PDIC reports rise in deposit insurance fund

The deposit insurance fund, which the government taps to pay depositors in case of bank failures, grew by 12 percent in February despite a significant number of banks that were ordered to shut down.

Philippine Deposit Insurance Corp. (PDIC) said income from investments in government securities was more than enough to cover the deposit insurance paid to depositors of closed banks.

PDIC, which manages the deposit insurance fund and is mandated to pay insurance to depositors in case of bank closures, said the fund amounted to P72.62 billion by the end of February, up from P64.91 billion a year ago.

PDIC said there were 31 banks, mostly rural banks, that were ordered closed by the Bangko Sentral ng Pilipinas last year.

PDIC said most depositors of those banks had already been paid.

The failure of 31 banks last year was blamed mainly on capitalization problems. Some, however, failed due to their involvement in unsafe and unsound banking activities.

One of those ordered closed last year was Banco Filipino Savings and Mortgage Bank (BF), which the central bank said extended too much loans to its officers and owners, and had become insolvent.

BF had 177,652 depositors with total deposits of P15 billion. Under the charter of PDIC, deposits of up to P500,000 are covered by insurance.