It is reported that the Bangko Sentral ng Pilipinas (Central Bank of the Philippines) successfully secured with the Supreme Court last week a Temporary Restraining Order (TRO) on enforcement of lower court rulings that favored several banks under the Legacy Group.
According to the story:
The high tribunal’s decision effectively gives banking regulators the green light to act on adverse findings made during their last examination of the 10 financial institutions scattered around the country.
The financial institutions covered by the ruling are Rural Bank of Parañaque Inc., Rural Bank of San Jose (Batangas) Inc., Rural Bank of Carmen (Cebu) Inc., Pilipino Rural Bank Inc., Philippine Countryside Rural Bank Inc., Rural Bank of Calatagan (Batangas) Inc. (now Dynamic Rural Bank), Rural Bank of DARBCI Inc., Rural Bank of Kananga (Leyte) Inc. (now First Interstate Rural Bank), Rural Bank of Bisayas Minglanilla (now Bank of East Asia), and San Pablo City Development Bank Inc.
Except for San Pablo City Development Bank, all were found by central bank examiners to be undercapitalized during their latest audit done on July 31, 2007. They were found to have an aggregate capital deficiency of P2.5 billion. The banks all operate under the aegis of the Legacy Group, which is primarily involved in selling pre-need plans.
PMT Forum members, especially those who made deposits with the affected banks, are currently speculating what will happen to the banks and their deposits.
I think the banks can make it as they have been freshly infused now with new capital this year. What the BSP is fussing about is the last July 2007 audit and quite dated. But there and then again, they wanna verify and see to it that it won’t happen again this time so they are all auditing the banks as of this last quarter of the year. The SC will have the final say again when the TRO will be lifted and I believe after a successful audit.
After reading it this morning, I called the head office. They said they will fight it (I guess a motion for reconsideration?). Anyway, wait and see na lang tayo! Initially, I had an urge to go to the banks to withdraw, but that would forfeit all interest. So I decided to let BSP and PDIC decide then if it closes, in my past experiences, PDIC will reimburse us anyway… so, no worries!
The way I see it, Legacy is prepared for the worst case scenario if you will study the following:
1. Legacy plans… moratarium issue
2. Release of the 3 months short-term time deposit product
3. Addition of 2 more Legacy rural banks
4. Negotiation for some more rural banks
So mga kasama, just relax. The way i see it, Legacy has prepared for the worst case scenario at ang resulta ay mararamdaman sa mga susunod na araw. At this stage, I do not see PDIC … I will not yet jump the ship. Legacy will be able to make it to shore. What i cannot guarantee is the long term effect of this once thay have surpassed this great challange.
Your thoughts on the issue? Post them in the following discussion threads:
- High court favors BSP vs. Legacy banks
- High interest time deposits in Legacy Financial Group’s rural banks
- Swindling and fraud issues hound Legacy Group and Rural Bank of Paranaque
- Experiences investing in double-your-money programs in the Philippines
- List of banks offering double your money investments