the P4.1 billion worth of outstanding loans it has extended, at least half were lent to entities related to officers and owners of the bank.

When a bank is placed under the receivership, all of the bank's remaining assets and outstanding liabilities shall be taken over by PDIC. PDIC is also responsible for paying deposit claims of clients of the bank.

Under the charter of PDIC, it is mandated to pay valid deposit claims of up to P500,000 per depositor.

In a separate statement, PDIC has assured the depositors of BF that valid deposit claims would be paid and that it would complete the processing of claims as soon as possible.

"PDIC President Jose Nograles has directed the mobilization of the entire organization to fast-track the payment of deposit insurance," PDIC said in the statement.

Data from the central bank showed that BF has 177,652 depositors with total deposits of P15 billion.

Furthermore, 97 percent of the depositors have deposits of P500,000 and below and are thus covered by deposit insurance.

Elmore Capule, deputy general counsel of the BSP, said in the same press conference that deposits in excess of P500,000 might be recovered, but hinted that such a probability would be small.

Once a bank is placed under receivership and proven to be incapable of being rehabilitated, PDIC sells its assets and proceeds are distributed among creditors and other people or entities that have claims against the bank, according to PDIC.

He said deposits in excess of P500,000 would be paid if other liabilities, such as obligations to creditors, were paid.