Press Release
December 27, 2008

Bank secrecy waived under deposit insurance bill

The right of banks and depositors to invoke the secrecy of bank records has been dispensed with under the Senate version of the administration bill raising the maximum amount of insurance coverage for bank deposits from the present P250,000 to P500,000.

Minority Leader Aquilino Q. Pimentel, Jr. (PDP-Laban) proposed that the right to bank secrecy be waived for depositors who are availing of the insurance money to be given by the Philippine Insurance Deposits Corporation (PDIC) in case of closure of their banks due to insolvency, banking

The doubling of the amount of insured bank deposits is contained in Senate Bill 2964 which has been approved on second and third reading by the chamber. The bill has been transmitted to the bicameral conference committee where it will be reconciled with the version of the House of Representatives.

Senator Edgardo Angara, chairman of the committee on banks, currencies and financial institutions and sponsor of the measure, accepted Pimentel's proposal by incorporating it in Senate Bill 2964.

They must be open to scrutiny by the public regarding the propriety, for example, of the coverage of their deposits,? Pimentel explained.

In effect, we are moving towards that direction where the government will have a more adequate supervision even over bank deposits.?

Angara said he has no objection at all to the Pimentel proposal because if the bank has gone under, the regulator must be able to look into the reasons and underlying causes for its collapse.

Under his proposal, Pimentel said both the bank and the depositors should waive their right to bank secrecy. In the case of the depositor, that is justified since he will benefit from the insurance proceeds.

The depositor should be made aware that availing of the insurance privilege implies that he or she waives the right to bank secrecy,? he said.

Angara made it clear that the waiving of bank secrecy will apply only to the particular case where the bank is about to collapse and is being placed under liquidation by the PDIC and no other instance.

Pimentel said he introduced the proposal in the light of the experience of lawmakers who always find their investigation of misappropriation of public funds or laundering of tainted or fraudulently-obtained money stalled by the invocation of bank secrecy by the respondent banks and individuals.

The hike in maximum insurance for bank deposits will benefit more than 3l million deposit accounts or about 97 percent of existing accounts.

The increased insurance amount is intended to further protect bank depositors and to allay their fears about the safety of their deposits in the wake of the global financial crisis.

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