Banco Filipino Shut Down

BANCO FILIPINO SHUT DOWN

by Roderick T. dela Cruz

 

THE Bangko Sentral on Thursday shut down Banco Filipino Savings and Mortgage Bank, which went on a bank holiday starting Tuesday to prevent its depositors from depleting its cash.

Immediately after the central bank’s policy-making Monetary Board issued its resolution, the Philippine Deposit Insurance Corp. took over the assets of the thrift bank, including its head office in Makati City.

“The Monetary Board in its meeting decided to place Banco Filipino under receivership of PDIC to provide immediate relief to its 177,652 depositors, 97 percent of whom are small depositors fully covered by deposit insurance of up to P500,000 each,” Bangko Sentral Deputy Governor Nestor Espenilla Jr. told reporters.

He said that as of March 15, the bank was supposed to have about P15 billion in deposits before it stopped servicing withdrawals on Tuesday. The bank had been suffering from a chronic reserve deficiency for some time.

Espenilla said the PDIC began taking over the bank’s offices to secure records and documents and prevent the further dissipation of its assets.

The Monetary Board also authorized the filing of appropriate cases, if necessary, against the bank’s directors, officers and other people who could have violated banking laws and Bangko Sentral’s rules and regulations.

“The Monetary Board took note of the failure of the board of directors or management of BF to restore the bank’s financial health and viability despite [the] considerable time given to address its financial problems, and after according the bank the requisite due process,” Espenilla said.

“The MB has therefore decided to prohibit BF from doing business in the Philippines and to place its assets and affairs under receivership, with PDIC as [the] designated receiver in accordance with Section 30 of Republic Act No. 7653 or the New Central Bank Act.”

Espenilla said the Monetary Board decided not to grant emergency loans because Banco Filipino did not meet the requirements or conditions for any loan.

The bank was unable to settle its liabilities as shown over the past three days, when it “did not have the liquidity to service withdrawals.

“There were bouncing checks issued,” Espenilla said.

The bank had also been suffering from chronic reserve deficiency for some time.

“They did not have the liquidity to be able to support their liability,” Espenilla said, noting that the bank had insufficient realizable assets.

Its liabilities exceeded its assets by about P8.4 billion, while the bank was continuing to accumulate losses of P2 billion a year from 2007 and 2009.

The bank incurred monthly losses of P277 million from its operations in the first nine months of 2010.

Despite the bank’s losses, Espenilla said, the bank spent P131 million in legal fees and about P500 million in compensation, representing two and a half times its gross income.

“The bank simply does not have the opportunity to sustain its operations,” Espenilla said.

Banco Filipino closed its branches for the third straight day on Thursday, warning it would not allow withdrawals by depositors unless the Bangko Sentral extended a P3-billion emergency loan to it.

The bank decided to close its head office and 62 branches beginning Tuesday after the massive withdrawals that led to a P903-million overdraft, which refers to the total withdrawals in excess of the available cash balance.

“When you go to the bank to withdraw your money, as much as we would like to give you that opportunity, we could not allow it, because the Bangko Sentral has not yet approved or acted upon our emergency loan,” Banco Filipino vice chairman Perfecto Yasay told the bank’s depositors in a televised interview on Thursday.

Yasay also blamed the central bank for allegedly spreading a smear campaign against Banco Filipino.

“We need to urge the Bangko Sentral to end this smear campaign,” he said.

“If we get the P3 billion but if they do not stop the smear campaign, then the funds will be depleted, causing panic among depositors.”

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REACTION

"Subok na Matibay, Subok na Matatag." Yes, the Banco Filipino indeed had a history in making Filipino citizens' lives easier and happier. They served many people for the past years. This issue was a big impact in the economy for Banco Filipino is one of the known banks here in the Philippines. The shut down was a big decision. It made people think of the causes  of what happened.

 

I was once a member of the Banco Filipino kids club in my childhood days. I remembered before  that Banco Filipino was really a famous bank. Lately, issues arise targeting the said bank and these issues aren't good. With this, I felt confused because I knew that the bank was really good. Suddenly, a news flashed in our television screen talking about the Banco Filipino shutdown. This made me feel nervous for the bank and I don't know why. I felt sad and pity about the bank. But the news explained the reasons of why the Banco Sentral did that to Banco Filipino. From that on, I was with the side of the Filipino citizens.

 

I was angry and tensed after knowing the issue. I felt pity for the citizens who wanted to get their money back, especially the poor ones who deposited even a little amount of money. My heart melted knowing that even some citizens wanted to withdraw their money to spend things needed for the graduation of their children. Other persons behind Banco Filipino can not feel it, but as we can see, they are really the ones who they should attend to first.

This issue will surely affect our economy and this will also mark a bad image in our country. With this, I don't know what to do as an ordinary citizen and I really feel upset about this.

World's highest power rates

PHILIPPINES HAS WORLD'S HIGHEST POWER RATES

MANILA, FEBRUARY 23, 2011 (STAR) By Jess Diaz - The Philippines, which ranks among the most corrupt countries, also holds the unenviable record of having the highest residential power rates not only in Asia but in the entire world.

Officials of the Energy Regulatory Commission (ERC) and the Power Sector Assets and Liabilities Management Corp. (PSALM) admitted as much yesterday in the course of a hearing by the House energy committee on the high cost of electricity in the country.

Responding to questions raised by Eastern Samar Rep. Ben Evardone, the energy officials said the Philippines has overtaken Japan as the country that charges the highest electricity rate on residential users.

As for commercial users, the country charges the second highest rate after Singapore. Commercial users pay more here for electricity than those in Japan.

Former Pampanga Rep. Zenaida Ducut, whom former President Gloria Macapagal-Arroyo had appointed ERC chair months before ending her nine-year presidency, and Lourdes Alzona, PSALM vice-president for finance, could not give the energy committee comparative data on the rates in Japan, Singapore, the Philippines, and other countries.

But Evardone revealed the rates to reporters based on a Department of Energy report made available to him by Batasan Rep. Henedina Abad, chair of the energy committee.

Evardone, whose Resolution 106 prompted the committee inquiry, said the residential rate here is about 18 US cents per kilowatt-hour.

It is 17 cents in Japan, 15 in Singapore, eight in Thailand, seven in Malaysia, five in Indonesia, and three cents in Vietnam, he said.

In terms of the commercial rate, it is 14 cents in Singapore, 13 in the Philippines, 12 in Japan, eight in Thailand, seven in Malaysia, six in Vietnam, and five cents in Indonesia.

“No wonder we have not been attracting foreign investors. Imagine, we beat the developed countries and largest economies like Japan in terms of power rates?” Evardone said, adding electricity rates are a big part of the cost of doing business.

The energy officials tried to justify the high cost of electricity here by saying the other countries cited are subsidizing their residential users.

“But we also have subsidies here, like the lifeline rates for poor households,” Deputy Speaker Arnulfo Fuentebella, one of the authors of the Electric Power Industry Reform Act (Epira) of 2001, retorted.

“Our principal objective in enacting Epira 10 years ago was to bring down electricity rates. Sad to say, that did not happen. The law did not fail; it is the implementation that failed. This is not what we expected to happen,” he said.

Fuentebella hinted that the ERC and Congress should share part of the blame for the high cost of electricity here.

“The ERC has disregarded some mandatory rate reduction schemes in violation of Epira,” he said.

On the part of Congress, he said the legislature imposed a 12-percent value added tax on electricity, which used to be VAT-exempt.

Alzona admitted that despite the already high cost of power here, PSALM would push through with asking the ERC to approve an adjustment of up to 15 centavos per kilowatt-hour to enable it to pay its loans.

Rep. Juan Miguel Arroyo of the party-list group Ang Galing Pinoy urged PSALM and the National Power Corp. (Napocor) to collect billions from private power distributors and cooperatives before making the public pay more.

“They should collect from Meralco and electric cooperatives,” he said. Arroyo was energy committee chairman in the previous Congress.

Energy officials admitted that Meralco owes Napocor about P36 billion incurred between 2001 and 2003.

They said Meralco, the largest power distributor in the country, is disputing the billings and the case is now pending in court.

They said among distribution utilities in the provinces, the Lanao del Sur Electric Cooperative has the biggest debt owed to Napocor, which amounts to P4.6 billion.

Rep. Maximo Rodriguez of the party-list group Abante Mindanao shared Arroyo’s call for PSALM and Napocor to compel private distribution firms to pay their debts before petitioning for a rate increase.

“Meralco can afford to pay. It is making billions every year in net profits,” he said.

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REACTION

From the moment I read the title of the article and the first sentence of the article, I was the happiest citizen in the Philippines. I thought Philippines hold titles that are unpleasing in the eyes and ears of the people. I was wrong. Imagine, despite of the title "one of the most corrupt countries", Philippines was great for having the title "country who has the world's highest power rates".

As a simple citizen, my heart fell pleasure for a while knowing that the one holding that title was the country where I belong. It makes me proud also because I feel like I was a part of it. Even though I don't know much about electricities, I can sense that this issue is strong and extraordinary. This issue was silent but meaningful. 

I am super proud to know that Philippines has overtaken Japan as the country that charges the highest electricity rate on residential users. And as for commercial users, our country charges the second highest rate after Singapore. Commercial users pay more here for electricity than those in Japan. Cool!

With this issue, I am very sure that foreign investors would definitely be attracted. I hope this would be a good start for the country to be the best. This should be the start of the productive economic stabilities of the country.

Higher taxi rates

 Higher taxi fares start today, says DoTC

TAXICABS WHOSE license plates end in "1" and "6" may start charging higher fares starting today once their meters have been calibrated to comply with a directive to issue receipts, the Department of Transportation and Communications (DoTC) said yesterday.

Meters of the first 300 units whose license plates end with the two numbers will be initially calibrated based on the schedule set by the Land Transportation Franchising and Regulatory Board (LTFRB). The fare increase was approved early this month.

"The LTFRB will calibrate 300 taxi units everyday. There are 22,000 taxi units in Metro Manila," Transportation Undersecretary Dante M. Velasco told BusinessWorld in a telephone interview.

"Taxi units with license plates ending with 1 and 6 will be calibrated first, then 2 and 7 will have their meters calibrated followed by those ending in 3 and 8, 4 and 9 then 5 and 0," he added.

"We don’t have a definite schedule when we will finish each set of the license plates," he further said.

Mr. Velasco clarified that taxi operators whose meters are not calibrated cannot implement the new fares.

"Passengers should check if the taxi unit had calibrated its meter with a sealed sticker. They should ask for a receipt," he said.

Mr. Velasco noted that fares will be maintained in some areas due to cost of business operation and cost of living on the part of commuters.

"The rate of fare increase in areas outside Metro Manila could not be the same as what we had approved," he said.

"The cost of living of passengers and the cost of operations of taxi operators in all areas are not the same," he added.

"Baguio City and other areas outside Metro Manila are exempted... because the taxi operators from the area have a pending petition before our office to have a lesser increase than P10. LTFRB has still to decide on their petition," Mr. Velasco further said.

LTFRB said in previous reports that it had acted on a Jan. 22, 2010 fare increase petition filed by the Philippine National Taxi Operators Association.

Regulators noted that taxi fares had last been adjusted on Sept. 3, 2004 and that prices of fuel, spare parts, labor and cost of living had since increased.

Taxi operators have to pay a P510 filing fee for an application to increase fares and another P500 for meter recalibration/resealing.

Noncompliant drivers and operators will be subject to a P2,500 fine per offense.

"We are expecting that all 22,000 taxi units in Metro Manila will have their meters calibrated by May," Mr. Velasco said.

Early this month, LTFRB said flagdown rates will go up to P40 from P30 for the first 500 meters and an additional P3.50 from P2.50 for each succeeding 300 meters or two minutes waiting time. The fare hike ruling was published Jan. 5. -- A. M. P. Dagcutan


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REACTION

For sure, because of this economic problem nowadays, the demand for taxi for tansportation decreases. For some  citizens, they said that they will now use public utility vehicles as much as possible. They added that they will also ride a taxi only if emergencies happen and when they are in need of a fast tranportation to work or appointments.

Me, as an ordinary citizen who gets a taxi for trasportation most of time is very affected about this problem. Higher taxi fares were already implemented yet my allowance stayed the same. This issue will surely change my budget plan and tells me to start working out with public utility vehicles. However, this would also help me save more money and make jeepney drivers happy. They could get additional income from me, for I travel a lot everyday.

I felt sad really for the first time ai heard about the issue regarding this in the news. But for now, I can say that I already accepted the fact that economy really changes. I am now better than the first time I heard this. I am just thinking and I will continue thinking that this will help me in my budget planning though.