Another one bites the dust.
LBC Development Bank, commonly known as LBC Bank to depositors, has been ordered closed by the Bangko Sentral ng Pilipinas (BSP) starting September 9.
The Philippine Deposit Insurance Corp (PDIC) announced it is taking over the assets and liabilities of LBC Bank after the BSP determined last week that the thrift bank was insolvent and violated a cease-and-desist order on unsafe and unsound banking practices.
Insolvency and Unsound Practices
The BSP claimed that LBC Bank was facing liquidity problems and pursued unsustainable operations that were detrimental to depositors and creditors.
The central bank also said the bank was previously issued a cease-and-desist order but continued its unsafe and unsound banking practices.
In the PMT Forum, members posted back in 2008 that they availed of time deposit accounts offering 8.75% interest rate per annum. It was also said that LBC Bank offered a time deposit paying 10.5% interest per year in 2006.
Such high-yielding accounts that offer interest rates beyond ongoing market rates have been found by the BSP to be an unsafe banking practice.
LBC Bank is the financial services unit of the LBC Group of Companies, a conglomerate primarily involved in the cargo and courier business and money remittance service. The bank has 20 branches nationwide, including its main outlet at J.P. Rizal Street in Makati City.
99.4% of accounts covered by PDIC insurance
As of June 30, 2011, LBC Bank has deposit liabilities amounting to P6.09 billion. According to the PDIC, more than P3.73 billion is covered by insurance.
On a per-account basis, more than 321,516 accounts or 99.4% of the total, are fully covered by deposit insurance.
Under the PDIC charter, deposit accounts amounting to P500,000 or below are covered by insurance and the deposit amounts will be returned to the account holder after complete verification. Deposits in excess of the limit may still be paid after the remaining assets of the bank have been liquidated.
Depositors’ Forum by the PDIC
The PDIC announced it will soon conduct Depositors’ Forum at certain branches of LBC Bank to enlighten depositors how to submit insurance claims.
We will update this post regarding the schedule of the Depositors’ Forum so bookmark this page to get updated information.
Apart from LBC Bank, other Philippine banks that were ordered closed by the BSP or declared bank holiday during the past years include:
- Banco Filipino
- Legacy Banks
- Rural Bank of Paranaque
- Philippine Farmer’s Bank
- BMS Bank
- 9 Rural Banks in Pangasinan, Batangas, Bulacan, etc.
Join the PMT Forum discussion here about the now-closed LBC Bank.