CITY OF MALOLOS, Bulacan—The recent shutdown of a cooperative bank here has triggered a sudden withdrawals of money from other cooperative facilities, a Bulacan official reported.
Board Member Michael Fermin, chair of the provincial board’s committee on cooperatives, said the May 23 foreclosure of the Cooperative Rural Bank of Bulacan (CRBB) due to insolvency may have panicked some depositors of other multipurpose cooperative banks.
There are 8,000 cooperatives in the province offering some form of banking services.
“We have heard of incidents of huge withdrawals by depositors in other cooperative banks,” Fermin said, adding that this has compelled the committee to set a meeting with officers and representatives of these cooperatives to evaluate their condition and set up measures to prevent a bank run.
The committee also plans to provide the cooperatives with a detailed background on CRBB because “they should know how CRBB has collapsed,” he said.
He said an understanding of CRBB’s financial operations may help the cooperatives fix their own operations.
According to Fermin, CRBB invested in real estate mortgaged by Bulacan clients, which turned out to be less valuable than earlier appraised.
However, some cooperative banks told the Inquirer that they had not experienced the problems that have drawn the attention of the provincial board.
Gregoria Simbulan, president of the Bulacan Chamber of Commerce and Industry (BCCI), said the CRBB foreclosure reveals the apparent vulnerabilities of cooperative banking.
“The BCCI calls on the Bangko Sentral ng Pilipinas to review its regulatory framework over cooperative banks and other smaller banks,” she said.