Probe of 41 bank closures sought | Inquirer News
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Probe of 41 bank closures sought

By: - Reporter / @cynchdbINQ
/ 01:59 AM June 24, 2012

A party-list lawmaker has asked the House of Representatives to investigate the collapse of 41 banks in the last 18 months which affected more than 547,000 depositors and displaced 2,000 bank employees.

LPG Marketers Association Rep. Arnel Ty, a member of the committee on banks and financial intermediaries, said the bank failures sent a bad message on the soundness of the banking system.

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“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.

Unsafe banking practices include excessive reliance on large, high-cost or volatile deposits or borrowing, including the offering of interest rates on such funds at 50 percent more than prevailing industry rates.

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

Ty has also sought the help of the Department of Labor and Employment (DOLE) in finding new jobs for the displaced bank employees.

He said that more than 2,000 employees had been rendered jobless as a result of the closure of the 41 banks which had a combined network of 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 up by the bigger universal and commercial banks that continue to expand,” Ty said.

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

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TAGS: bank closures, bank employees, banking practices, banking system, Department of Labor and Employment, House of Representatives, LPG Marketers Association Rep. Arnel Ty, PDIC, Philippine Deposit Insurance Corporation
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