Banco Filipino can reopen even if BSP appeals case

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Wednesday, February 1, 2012


AN OFFICIAL of the Banco Filipino Savings and Mortgage Bank (BFSB) said the thrift bank can operate soon even if its opponents will appeal the decision with the Supreme Court.

“The New Central Bank Law says that the Bangko Sentral ng Pilipinas can summarily close a bank under Section 30 without any hearing unless the Monetary Board decision is set aside by the Court on a finding of grave abuse of discretion. The decision must be immediately implemented unless the SC issues a temporary restraining order," Banco Filipino vice chairman Perfecto Yasay told Sun.Star.

In a 50-page decision, the Court of Appeals on January 27 ordered the BSP to reopen Banco Filipino, which was put under receivership that effectively stopped its operations nationwide since March last year.

Penned by Associate Justice Agnes Reyes-Carpio, the CA's former Special Fourteenth Division said the BSP should also implement the P25-billion worth of financial assistance asked by the thrift bank.

The appellate court ruled that the BSP committed grave abuse of discretion when it refused to give Banco Filipino an emergency loan despite proving that it is not insolvent, a condition when liabilities exceed assets.

However, records provided by BSP-appointed comptroller Director Leilanie Canullas show that the total assets of Banco Filipino is P25.201 billion as opposed to its total liabilities of P23.598 billion, for a net value of P1.602 billion as of December 31, 2010.

One of MB's members, lawyer Nelly Favis-Villafuerte, even issued a memorandum seeking MB’s reconsideration of its decision to declare BF insolvent considering that it was not given notice of advance findings and accorded five days to refute the findings of the Supervision and Examination Sector.

In a separate report to the Court, bank stockholders said that the total appraised value of its real properties amounts to P37.89 billion and that its deposit liabilities only amounted to P19.40 billion as of March 21, 2011.

By comparison, BSP had said that liabilities of Banco Filipino exceeded its assets by P8.4 billion as of September 30, 2010. This paved the way for the regulator to put the bank under receivership.

As a result, the Court nullified Monetary Board Resolution No. 372-A issued on March 17 last year as the Court assailed the BSP for failing to explain to the public why they voted against the grant of the emergency loan.

"As proven in this case, haste makes waste. Had respondents BSP and MB exercised due diligence, depositors and creditors would have been spared from the agony and the nightmare this case had caused. They would not have experienced sleepless nights and serious anxieties," the decision read.

Fe dela Cruz, the BSP's director for corporate affairs, was unavailable for comment as of this posting Wednesday.

The Court noted that prior to the bank's closure, it had around P16 billion deposit accounts which were reduced substantially as the state-run Philippine Deposit Insurance Corporation (PDIC) started paying depositors and creditors.

Fully aware with the implication of the bank’s reopening, the appellate court said depositors would "seize every available opportunity to withdraw their deposits and to transfer them to other banks which they perceive to be healthier and safer."

The Court held that the BSP should implement the financial assistance program within 30 days so that Banco Filipino can still continue its business with "safety, and confidence to its creditors, depositors and the general public."

The appellate court noted that before the closure of the bank, the business plan crafted by the BSP, MB and BF which provided for the grant of P25-billion emergency loan, was already up for approval.

However, with the expected heavy withdrawals on the first day of the resumption of the BF's business, the appellate court said adjustments in the business plan may be necessary.

BSP records show that Banco Filipino has 177,652 depositors, majority of which are small depositors fully entitled by deposit insurance of up to P500,000 each.

Banco Filipino was first closed down in 1985 for failing to pay its loans, according to the then Central Bank of the Philippines. But the High Court ruled the closure illegal in 1991, allowing the Aguirre-led bank to operate in 1994. (Virgil Lopez/with JCV/Sunnex)

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