PDIC’s foreclosed real estate portfolio hits P19 billion

MANILA, Philippines — State-run Philippine Deposit Insurance Corp. (PDIC) has more than P19 billion worth of real estate properties from banks ordered closed by the Bangko Sentral ng Pilipinas (BSP).

The money could be used to beef up PDIC’s buffer to pay out deposit insurance claims.

PDIC president Roberto Tan earlier told the Senate Committee on Banks, Financial Institutions, and Currencies that the agency has more than 30,000 accounts pertaining to foreclosed real estate properties.

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“Based on a very rough estimate the value of the portfolio right now with us is over P19 billion. This is the book value and recovery will be different,” Tan said.

The PDIC is tasked to continuously build up the level of the deposit insurance fund (DIF), the fund source for deposit insurance payouts and financial assistance to banks, to enable it to adequately respond to insurance calls. Member-banks are assessed the annual flat rate of 1/5 of one percent of their total deposit liabilities.

The assessments are collected from member-banks semi-annually and form part of the DIF, which is managed through prudent investments as provided in the PDIC Charter.

PDIC has also been beefing up the buffer through the sale of foreclosed assets of banks ordered closed by the central bank’s Monetary Board.

Last year, PDIC settled P124.11 million in deposit insurance claims after the BSP ordered the closure of five problematic banks amid the COVID-19 pandemic.

The reported payments represented claims for 7,072 valid deposit accounts maintained in five banks ordered closed in 2020 or 76 percent of the estimated total deposit accounts of 9,305.  Total payments accounted for about 60 percent of the total estimated insured deposits of P208.07 million in these five closed banks.

The amount paid last year was way below the P1.18 billion settled in 2019 when the central bank shuttered 11 problematic banks. This covered 51,278 accounts or 92.25 percent of the total claims filed by depositors.

Finance Secretary Carlos Dominguez III said PDIC should focus on settling the insurance claims of depositors of closed banks, as well as the liquidation of foreclosed assets.

“I’d like them to focus as a pay box, to paying the insurance and then liquidating the banks,” Dominguez said.

Dominguez, who is also chairman of the PDIC, is not happy with the current pace of the disposition of assets.

“At the rate they have been doing it, it is going to take them forever to do proper liquidation. That is why we are also asking exemption from the bulk sales law,” Dominguez said.

The proposed reforms in the PDIC Charter and the doubling of the deposit insurance coverage to P1 million from the current P500,000 are outlined in Senate Bill  2089 filed by Sen. Juan Edgardo Angara and SB 1260 by Sen. Ramon Revilla Jr.

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Dominguez backs the proposed amendments to the PDIC Charter that aim to clearly delineate the functions of the PDIC and the BSP to ensure that the former focuses on its primary functions of being a “pay box” for deposit insurance claims and a liquidator of failed banks.

The BSP, in turn, will take over all of PDIC’s regulatory functions, such as the issuance of cease-and-desist orders relating to unsound banking practices to help prevent confusing functions.

For better coordination between the two agencies, the PDIC will be transferred to the BSP from the DOF.

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Article and Photo originally posted by Philippine Star last March 29, 2021 12:00am and written by Lawrence Agcaoili.

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