A claimant reported that in a July 21 afternoon visit to the PDIC office, one of so many unproductive follow-ups on the status of his claims, he saw an old woman creating a drama scene: berating and shouting at the staff. She could not understand why PDIC was insisting that her children, who were in Singapore, and her friends, had to personally appear to file claims. The old woman just wanted that she alone (not even her husband who she claimed was sick) could do the filing for all of them.
The informant could not help but notice that the old woman was clutching a bunch of yellow claim slips, leading the former to think that "she might have invited the entire barangay to deposit (sic) in Legacy banks" and doubt "whether those were real persons or just fictitious names as the number of claims filed by her is questionably humongous."
If an ordinary depositor would have cause to think that this woman is really the owner of most of those deposits, then imagine what the PDIC would conclude, especially since their charter specifically provides that in determining the amount due to a depositor, "there shall be added together all deposits in the bank
maintained in the same right and capacity for his benefit either in his own name or in the name of others." It is a foregone conclusion that the old woman will not get her way and that even if she presented all her friends, there is no guarantee that PDIC will pay all the claims. Remember the PDIC lawyer? He said that they have ways and means to go beyond what the personal info sheets indicate for the deposits in order to find out who really is the beneficial owner of questionable accounts.
It is understandable that cases of using dummies and preneed check conversions are delaying the validation of accounts, and therefore holding up (some people say grinding down) the payout of claims. However, it has been almost eight months since the closure of banks and checks are just trickling in. It is almost inconceivable that a claimant is paid for one account, while other accounts (in the same bank) opened at the same time as that paid account is still being verified- same situation for his family members who opened accounts together with the paid claimant. There have been more instances where PDIC has required affidavits of one sort or another, than cases of actual payments made. We personally know of one family who received one check for one account but was asked to submit affidavits for 15 accounts, all in the same bank.
Claimants, even those who have been partially paid, have come to the realization that even though PDIC wants to pay valid depositors, it does not have enough liquid funds. It relies on its monthly assessment collections, which average about P600 million a month, net of taxes, to fund its issued checks. So if its payables for all the 13 Legacy banks is about P10 billion (not including the claims for the closed 13 non-Legacy banks), then expect that payouts will drag out for the next 14 months. But wait! Isn't PDIC mandated by its charter to pay within 6 months from the date of filing? It has to, and therefore expect PDIC to soon issue bonds to raise money or finally force PBCom to sell it shares in order to get back its P7.64 billion investment in the bank. If it cannot raise funds soon enough, then the acronym PDIC will come to mean: Postponing Delaying Insurance Corp.
Showing posts with label depositors. Show all posts
Showing posts with label depositors. Show all posts
Friday, July 24, 2009
Saturday, June 27, 2009
A Matter of Miscommunication?
Had a long teletalk with a close consultant of Jose Nograles, PDIC President and these are the details we gleaned from our discussions:
a. PDIC is singling out Davao as the nest of depositors who "because of greed" invested their money in legacy banks even though there wasn't any single legacy bank in Davao. We immediately corrected the use of the word invest since this implies the possibility of loss or gain from putting in one's money in a venture or financial instrument. We told him that investment is different from deposit which gives a fixed return on one's money placement, and the fixed return is called interest rate per annum. And when we talk about Legacy banks, we talk about deposits. The consultant gave me the impression that PDIC will resist paying these Davao depositors, and other such depositors;
b. Based on his talks with Joepot, the consultant sees no problem with depositors who opened multiple accounts within the maximum deposit insurance and PDIC-insured account configurations especially when joint accounts and ITF accounts are made with qualified beneficiaries- persons within the 3rd degree of consanguinity; and
c. That mailing of checks had one objective of making life difficult for depositors who opened dummy accounts using employees, friends, etc. Now it will be up to the dummy who gets issued a check in his/her name to give up what the check represents- a big amount to a driver, maid, or even a friend in need. It will be more problematic for the real owner of the funds to trace a former employee, so as to deposit the check made in the latter's name.
We also mentioned PDIC's limiting the use of a SPA to those living abroad and medically incapacitated. The consultant was surprised to find out that PDIC turned down depositors (who were temporarily in Manila to file claims) from having the PDIC officer attest to their appearance with their valid IDs. This process would have enabled these depositors to execute an SPA while in the Philippines. But no, the PDIC insisted that these depositors go back to their respective countries and execute the SPAs in the nearest Philippine consulate, which is sometimes several hours and hundreds of miles away. Talk about mindless bureaucracy, and making life tough for the depositors, who are the raison d'etre of PDIC.
The consultant believes that miscommunication is the root cause of the image problem of PDIC; and that PDIC intends to pay legitimate depositors. When asked why it is taking too long, he said that the processing and verification of 135,000 accounts in Legacy banks and thousands more of non-Legacy bank accounts is causing the delay. We believe otherwise: our previous posts on the topic establishes the fact that PDIC is illiquid and is relying on its monthly assessment collections to pay the depositors.
We are of the opinion that if only PDIC had acknowledged its insolvency, and admitted that the situation became worse by the subsequent failure of more than a dozen non-Legacy banks, then depositors would understand. They only needed assurance that their deposits would eventually be paid. The scare tactic of calling tens of thousands of accounts as dubious due to lack of or missing bank documents did not help the situation, it only cause anxiety and anguish, leading to the formation of DEADBOL (go here to register).
a. PDIC is singling out Davao as the nest of depositors who "because of greed" invested their money in legacy banks even though there wasn't any single legacy bank in Davao. We immediately corrected the use of the word invest since this implies the possibility of loss or gain from putting in one's money in a venture or financial instrument. We told him that investment is different from deposit which gives a fixed return on one's money placement, and the fixed return is called interest rate per annum. And when we talk about Legacy banks, we talk about deposits. The consultant gave me the impression that PDIC will resist paying these Davao depositors, and other such depositors;
b. Based on his talks with Joepot, the consultant sees no problem with depositors who opened multiple accounts within the maximum deposit insurance and PDIC-insured account configurations especially when joint accounts and ITF accounts are made with qualified beneficiaries- persons within the 3rd degree of consanguinity; and
c. That mailing of checks had one objective of making life difficult for depositors who opened dummy accounts using employees, friends, etc. Now it will be up to the dummy who gets issued a check in his/her name to give up what the check represents- a big amount to a driver, maid, or even a friend in need. It will be more problematic for the real owner of the funds to trace a former employee, so as to deposit the check made in the latter's name.
We also mentioned PDIC's limiting the use of a SPA to those living abroad and medically incapacitated. The consultant was surprised to find out that PDIC turned down depositors (who were temporarily in Manila to file claims) from having the PDIC officer attest to their appearance with their valid IDs. This process would have enabled these depositors to execute an SPA while in the Philippines. But no, the PDIC insisted that these depositors go back to their respective countries and execute the SPAs in the nearest Philippine consulate, which is sometimes several hours and hundreds of miles away. Talk about mindless bureaucracy, and making life tough for the depositors, who are the raison d'etre of PDIC.
The consultant believes that miscommunication is the root cause of the image problem of PDIC; and that PDIC intends to pay legitimate depositors. When asked why it is taking too long, he said that the processing and verification of 135,000 accounts in Legacy banks and thousands more of non-Legacy bank accounts is causing the delay. We believe otherwise: our previous posts on the topic establishes the fact that PDIC is illiquid and is relying on its monthly assessment collections to pay the depositors.
We are of the opinion that if only PDIC had acknowledged its insolvency, and admitted that the situation became worse by the subsequent failure of more than a dozen non-Legacy banks, then depositors would understand. They only needed assurance that their deposits would eventually be paid. The scare tactic of calling tens of thousands of accounts as dubious due to lack of or missing bank documents did not help the situation, it only cause anxiety and anguish, leading to the formation of DEADBOL (go here to register).
Wednesday, June 17, 2009
The Postman now works for the PDIC
Good news for some! HC is the first depositor we know who confirmed that PDIC mailed him three checks in payment for all three of his RBOP time deposits. Vicky, a fellow member-depositor who works in Angola, had earlier received two checks, representing her share of two joint accounts in RBOP wherein her mother was her co-account holder. David, a foreigner-member living in Cebu, reported today that he and his wife were paid for their respective shares of joint accounts and one single account worth P100,000, that represented some of his accounts in Bank of East Asia. Update: the next day, his adult stepdaughter received from the mail a check for P250,000, also for a BEA deposit.
Here is what we can deduce from the experiences of these lucky depositors (we say lucky because there are a lot out there, including yours truly, who have not even seen the shadow of a mailed envelope:
1. RBOP's time deposit accounts, inspite of the bank's notoriety as the main hub for Celso's fraudulent activities, have been verified and some account holders are now being paid. So this means that depositors of other banks are getting paid and one example is David's BEA accounts;
2. Except for HC's case (his accounts totaled about P500,000), the other two were only paid a fraction of their total deposits. David received less than 15% of his deposits. PDIC advised him to submit a notarized affidavit of disinterest persons if he wanted to be paid for one of his individual accounts, and all because his middle initial was spelled out in the CTD, but not in the signature card. Vicky's mother has to file a notarized affidavit of co-ownership before her mother's share would be paid out. PDIC is making the depositors jump through hoops. So the strategy is pay a little and then dangle the possibility of getting paid for the other accounts, but only after undertaking another set of tasks and processes. If PDIC is relying on its monthly assessment collections to fund its payments, then this strategy is logical.
3. All three actively worked for the recovery of their accounts: HC wrote a presidentiable who endorsed his letter to PDIC; Vicky got herself interviewed by GMA-7 TV; and David keeps on writing to, commenting in and posting to any blog or online medium. Oh yes, David also wrote a letter to the same presidentiable who must have endorsed it to PDIC.
Bad news for others! We called Mrs Lego yesterday night and again this afternoon, and she gave us the same news- no mail received as yet. Poor woman, she has futilely visited twice her city's postal office. She told me that she called the PDIC office and they told her that she should be receiving her check within a week. Mrs. Lego told them that it has been exactly a week since she had "rallied" in their Makati office, but still no letter. She said that if by tomorrow she has not yet received that much-awaited letter containing a check, she would pay PDIC a visit the next day and plead, beg, cry, and shout (again). The waiting saga of this 64 yo woman continues....
Here is what we can deduce from the experiences of these lucky depositors (we say lucky because there are a lot out there, including yours truly, who have not even seen the shadow of a mailed envelope:
1. RBOP's time deposit accounts, inspite of the bank's notoriety as the main hub for Celso's fraudulent activities, have been verified and some account holders are now being paid. So this means that depositors of other banks are getting paid and one example is David's BEA accounts;
2. Except for HC's case (his accounts totaled about P500,000), the other two were only paid a fraction of their total deposits. David received less than 15% of his deposits. PDIC advised him to submit a notarized affidavit of disinterest persons if he wanted to be paid for one of his individual accounts, and all because his middle initial was spelled out in the CTD, but not in the signature card. Vicky's mother has to file a notarized affidavit of co-ownership before her mother's share would be paid out. PDIC is making the depositors jump through hoops. So the strategy is pay a little and then dangle the possibility of getting paid for the other accounts, but only after undertaking another set of tasks and processes. If PDIC is relying on its monthly assessment collections to fund its payments, then this strategy is logical.
3. All three actively worked for the recovery of their accounts: HC wrote a presidentiable who endorsed his letter to PDIC; Vicky got herself interviewed by GMA-7 TV; and David keeps on writing to, commenting in and posting to any blog or online medium. Oh yes, David also wrote a letter to the same presidentiable who must have endorsed it to PDIC.
Bad news for others! We called Mrs Lego yesterday night and again this afternoon, and she gave us the same news- no mail received as yet. Poor woman, she has futilely visited twice her city's postal office. She told me that she called the PDIC office and they told her that she should be receiving her check within a week. Mrs. Lego told them that it has been exactly a week since she had "rallied" in their Makati office, but still no letter. She said that if by tomorrow she has not yet received that much-awaited letter containing a check, she would pay PDIC a visit the next day and plead, beg, cry, and shout (again). The waiting saga of this 64 yo woman continues....
Wednesday, June 10, 2009
How Many Visits Will It Take?
Mrs. AL called us up yesterday night , and she was so hyper. She said that she, together with her daughter, had just come from visiting PDIC SSS bldg office that afternoon. She admitted to creating a scene. She was crying and shouting in the information counter, first requesting, then demanding the release of a least one check. She has six time deposits, ranging from 50k to 100k, and she could not understand why it is taking PDIC so long to settle her claims.
She has a tumor in her breast, and needs a biopsy. She is now feeling pain in the other breast. Her husband recently suffered a third stroke, and manhid na daw ang left side of his face. Her son has a tricyle that is in danger of being repossessed because he is 3 months late in his amortizations. She has two daughters with kids who are late in their enrollment because of lack of funds.
Mrs. Al brought her ultrasound findings and the senior's card of her husband to show that it was filled up with entries of medicines purchased for his condition. She said that she would not leave the PDIC office until she got answers, and a check. The clerk told her that he would check the status of her claims but came back and told her that the computer system was down. Mrs. AL said that she resumed her crying but got a headache, which forced her to leave the PDIC office, but with a promise that she would be back.
We advised her to take it easy, that a headache could be a symptom of an impending stroke. It would not help any if she got a stroke, and if she survived it, she would be in the same condition like her poor husband. She said that is the reason why she left the PDIC office, in order to calm down. We suggested to her that the next time she goes back to the PDIC office, she should look for Atty Elaine Deticio, AVP for Claims, instead of talking to a clerk or desk staff. In our one and only meeting with Atty Elaine, she struck us as a sensible and professional individual who listened and cared, not only for the depositors but also for her staff. We cannot wait to hear from Mrs AL the next time we talk, and find out how she fared with a ranking PDIC officer, especially with Atty Elaine.
We can only imagine the tens of thousands of depositors who are in similar straits like Mrs AL who cannot understand why PDIC is taking its sweet time to return to return to them their hard-earned money to them. Mrs. AL knows that PDIC is not handling government funds, but money specifically intended to protect depositors like her. If there was such a thing as a small depositor (which there isn't per PDIC charter), then 65-year-old Mrs AL would be the epitome. And PDIC is the anithesis of an ideal insurer.
She has a tumor in her breast, and needs a biopsy. She is now feeling pain in the other breast. Her husband recently suffered a third stroke, and manhid na daw ang left side of his face. Her son has a tricyle that is in danger of being repossessed because he is 3 months late in his amortizations. She has two daughters with kids who are late in their enrollment because of lack of funds.
Mrs. Al brought her ultrasound findings and the senior's card of her husband to show that it was filled up with entries of medicines purchased for his condition. She said that she would not leave the PDIC office until she got answers, and a check. The clerk told her that he would check the status of her claims but came back and told her that the computer system was down. Mrs. AL said that she resumed her crying but got a headache, which forced her to leave the PDIC office, but with a promise that she would be back.
We advised her to take it easy, that a headache could be a symptom of an impending stroke. It would not help any if she got a stroke, and if she survived it, she would be in the same condition like her poor husband. She said that is the reason why she left the PDIC office, in order to calm down. We suggested to her that the next time she goes back to the PDIC office, she should look for Atty Elaine Deticio, AVP for Claims, instead of talking to a clerk or desk staff. In our one and only meeting with Atty Elaine, she struck us as a sensible and professional individual who listened and cared, not only for the depositors but also for her staff. We cannot wait to hear from Mrs AL the next time we talk, and find out how she fared with a ranking PDIC officer, especially with Atty Elaine.
We can only imagine the tens of thousands of depositors who are in similar straits like Mrs AL who cannot understand why PDIC is taking its sweet time to return to return to them their hard-earned money to them. Mrs. AL knows that PDIC is not handling government funds, but money specifically intended to protect depositors like her. If there was such a thing as a small depositor (which there isn't per PDIC charter), then 65-year-old Mrs AL would be the epitome. And PDIC is the anithesis of an ideal insurer.
Thursday, May 28, 2009
Wednesday, May 27, 2009
PDIC and BSP allowed Legacy to Swindle Depositors
The second DEADBOL meeting was attended by a prospective member, who aside from having time deposits in legacy banks, was a VP-Marketing for legacy bank products. Gi had worked for legacy since 2002 and had more information regarding Celso and the legacy operations.
She confirmed that Celso or CGA paid CTDs to his employees as separation pay, but unlike her subordinate who was led to believe that the banks would be kept open, she was called in the early afternoon of December 4,2009 by the cashier of Dynamic Bank that the banks would be declaring holidays. That during Sat, Dec. 6 and Sun, Dec. 7, bank employees were working overtime inside Rural Bank of Paranaque (RBOP) offices doing cleanup operations (she didn't know what that meant). Bank clerks were also typing the CTDs for separated legacy employees, including themselves.
We were puzzled when Gi said that a lot of time deposits in RBOP were owned by depositors located in Cebu, Gen. Santos, and especially Davao. She explained to us that there wasn't any legacy bank in Davao- constraining so many Davaoenos to course their deposits mainly through legacy offices in Davao. There were also depositors who did not want to travel long distances to open new accounts, so they placed their money through the nearest legacy offices. These "remote" depositors were issued legacy ORs, aside from CTDs which were delivered by the respective banks several days later. We then asked ourselves the obvious question: is it possible that these banks actually received the funds or did they issue the CTDs even if unfunded? It turned out that the answer to these questions did not matter. Gi recounted that she had a client who had been a depositor of the defunct CGA-owned Center bank (closed in 2006). He had personally opened his first P100,000 account but when the PDIC maximum was increased to P250,000, he deposited another P100,000, but through the legacy Makati office. PDIC honored the first account but denied his claim for the second, for the reason that the legacy office remitted the day's collections as an aggregate amount, without a breakdown of the names of the depositors. These transactions were done daily by the legacy offices, making it difficult for PDIC to ascertain who owns what, especially if legacy offices did not deposit collections daily or if the deposited funds did not match office collections.
What hit us is that CGA knew that these remote deposits would not be acceptable to PDIC, but still continued on with this scheme, but on a grander scale: from a one-unit bank to 12 banks with more than 109 branches. His greed knew no bounds, creating hundred, perhaps thousands of despairing depositors with probably no chance of getting back their hard-earned money. After this mind-boggling insight, we were hit by another lightning bolt of an idea: the PDIC allowed legacy offices to continue collecting remote deposits. It is quite impossible that PDIC or the BSP had not heard that legacy offices continued to receive money meant as bank deposits, but had obviously tolerated its practice. PDIC had not issued any circular or memo warning depositors to avoid this kind of remote banking which would not be covered by PDIC insurance, and we are sure that the BSP or PDIC had not issued any cease-and-desist order to the legacy banks and offices.
These insights lead to one inescapable conclusion- that Celso could not have pulled off his "business model" without collusion from these so-called regulatory bodies. Was this the organized syndicate that BSP Deputy Gov. Nestor Espenilla, Jr. was alluding to "that from day one was created to exploit human nature and weak links in the legal, regulatory, and enforcement framework of our banking and financial system.”
The irony of it all is that Davao is the bulwark of Speaker Prospero Nograles. Did he imagine that his kababayans would be the biggest victims of this innovative scheme to swindle depositors? Has his younger brother, PDIC President Jose Nograles, come to realize that most of the claimants of these remote deposits are Davaoenos?
She confirmed that Celso or CGA paid CTDs to his employees as separation pay, but unlike her subordinate who was led to believe that the banks would be kept open, she was called in the early afternoon of December 4,2009 by the cashier of Dynamic Bank that the banks would be declaring holidays. That during Sat, Dec. 6 and Sun, Dec. 7, bank employees were working overtime inside Rural Bank of Paranaque (RBOP) offices doing cleanup operations (she didn't know what that meant). Bank clerks were also typing the CTDs for separated legacy employees, including themselves.
We were puzzled when Gi said that a lot of time deposits in RBOP were owned by depositors located in Cebu, Gen. Santos, and especially Davao. She explained to us that there wasn't any legacy bank in Davao- constraining so many Davaoenos to course their deposits mainly through legacy offices in Davao. There were also depositors who did not want to travel long distances to open new accounts, so they placed their money through the nearest legacy offices. These "remote" depositors were issued legacy ORs, aside from CTDs which were delivered by the respective banks several days later. We then asked ourselves the obvious question: is it possible that these banks actually received the funds or did they issue the CTDs even if unfunded? It turned out that the answer to these questions did not matter. Gi recounted that she had a client who had been a depositor of the defunct CGA-owned Center bank (closed in 2006). He had personally opened his first P100,000 account but when the PDIC maximum was increased to P250,000, he deposited another P100,000, but through the legacy Makati office. PDIC honored the first account but denied his claim for the second, for the reason that the legacy office remitted the day's collections as an aggregate amount, without a breakdown of the names of the depositors. These transactions were done daily by the legacy offices, making it difficult for PDIC to ascertain who owns what, especially if legacy offices did not deposit collections daily or if the deposited funds did not match office collections.
What hit us is that CGA knew that these remote deposits would not be acceptable to PDIC, but still continued on with this scheme, but on a grander scale: from a one-unit bank to 12 banks with more than 109 branches. His greed knew no bounds, creating hundred, perhaps thousands of despairing depositors with probably no chance of getting back their hard-earned money. After this mind-boggling insight, we were hit by another lightning bolt of an idea: the PDIC allowed legacy offices to continue collecting remote deposits. It is quite impossible that PDIC or the BSP had not heard that legacy offices continued to receive money meant as bank deposits, but had obviously tolerated its practice. PDIC had not issued any circular or memo warning depositors to avoid this kind of remote banking which would not be covered by PDIC insurance, and we are sure that the BSP or PDIC had not issued any cease-and-desist order to the legacy banks and offices.
These insights lead to one inescapable conclusion- that Celso could not have pulled off his "business model" without collusion from these so-called regulatory bodies. Was this the organized syndicate that BSP Deputy Gov. Nestor Espenilla, Jr. was alluding to "that from day one was created to exploit human nature and weak links in the legal, regulatory, and enforcement framework of our banking and financial system.”
The irony of it all is that Davao is the bulwark of Speaker Prospero Nograles. Did he imagine that his kababayans would be the biggest victims of this innovative scheme to swindle depositors? Has his younger brother, PDIC President Jose Nograles, come to realize that most of the claimants of these remote deposits are Davaoenos?
Wednesday, April 29, 2009
The Legacy Bank Mess: An Expose of PDIC (Part 1)
The legacy mess created by Celso de los Angeles has once again rocked the already ailing preneed industry. The sudden closure last December, 2009 of Legacy Consolidated plans and its two affiliated preneed companies added an estimated 30,000 victims to the legion of planholders holding useless educational and pension plans. Although this development spelled more bad news for the floundering preneed industry, it was not unfamiliar to the public that had experienced years ago the closure of CAP, Pacific Plans, and several other companies in the business. If for anything, legacy plans had just delivered the final blow on a moribund industry.
What is insidious and potentially catastrophic is the deleterious effect of the collapse of the legacy banks on public confidence and faith in the banking system. Surprisingly, it is not Celso that is the villain in this unfolding scenario that is fraught with serious negative implications for the country's rural banking sector. The Philippine Deposit Insurance Corporation was established in 1963 with a single overriding mandate – to ensure public confidence in the banking industry. This is achieved by providing all depositors in all banks with an insurance coverage of P250,000; and second, by acting as the ‘receiver’ of failed or closed banks. Up until the closure of several legacy banks, PDIC has been faithfully fulfilling its current overall mandate “to provide depositor protection and strengthen public confidence in the banking system.” Hundreds of banks have closed and been declared insolvent since PDCI was created, but it had remained the faithful guardian and guarantor of the depositors’ money.
The PDIC Occasional Paper No. 1 2005 mentioned that “notwithstanding problems arising from the poor quality of record-keeping, PDIC’s continuing efforts at expeditious settlement of claims has paid off in terms of a shorter period of time for payouts. The average number of days to start payouts from date of closure has improved from 289 calendar days in 1993 to 41 calendar days in 2002, and single digit levels beginning 2003.” However, this progress is all set to be reversed and retrogress with the convoluted manner that PDIC is now conducting the filing, verification, processing and payout of legacy bank claims. It is twisting and bending its own policy, rules and regulations, and conjuring a new set of procedures that are tedious and time-consuming. Since the closure of the legacy banks before mid-December of 2008, PDIC President Jose Nograles defends its actions by explaining in numerous press releases that PDIC just wants to make sure that only “legitimate depositors” are paid because bank officials have not only lost banks records but created fictitious accounts. We understand the need for precautions but it seems that Nograles, reading his innumerable sound-and-print bites, would rather not pay the depositor who in good faith banked his hard-earned money than risk paying a fraudulent claim. As of now, almost 150 days since the closure of banks, only a miniscule percentage of depositors have been paid. None of the 100k accounts above, which account for about 75 percent of the total 135,000 accounts, have been paid. PDIC had previously adhered to the necessity of prompt payment of insured deposit claims, not only to maintain credibility and confidence in the deposit insurance system but just as important, to help eliminate possible contagion effects of closure. So why would PDIC, under the leadership of Jose Nograles, deliberately ruin its excellent track record of single digit days payout and run the real risk of eroding public confidence? The answer is both political and financial but before we delve into the dark motives of powerful men and hidden interests of big commercial institutions, we first need to expose the myths and propaganda that PDIC is peddling to the general public.
What is insidious and potentially catastrophic is the deleterious effect of the collapse of the legacy banks on public confidence and faith in the banking system. Surprisingly, it is not Celso that is the villain in this unfolding scenario that is fraught with serious negative implications for the country's rural banking sector. The Philippine Deposit Insurance Corporation was established in 1963 with a single overriding mandate – to ensure public confidence in the banking industry. This is achieved by providing all depositors in all banks with an insurance coverage of P250,000; and second, by acting as the ‘receiver’ of failed or closed banks. Up until the closure of several legacy banks, PDIC has been faithfully fulfilling its current overall mandate “to provide depositor protection and strengthen public confidence in the banking system.” Hundreds of banks have closed and been declared insolvent since PDCI was created, but it had remained the faithful guardian and guarantor of the depositors’ money.
The PDIC Occasional Paper No. 1 2005 mentioned that “notwithstanding problems arising from the poor quality of record-keeping, PDIC’s continuing efforts at expeditious settlement of claims has paid off in terms of a shorter period of time for payouts. The average number of days to start payouts from date of closure has improved from 289 calendar days in 1993 to 41 calendar days in 2002, and single digit levels beginning 2003.” However, this progress is all set to be reversed and retrogress with the convoluted manner that PDIC is now conducting the filing, verification, processing and payout of legacy bank claims. It is twisting and bending its own policy, rules and regulations, and conjuring a new set of procedures that are tedious and time-consuming. Since the closure of the legacy banks before mid-December of 2008, PDIC President Jose Nograles defends its actions by explaining in numerous press releases that PDIC just wants to make sure that only “legitimate depositors” are paid because bank officials have not only lost banks records but created fictitious accounts. We understand the need for precautions but it seems that Nograles, reading his innumerable sound-and-print bites, would rather not pay the depositor who in good faith banked his hard-earned money than risk paying a fraudulent claim. As of now, almost 150 days since the closure of banks, only a miniscule percentage of depositors have been paid. None of the 100k accounts above, which account for about 75 percent of the total 135,000 accounts, have been paid. PDIC had previously adhered to the necessity of prompt payment of insured deposit claims, not only to maintain credibility and confidence in the deposit insurance system but just as important, to help eliminate possible contagion effects of closure. So why would PDIC, under the leadership of Jose Nograles, deliberately ruin its excellent track record of single digit days payout and run the real risk of eroding public confidence? The answer is both political and financial but before we delve into the dark motives of powerful men and hidden interests of big commercial institutions, we first need to expose the myths and propaganda that PDIC is peddling to the general public.
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