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Tuesday, September 05, 2006
Bank lost heavily; did BSP fail in its job?
By Elias O. Baquero
Sun.Star Staff Reporter
The audited reports of the Bank of Cebu financial statements showed that the bank already incurred heavy losses in recent years.
It had a net loss of P29.6 million in 2003 and P28.6 million in 2004, which resulted in capital deficiency of P113.8 million and P77.3 million, respectively.
The financial statements, which were submitted to the Securities and Exchange Commission by Luis Cañete and Company, an accounting firm, also stated that the management recognized the problem and was taking steps to improve its operations and to comply with the minimum capital requirements.
Bank of Cebu operations chief Leopoldo Solano yesterday said that had the examination group of the Bangko Sentral ng Pilipinas (BSP) only done its homework and examined the bank for this year, before making an “onerous and misleading” report to the Monetary Board, the receivership could have been avoided.
Solano said the BSP examination group did not examine the bank’s records from June 2005 to June 2006, despite the prodding of the bank’s management.
“There is a feeling from both bank’s employees and its depositors that the BSP had been remiss of or irresponsible on its duty,” Solano said.
The Monetary Board ordered the closure of the Bank of Cebu last Thursday, after it found that its assets are not enough to cover its liabilities.
The bank was given 90 days to come up with a rehabilitation plan.
Solano said the bank and its clients would like a congressional investigation if only to correct, by legislation, a flaw in the law that allows sweeping moves that could erode the public’s trust and confidence in the banking industry.
The Bank of Cebu was incorporated on Dec. 14, 1961 as a private development bank under the provisions of Republic Act 4093. The bank is owned by Peninsula Equity Realty Assets Inc. and has a main office and six branches.
It had 81 employees.
A Bank of Cebu official, who requested anonymity, said they believe former bank officials who were booted out on orders of the Monetary Board were behind the bank’s closure.
“We are discussing with our technical people and lawyers the shortest route to reopen the bank,” said the bank official.
He said the bank’s closure seemed orchestrated because the BSP Monetary Board’s order was released in the afternoon of Aug. 31, a copy of which was furnished to Philippine Deposit Insurance Corp. (PDIC) on the same day.
The PDIC, in turn, furnished copies to the bank’s board of directors, and padlocked the bank the next day.
“It seems we are under martial law. Congress should conduct an investigation,” said the official.
For Bisaya stories from Cebu. Click here. (September 5, 2006 issue)
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