A Compostela Valley rural bank has been forced into receivership after suffering losses due to some of the country’s most devastating typhoons.
The Bangko Sentral ng Pilipinas (BSP) at the weekend announced that the Rural Bank of Montevista was ordered shut by the Monetary Board at its meeting last Thursday.
The Davao del Norte-based bank, one of Mindanao’s most reputable small lenders, was placed under the Philippine Deposit Insurance Corp.’s (PDIC) receivership on Friday.
Earlier in the week, the bank’s management announced that it had declared a bank holiday, telling regulators that it could no longer service deposits of its clients.
Montevista had about a dozen branches and 23,522 depositors.
The bank’s president Felix Maceda said loan defaults had risen sharply following the effects of recent typhoons on the company’s borrowers, many of which work as farmers.
“The rural folk, including the rural bank, are victims of the calamity that we have no control of,” Maceda said.
Maceda said most of the bank’s loan portfolio had been earmarked for microlending operations.
This was “in response to the government’s earlier call to serve the poorest of the poor through micro-financing loans.”
Many of the bank’s clients had their farms damaged by Typhoon “Pablo” in December 2012.
The same areas were likewise affected by flooding caused by the storm “Agaton” earlier this year.
“Pablo and Agaton, as well as other factors, and borrowers, mostly small micro-finance beneficiaries, have stopped paying their loans, causing serious cash-liquidity problems,” the bank’s president said.
Under existing rules, deposits in closed banks are covered up to a maximum of P500,000.
Likewise, depositors with P50,000 or less need not file deposit insurance claims with the state deposit insurer. Their accounts would be automatically paid by the PDIC.
The Rural Bank of Montevista has been repeatedly recognized under the Rural Bankers Association of the Philippines’ Microenterprise Access to Banking Services (MABS) project, a program funded by the US Agency for International Development, for extending loans that helped lift the lives of many small entrepreneurs in Mindanao.