THE MONETARY Board last week ordered the closure of two rural banks—one in Camarines Sur and the other in La Union.
In a Dec. 10 circular, Bangko Sentral ng Pilipinas Deputy Governor Nestor A. Espenilla Jr. said the Monetary Board had decided to prohibit Peñafrancia Rural Bank of Calabanga (Camarines Sur) Inc. from doing business in the country.
Also, the rural bank’s assets and affairs were placed under receivership pursuant to Section 30 of Republic Act No. (RA) 7653 or The New Central Bank Act, Espenilla said.
Under RA 7653, a bank is put under receivership if it was unable to pay its liabilities; has insufficient realizable assets to meet liabilities; cannot continue in business without involving probable losses to its depositors or creditors; or has willfully violated a cease and desist order that has become final, involving acts or transactions which amount to fraud or a dissipation of the assets of the institution.
The Monetary Board had designated state-run Philippine Deposit Insurance Corp. (PDIC) as Camarines Sur bank’s receiver.
In a separate circular also issued on Dec. 10, Espenilla announced that Rural Bank of Caba (La Union) lnc. had likewise been placed under PDIC receivership.
On its website, PDIC said it was the statutory receiver as well as liquidator of closed banks in the country.
PDIC also takes over the banks ordered closed by the Monetary Board; administers closed banks’ assets, records and affairs; as well as preserves and disposes such assets “for the benefit of the creditors and uninsured depositors,” it added.
“When the Monetary Board orders the liquidation of a bank that has been placed under receivership, its assets are managed, liquidated and distributed to creditors and uninsured depositors according to the preference and concurrence of credits as provided for by the Civil Code of the Philippines,” PDIC said.
Data on PDIC’s website showed that as of end-September, it has five rural banks under receivership, on top of 364 banks under liquidation.