PDIC takes over bank partly owned by LWUA

SAN PEDRO, Laguna, Philippines—The Philippine Deposit Insurance Corp. on Friday took over the management and administration of a controversial Laguna thrift bank that dismissed Local Water Utilities Administration  chief Prospero Pichay had purchased with the government agency’s funds.

On Friday morning, representatives of the PDIC served the takeover notice on the LWUA office in Quezon City, informing it of the takeover of the Express Savings Bank Inc. (ESBI) by the PDIC.

“I was told that ESBI was unable to pay its liabilities as they become due… and cannot continue in business without incurring probable losses to its depositors and creditors,” said LWUA acting administrator Salvador Ner.

Reading a portion of the PDIC memorandum over the phone, Ner said, “according to RA 7653, the receiver (PDIC) shall determine as soon as possible, but not later than 90 days from takeover, whether the institution may be rehabilitated or may be permitted to resume business.”

Pichay, who was appointed chairman of the water agency by then President Gloria Macapagal-Arroyo, ordered the purchase by LWUA of 60 percent of the bank’s common shares in 2009.

The Office of the Ombudsman on Monday ordered the dismissal of Pichay based on the plunder case filed against him, as well as of former LWUA acting administrator Daniel Landingin and acting deputy administrator Wilfredo Feleo, for the unauthorized investment in the rural bank.

The PDIC is now preparing for the deposit and insurance payout of all valid accounts in ESBI, according to a PDIC source who asked not to be named for lack of authority to speak on the matter.

The source said among those being evaluated for the payout would be the P780 million LWUA fund (P80 million used in the purchase of shares; P400 million as investment; P300 million as deposit).

“What we are going to do is to write (PDIC) a letter expressing our desire to get (the LWUA funds) back. If we cannot get our money, a lot of our projects [will be affected],” said Ner.

ESBI has its main bank in Cabuyao and three other branches in the cities of Biñan, Sta. Rosa, and Calamba, all in Laguna province.

LWUA acting chairman of the board Ephyro Luis Amatong said they had “repeatedly” asked the ESBI for the recall of the P780 million since the new set of LWUA directors assumed office on June 6.

He said this was in accordance with the directive of the Monetary Board, which found that ESBI was not a government depository bank.

The directive of the Monetary Board came out in April 2010, but the previous administrator failed to act on it.