PDIC files raps vs 8 Banco Filipino execs over unsound practices
MANILA, Philippines—Philippine Deposit Insurance Corp. (PDIC) has filed charges against eight former officials of Banco Filipino Savings and Mortgage Bank, which was ordered closed in March 2011, in connection with its alleged unsafe and unsound banking practices.
The case filed by PDIC with the Department of Justice adds to that already filed by its co-regulator, the Bangko Sentral ng Pilipinas.
Banco Filipino officials charged by PDIC were the following board directors and members of the executive committee: Teodoro O. Arcenas Jr., Albert C. Aguirre, Maxy S. Abad, Catherine C. Aguirre-Hernandez, Delfin M. Dimagiba, Ramon E. Montano, Orlando O. Samson and Francisco A. Rivera.
PDIC alleged that the bank committed unsafe and unsound practices by extending a total of P3.08 billion worth of loans to its related entities, and by not collecting payments for the bulk, or P2.99 billion, of these loans.
This bulk had remained overdue for four to seven years, PDIC said.
The BSP ordered the closure of Banco Filipino in March last year, a few days after the bank failed to service withdrawals of clients.
The central bank declared that Banco Filipino was insolvent, and that its continued operation could put at risk assets of depositors.
The BSP said that at the time of the bank’s closure, its liabilities exceeded its assets by P8.4 billion. It also said that Banco Filipino had been posting net losses since 2002 and that its net losses averaged P2 billion a year since 2007.
Also, deposits to Banco Filipino by the time of its closure stood at P15 billion, of which P9.4 billion was covered by deposit insurance provided by PDIC.
Last year was the second time that Banco Filipino was shut down. The first time was during the Marcos regime in the 1980s. The bank was reopened in 1994 after the Supreme Court ruled that its closure had been arbitrary.
For the second time, Banco Filipino contested its closure, denying the charges against it by regulators. Officials of the thrift bank also filed charges against regulators of the BSP, saying that the closure order on the bank was done in bad faith.
Banco Filipino won the favor of the Court of Appeals, which recently ordered the reopening of the bank. But the bank has not yet reopened, as the BSP filed a motion for reconsideration before the CA.