Depositors remain calm amid LBC bank closure

DESPITE the closure, some depositors of the LBC Development Bank are confident that they can get their savings back owing to their previous experience with other closed banks.

Some depositors went to the lone  LBC Bank branch in Gorordo Avenue, Cebu City, a day after operations were suspended.

Retired teacher Virginia Kho said the bank holds her savings from three decades of work as a teacher.

Kho said she was a victim of bank closures two other times before and knows what to expect of a bank under receivership of the Philippine Deposit Insurance Commission (PDIC).

“The last time was with one of the rural banks of the Legacy Group of Companies in Naga City. I’m confident that I can still get my deposits because I was able to receive my money after the past two banks also closed,” she said.

Kho said she always makes sure that the bank she transacts with is under  the PDIC so her account is guaranteed by the state.

The latest LBC Development bank closure won’t stop her from transferring to another bank.

“I still think it is safer to  deposit my money in the bank,” she said, than keep cash at home.

Dido Abenido has a time deposit in the LBC Bank for his children’s education. Last week, he withdrew the interest on his deposits.

“I think I will still put my money in the bank or maybe in a cooperative. I know I can still get my money back but I hope the process will be faster because last time, it took PDIC too long before everyone got their deposits back,” he said.

Depositors are invited to a  forum this Friday at 9 a.m. in Sinulog Hall, Cebu City Public Library on Osmena Boulevard.

Claim forms will be distributed. Depositors are asked to bring with them evidence of deposit like their Savings Passbook and Certificate of Time Deposit.

Jaime Estella, president of the Cebu Bankers’ Association, said the incident with LBC Bank is isolated and doesn’t  reflect the condition of the banking industry, which he considers still healthy.

The BSP said yesterday the LBC Development Bank had been making huge cash advances to its sister company, remittance firm LBC Express, which partly became the reason why the thrift bank eventually became insolvent.

BSP Deputy Gov. Nestor Espenilla Jr. said based on their investigation, LBC had been giving cash advances to LBC Express so that the latter could facilitate the delivery of remittances to clients much faster.

Some of the cash advances remained unpaid, thus causing the bank’s financial burden.

Espenilla said this was one of the reasons why the bank was placed under the Prompt Corrective Action (PCA) program of the central bank.

LBC had been under the PCA program for more than a year before its closure last week, the official said.

Under the PCA program, banks are tightly monitored and are given directives on how to improve their financial standing.With Inquirer