Bank depositors distressed; 2,000 employees displaced

OVER 547,000 depositors have been distressed by the collapse of 41 banks in the last 18 months.

The increasing number of lenders biting the dust has prompted Representative Arnel Ty, a member of the House committee on banks and financial intermediaries, to push for a legislative inquiry.

“We have to ascertain whether existing laws are adequate to discourage unsafe, unsound and fraudulent banking practices, protect depositors, promote savings, support responsible credit, and reinforce public confidence in the (banking) industry,” said Ty, who represents the LPG Marketers’ Association (LPG-MA) sectoral party in Congress.

Unsafe banking activities include the excessive reliance on large, high-cost or volatile deposits or borrowing, including the offering of interest rates on said funds that are 50 percent higher than prevailing industry rates.

Under the law, the undue dependence on solicitation and acceptance of brokered deposits and spending large sums on commissions and referral fees to generate deposits may also constitute unsound banking practices.

Meanwhile, Ty has sought the help of the Department of Labor and Employment (Dole) in finding new jobs for the dislocated staff of the ruined lenders.

He said more than 2,000 employees have been thrown out of work as a result of the closure of the 41 banks that had a combined 220 branches.

“The Dole and the Bankers Association of the Philippines should find ways to absorb the displaced personnel in the new branches being put by the bigger universal and commercial banks that continue to expand,” Ty said.

Ty made the statement as the state-run Philippine Deposit Insurance Corp. (PDIC) began paying the claims of depositors of Export and Industry Bank, which was shut by the Bangko Sentral ng Pilipinas (BSP) on April 27.

The 50-branch thrift was among the three larger banks recently taken over by regulators due to severe liquidity issues and their inability to service withdrawals.

The two others were the 20-branch LBC Development Bank and the 62-branch Banco Filipino Savings and Mortgage Bank.

Ty previously filed House Resolution 1749, which sought an inquiry, in aid of legislation, into LBC’s collapse.

He has also been prodding the PDIC to take strong legal action against the officers of collapsed banks found to have perpetrated fraud, resorted to self-dealing or committed other violations.

The 41 banks padlocked by the BSP in the last 18 months are on top of 32 mostly rural lenders closed in 2010. (PR)