Advances, insufficient assets led to LBC bank closure - BSP

The Bangko Sentral ng Pilipinas (BSP) said Wednesday it decided to shut down the LBC Development Bank because its estimated realizable assets were no longer sufficient to cover its liabilities and it had a build-up of advances to its affiliates that weakened its finances. Since last year, LBC Development Bank was issued a cease-and-desist order (CDO) on its practice of granting advances to its affiliates, including the LBC remittance firm, BSP director Chuchi Fonacier said in an interview with GMA News Online. She said the BSP issued the CDO because they already noticed the impact of the advances on the bank's financial health. “But the bank persisted… Nag-build-up ‘yung advances to its affiliates." Fonacier said. "Deposit liabilities of P6.09 billion…" “LBC Development Bank had estimated total deposit liabilities of P6.09 billion… Latest available records show that as of June 30, 2011, insured deposits amount to P3.73 billion. Number of accounts totaled to 321,516 and 99.4% of the said total number of accounts are fully-covered by deposit insurance," the PDIC said. PDIC said it “took over the bank… [to] gather, verify and validate all bank records and administer and preserve its assets for the benefit of all creditors." The BSP Monetary Board placed the bank under PDIC receivership on Sept. 9, but was officially made public only three days later on Monday, Sept. 12 through the PDIC. In a statement posted on its official Facebook account, LBC Development Bank sought to assure its customer that “the issue of LBC Bank being placed under receivership by PDIC has minimal effect to LBC Express. The extent of the concern is limited only to our ATM Bilis customers." The bank’s website is no longer active. “The rest of our services such as our other remittance services, courier, cargo and Balikbayan box are not affected," the bank added. “And to our ATM Bilis customers, we are very sorry for this inconvenience and rest assured that we are working round the clock to resolve the matter. We shall issue daily updates about this matter. We shall keep you posted. Thank you for your understanding," the bank also said. Depositors' forum Depositors of the padlocked LBC Development Bank will have their first forum with the PDIC on Thursday, Sept. 15, at the Makati Coliseum in Makati City. Eighteen other depositors’ forums have been set at various LBC Development Bank branches, according to the PDIC.
PDIC also assured depositors of LBC Development Bank that all valid accounts and deposit insurance claims will be paid as soon as possible. It also said that updates will be issued as soon as examination and validation of accounts are completed. PDIC said its representatives will explain in the forum the requirements and procedures for filing deposit insurance claims. LBC Development Bank has its head office at 809 J. P. Rizal St., Poblacion, Makati City and has 19 branches nationwide. — VS, GMA News