You’ll get your money back, PDIC assures LBC bank depositors
The Philippine Deposit Insurance Corp. (PDIC) has assured depositors of LBC Development Bank, many of them families of overseas Filipino workers, they will get back their deposits which were mainly the remittances of their loved ones working abroad.
In a statement, PDIC said all deposits covered by insurance and confirmed as valid shall be reimbursed immediately on completion of the validation process.
“PDIC assures the public, particularly depositors of LBC Development Bank, that the corporation will pay all valid accounts and deposit insurance claims as soon as possible,” the insurer said in a statement.
In a press conference, PDIC executive vice president Cristina Orbeta said it was believed many LBC Development Bank depositors were OFW families given the bank’s tie-up with courier and remittance firm LBC Express.
She said PDIC will soon announce the schedule of forums where depositors would be oriented on the insurance claim process. Such forums are normally held in the bank’s branches.
Last Thursday, the Monetary Board of the Bangko Sentral ng Pilipinas placed LBC Development Bank, the financial services arm of the LBC Group, under receivership.
Nestor Espenilla, BSP deputy governor for bank supervision, said this was because, for one thing, the bank had become insolvent—meaning the bank’s liabilities had exceeded its assets.
Espenilla said LBC bank was engaged in unsafe and unsound banking practices, such as paying higher than average interest rates for deposits.
“High return means high risk,” Orbeta said.
Espenilla said that prior to its closure, the LBC bank had been under the Prompt Corrective Action (PCA) program of the BSP. Still, it failed to improve its financial standing, he said.
Banks under PCA are subject to stricter monitoring and are given recommendations on how to improve their financial standing in order to comply with the liquidity requirements of the BSP.
“LBC Bank had been under the PCA, but it failed to improve and address the concerns of the BSP,” Espenilla said.
LBC Bank has its head office in Makati City and 19 branches nationwide. The bank has 321,516 depositors holding P6.09 billion in deposits.
PDIC said that of the deposits, P3.73 billion was covered by insurance. PDIC insurance covers deposit accounts of P500,000 and below. Bigger accounts would have to wait until the bank’s assets are fully liquidated to see if they would get anything back.
In Batangas City, LBC Development Bank depositors were “outraged” and “distraught” over its closure.
“There were a lot (of depositors that came), especially this morning, that we didn’t even have time to take breakfast,” said a PDIC representative in Batangas City.
“You could see some of them almost crying. An old woman was shaking, I saw her hands. She said her deposit was over P500,000,” the representative, who requested anonymity for lack of authority to speak, said by phone.
Maria Theresa Enojado, LBC bank manager in Naga City, said in a phone interview that she was “shocked” over the closure.
Enojado said “everything was OK and running smoothly without any problems of liquidity,” as far as she knew.
“Our main concern now is to ensure that depositors get back all their deposits and for us to get our jobs back,” she said.
In Cebu, depositors trooped to the LBC bank branches in the city after hearing the news.
The PDIC had taken over the LBC bank branch on Gorordo Avenue on Friday evening, according to the guard outside the bank. With reports from Maricar Cinco and Juan Escandor Jr., Inquirer Southern Luzon; and Jhunnex Napallacan, Inquirer Visayas
