Press Release
March 16, 2011

Govt urged to help depositors of cash-strapped Banco Filipino

Sen. Ralph G. Recto yesterday said depositors of the Banco Filipino Savings and Mortgage Bank (Banco Filipino) should be assured by state regulators that they would be able to recover their cash deposits from the troubled thrift bank.

"What is clear is that hard-earned cash of hundreds or even thousands of depositors of Banco Filipino are now trapped with the inability of the bank to dispense cash," Recto, Senate ways and means chair, said.

The senator nevertheless asked the Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) to see to it that depositors are protected should the bank finally close down and that this would not be repeated in other similarly-situated banks.

Recto said BSP should run to the rescue of Banco Filipino "not to save its owners and board of directors but the hapless depositors who are now jittery over the fate of their money deposits."

"We want to know from the BSP and its monetary board, why the thrift bank has not been given its much needed court-sanctioned attention so that the depositors are protected," he said.

He stressed he was not siding with the Aguirres, which control the bank, but is worried on the impact of the branch closures to its bank clients and to the banking sector in general.

Recto noted that the BSP, under the rebuilding plan approved by the Makati Regional Trial Court following the 1994 Supreme Court order re-opening the bank, should have infused P25 billion in financial assistance to the thrift bank.

But officials of Banco Filipino led by former Securities and Exchange Commission chair Perfecto Yasay have decried the BSP's inaction on their emergency loan requests.

"The BSP, regardless of the real story behind Banco Filipino's money woes, should calm the banking sector by ensuring the depositors that their money are safe and intact," Recto said.

"The tsunami of withdrawals must be stopped before the contagion spreads out to other small troubled banks and trigger a 8.9 magnitude quake in the banking sector," Recto added, noting that a few more banks are also facing the same money woes and which are also awaiting the "rescue" of the BSP.

The senator said the heavy withdrawals in the past few days were apparently the result of malicious campaign against the bank describing it as problematic and mismanaged.

"If these are really true, the BSP has within its powers to discipline the bank and make it answerable to their clients," Recto pointed out.

"I read in the papers that the BSP has asked the bank to explain their closures. The other relevant question, I think, is that why the BSP has not granted the bank its request for emergency loan assistance?"

Recto stressed the BSP must be very clear on its stance on Banco Filipino: would it be up for receivership or direct takeover to stave off a looming bank run.

Banco Filipino was forced to close down some of its branches Tuesday after being hit by heavy withdrawals amid rumors that it was in deep financial trouble.

Banco Filipino was shut down by the old central bank during the Marcos regime in the 1980s but was reopened in 1994 after the Supreme Court ruled that its closure was arbitrary.

The bank currently has about P17 billion worth of deposits in more than 60 branches across the country. Bank officials claimed that the bank has net capital assets of P25 billion, which was very large for a thrift bank.

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