BSP orders closure of rural bank in Cagayan

BSP orders closure of rural bank in Cagayan

Source: Lawrence Agcaoili

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has ordered the closure of Cagayan-based Providence Rural Bank Inc., the first bank to be closed this year, as part of the regulator’s efforts to weed the banking industry of weak players.

 The Monetary Board issued MB Resolution 291.B last Feb. 27 prohibiting the rural bank from doing business in the country and directing the state-run Philippine Deposit Insurance Corp. (PDIC) to take over and liquidate the closed bank.

 Latest data showed Providence Rural Bank, a single-unit rural bank located on National Highway cor. Aglipay St., Brgy. Bulala in Camalaniugan, Cagayan had 2,431 deposit accounts with total deposit liabilities of P33.4 million.

 PDIC assured depositors that all valid deposits and claims shall be paid up to the maximum deposit insurance coverage of P500,000.

 The state-owned deposit insurer is allowed under RA 3591 as amended by RA 10846 to accept letters of intent from interested banks and non-bank institutions for possible purchase of assets and assumption of liabilities as a mode of liquidating the closed rural bank within 60 days from the takeover.

Ma. Ana Carmela Villegas, executive vice president at PDIC, said the law states that a bank placed under liquidation shall in no case be re-opened and permitted to resume banking business.

 Furthermore, Villegas said through Bulletin 2020-01 the law also expressly provides that banks closed by the Monetary Board shall no longer be rehabilitated.

 Upon placement of the Providence Rural Bank under liquidation, she said the powers, functions and duties of the directors, officers and stockholders of the bank are terminated.

Moreover, all assets of the closed bank are deemed to be in custodia legis in the hands of the receiver and may not be subject to attachment, garnishment, execution, levy or any other court processes.

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