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MANILA, Philippines - (UPDATED 5:38 p.m.) The state deposit insurer on Friday stepped in and took over Export & Industry Bank (EIB) after a deal for the sale of its assets to the Philippines' biggest lender failed to materialize.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said the Monetary Board placed EIB under receivership on April 26 because of the lender's inability to meet its obligations as they fell due.
Under Section 30 of Republic Act No. 7653, state-run Philippine Deposit Insurance Corp. (PDIC) will take over a bank that has insufficient assets to meet its liabilities or to continue its business without incurring losses to depositors or creditors.
The BSP said EIB wrote regulators, saying it would declare a bank holiday on April 27.
BSP Deputy Governor Nestor A. Espenilla Jr. said EIB was faced with P700 to P800 million in maturing time deposits "due today and Monday" that the lender was unable to service.
“It is sad. We hoped it could be fixed but sometimes you lose,” Espenilla said, referring to Banco De Oro Unibank Inc.'s (BDO) planned acquisition of the assets of EIB.
BDO was supposed to acquire EIB's network of 50 branches after securing clearance from BSP nearly two years ago and from PDIC a year ago.
The state deposit insurer's approval was subject to execution of definitive agreements and documentation acceptable to the transacting parties and the PDIC, as well as the fulfillment of certain closing conditions, including the final approval of the BSP.
Under the acquisition deal, BDO would assume the P9-billion financial assistance that PDIC gave EIB in the form of a concessional loan invested in government securities. The said assistance was to produce an annual income support to BDO with a net present value of about P5.6 billion, or lower than the P10.9 billion in net liabilities the lender assumed from EIB.
During the third quarter of last year, EIB's losses swelled 35.5 percent to P725.22 million from the previous three-month period's P430 million.
Despite EIB's closure, "the overall Philippine banking system remains sound and stable with ample liquidity and high level of capitalization," the BSP said.
"The closure of EIB is not expected to adversely affect the Philippine banking system considering its relatively small size," the central bank said, adding that the shuttered lender's total assets amounts to 0.3 percent of the total assets of the banking system.
Insurance payments to start end-May
In a separate statement, PDIC said it would start by the end of next month the insurance payment to depositors with at most P10,000 in balances and who have no outstanding loans with EIB. These depositors need not file deposit insurance claims.
Under the law, a bank deposit would be insured up to P500,000.
Depositors whose accounts have balances of more than P10,000 or who have outstanding loans with EIB are required to file deposit insurance claims. PDIC said insurance payments for these accounts would start by end-June.
At end-December last year, EIB had 50,092 accounts with combined deposits worth P15.98 billion.
PDIC said it would hold depositors' forums starting May 2 to explain the requirements and procedures for filing insurance deposit claims. The schedules and venues would be posted on the agency's website, www.pdic.gov.ph.
Citing the latest General Information Sheet that EIB filed with the Securities and Exchange Commission, PDIC said the bank was majority owned by Ridderbrecht B.V., which owned 11.62 percent of the lender; Lead Bancfund Holdings Inc., 10.03 percent; Apex Bancrights Holdings Inc., 10.03 percent; Extra Year Investments Ltd., 9.5 percent; Asiawide Refreshments, 8.45 percent; and Medco Asia Investments Corp., 7.86 percent.
The same SEC document showed Jaime C. Gonzalez chaired the bank, while Juan Victor S. Tanjuatco was its president, according to PDIC.
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