Gov’t insurer settled less claims in 2012

The Philippine Deposit Insurance Corp. settled less claims in 2012 as the number of banks that closed down declined from that of the previous year.

The state insurer paid P3.76 billion in deposit insurance claims resulting from bank closures last year. This was nearly 70 percent lower than the P12.36 billion settled the previous year.

“We spent less last year because there were fewer banks that closed down,” said Sandra Diaz, PDIC senior vice president.

In a briefing last Friday, she said 24 banks were closed last year compared with the 29 reported in 2011.

Also, the 24 banks that ended operations last year had 97 branches, while the 29 banks that closed down in 2011 had 125 branches.

The insurance claims paid last year represented about 84 percent of the total insured deposits placed in the closed banks. This means PDIC still has to settle some of the insured deposits this year.

In 2011, the amount of insurance claims settled represented 94 percent of the total insured deposits placed in the ailing banks.

The deposit insurance fund, or the pool of money used by PDIC to settle insurance claims, stood at P81 billion by the end of 2012, up by 17 percent from the P69.4 billion reported the previous year.

For Valentin Araneta, president of PDIC, the latest amount of the fund is comfortable. He said this represented 5.2 percent of total insured deposits in the country. This is slightly higher than the international benchmark of 5 percent.

By trimming the number of bank closures, PDIC hopes to spend even less on payments of deposit insurance in 2013.

Most of the banks that were ordered closed over the past two years were rural banks that had poor capitalization or management problems.

PDIC officials said the state firm would organize more road shows all over the country this year to promote incentives programs for banks that would consolidate.

Under the program, called the Strengthening Program for Rural Banks Plus (SPRB Plus), strong banks are urged to acquire weak rural banks. Banks that will consolidate under the program are entitled to incentives, such as loans and regulatory relief.

The objective of the program is to reduce the number of weak industry players, thereby curb the number of bank closures.