Court of Appeals denies Banco Filipino’s plea to reopen
MANILA, Philippines—The Court of Appeals has denied the petition of Banco Filipino Savings & Mortgage Bank (BF) to be allowed to reopen after it was ordered closed by the central bank.
In a resolution, the appellate court said it found no merit in the request of the padlocked thrift bank.
“After having considered and deliberated on the petition and the comments of the respondents, as well as the respective discussions and argumentations stated therein, we do not find sufficient cause to grant it,” the appeals court said in a resolution penned by Associate Justice Agnes Reyes-Carpio.
The court said the Bangko Sentral ng Pilipinas’ decision to put BF under receivership was in order, noting that it was the role of the BSP to protect the public. It said regulatory action against a bank suffering from financial woes was necessary to maintain public confidence in the banking system.
“Unless adequate and determined efforts are taken by the government against distressed and mismanaged banks, public faith in the banking system is certain to deteriorate to the prejudice of the national economy itself, not to mention the losses suffered by the bank depositors, creditors and stockholders, who all deserve the protection of the government,” the appeals court said.
The court said the BSP was doing its job as a regulator when it ordered BF closed.
Last March, the BSP placed BF under the receivership of the state-owned Philippine Deposit Insurance Corp. (PDIC) after it monitored the poor financial condition of BF. The BSP said the thrift bank had become insolvent, noting that its liabilities exceeded its assets by P8.4 billion.
The BSP also noted BF had been losing an average of P2 billion a year since 2007.
The BSP accused BF of engaging in unsound banking practices. It said the thrift bank had been using much of the deposits of the public to extend loans to the bank’s owners and officers.
The BSP likened the practices of BF to a “Ponzi scheme,” saying the interest it had been using to pay depositors was coming primarily from new deposits rather than income from investments.
Government data showed BF had 177,652 depositors with total deposits of P15 billion.
After its closure, BF filed an appeal, saying the BSP exercised arbitrariness in closing it. The thrift bank denied claims that it was insolvent.
