MANILA, Philippines?The Philippine Deposit Insurance Corp. (PDIC) said it would consider selling bonds in the near future, explaining that low interest rates at the moment has made efforts at shoring up its liquidity position a prudent exercise.
?We may look into it [selling bonds] now that interest rates are low to strengthen our balance sheet,? PDIC President Jose Nograles told the Inquirer.
He said PDIC?s deposit insurance fund?which stood at P60.5 billion as of end-2008?was still comfortable enough to meet current expenditure demands.
Now that PDIC has the option to sell bonds with sovereign guarantee, the deposit insurer may no longer seek the help of the Bangko Sentral ng Pilipinas to secure loans in case it needs additional funds to service deposit claims, Nograles said.
President Macapagal-Arroyo has recently signed into law the new charter of PDIC. The law?s key feature is the increase in the coverage of deposit insurance from P250,000 to P500,000 per person per bank.
The law allows PDIC to sell bonds with a sovereign guarantee.
The law likewise will grant tax relief to PDIC six years from now, or when the government is believed to have already substantially lowered, if not wiped out, its budget deficit.
Prior to the signing of the law, PDIC was hoping to get P14 billion from the central bank to finance the deposit claims of clients of failed rural banks under the Legacy Group. Although the deposit insurance fund proved to be sufficient so far, PDIC said it was still hoping to get a loan to serve as buffer.
The BSP, however, thumbed down the loan request. Central bank officials said the very reason for the existence of the deposit insurance fund was to service deposit claims of failed banks.
Since the fund proved to be sufficient, the central bank found no need to lend to the deposit insurer.
PDIC has started servicing claims of clients of the Legacy-owned banks since February. Nograles said the deposit insurer was committed to servicing all valid deposit claims as early as possible to maintain the public?s confidence in the banking system. Michelle V. Remo