BSP says banking system remains fundamentally sound

April 23, 2009 11:08 am 

MANILA, April 22 — Less than 30 rural-based lending institutions have fallen by the wayside since last year but the Bangko Sentral ng Pilipinas remains confident the banking system as a whole remains fundamentally sound.

Deputy BSP governor Nestor Espenilla stressed this point in a text message on Wednesday soon after confirming that two more rural lenders folded and ordered closed by the policy-setting monetary board of the central bank.

“This is normal housecleaning,” Espenilla said.

He meant the 29 rural lenders that folded and toppled from 2008 up to present, including seven that closed since January this year.

Only one Legacy-linked lender folded thus far this year but the BSP refused to identify the lender because many of their owners refuse up to now their close relations with delos Angeles.

Twenty-two rural banks were ordered closed last year and of this number 12 were Legacy-linked.

“Only 10 rural banks, if you exclude those linked to the Legacy Group, actually closed last year, which is below the annual average,” Espenilla said.

He stressed both Accord Savings Bank based in Baguio City and Bangko Rural ng Bulacan of the same province were never linked to the Legacy Group of banks whose principals were headed by part time politician and financial engineer Celso delos Angeles.

“I’d rather characterize this as occasional closure and part of the continuing maintenance of the overall health of the banking system,” Espenilla said.

Ten rural banks closed shop in 2006 followed by 15 more in 2007 but their closure should not be missed by small borrowers in the countryside, according to Espenilla.

“Their loss has promptly been replaced by the establishment of new ones, resulting to even more new branches overall,” he added. (PNA)



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