Bank closure triggers panic withdrawals in Bulacan

CITY OF MALOLOS—The recent shutdown of a cooperative bank here has triggered a round of sudden withdrawals from other cooperative facilities, a Bulacan official reported.

Board Member Michael Fermin, chair of the provincial board’s committee on cooperatives, said the May 23 foreclosure of the Cooperative Rural Bank of Bulacan (CRBB) due to insolvency may have panicked some depositors of other multipurpose cooperative banks.

There are 8,000 cooperatives in the province which offer some form of banking service.

“We have heard of incidents of huge withdrawals by depositors in other cooperative banks,” Fermin said, adding that this had compelled the committee to set a meeting with officers and representatives of these cooperatives to evaluate their condition and set up measures that would prevent a bank run.

The committee also plans to provide the cooperatives with a detailed background of CRBB because “they should know how CRBB has collapsed,” he said.

He said an understanding of CRBB’s financial operations may help the cooperatives fix their operations.

According to Fermin, CRBB invested in real estate mortgaged by Bulacan clients, which turned out to be less valuable than earlier appraised.

However, some cooperative banks told the Inquirer that they have not experienced the problems that have drawn the attention of the provincial board.

Gregoria Simbulan, president of the Bulacan Chamber of Commerce and Industry (BCCI), said the CRBB foreclosure reveals the apparent vulnerabilities of cooperative banking.

“The BCCI calls on the Bangko Sentral ng Pilipinas to review its regulatory framework over cooperative banks and other smaller banks,” she said. Carmela Reyes-Estrope, Inquirer Central Luzon