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Less than half of Exportbank Depositors and Creditors Consent to Bank Rehab

The Philippine Deposit Insurance Corporation (PDIC) said that consent to the rehabilitation of the Export and Industry Bank (EIB) had come from less than half of the depositors and uninsured creditors of the bank.

Executive Vice President Cristina Q. Orbeta disclosed that as of end November 2012, only about 44% of the total number of uninsured depositors and creditors of EIB accounting for 48% of the bank’s ordinary credits have signified their consent to the rehabilitation of EIB. The consent from the uninsured depositors and creditors is one of the critical requirements in order for EIB’s rehabilitation to proceed.

The major stockholders raised the need for consent from 100% of the creditors and depositors with uninsured deposits before they can undertake to perform the acts required to approve and implement the rehabilitation of EIB. Likewise, strategic third party investors interested in acquiring EIB also indicated that the consent of depositors and creditors is critical considering that the assets of EIB is much less compared to the total amount of its liabilities. Moreover, the implementation of the rehabilitation would necessitate the turnover of deposit documents. This requires the written consent of the depositors to preclude charges for the violation of the Deposit Secrecy Law.

PDIC earlier imposed a deadline of September 8, 2012 for the submission of the required consent of depositors and creditors. To give sufficient time to depositors and creditors to make a decision, the deadline was extended twice or by two (2) months up to November 9, 2012. During the extension period, only 14% of the depositors, accounting for 23% of total ordinary credits of EIB submitted their consent.

PDIC said that they have exerted all efforts to explain to depositors why their consent is necessary. Individual notices were sent to EIB depositors and creditors. PDIC has also been conducting meetings with EIB’s uninsured depositors and creditors since August this year to explain the rehabilitation process and the requirements for rehabilitation. During the meetings, which were conducted nationwide, PDIC emphasized that for the rehabilitation of EIB to proceed, the depositors need to waive secrecy of deposits and agree to the restructuring, waiver and condonation of amounts that will not be assumed by the investor. Depositors and creditors were also informed that the rehabilitation of EIB is possible only if there are interested investors who will bid for the bank, and that the requisite consent of creditors and uninsured depositors as well as of 2/3 of outstanding capital stock are obtained.

The stockholders also raised concern of the claims on the bank’s assets by parties other than the depositors and creditors of the bank. The group that has a contingent claim on the assets of EIB is composed of Forum Holdings Corporation, Pacific Rehouse Corporation, East Asia Oil Company, Inc., Pacific Concorde Corporation and Mizpah Holdings, Inc. The case filed by Forum Holdings et. al. with the Court of Appeals (CA) for Declaration of Liability with Prayer for Issuance of Temporary Restraining Order (TRO) and/or Preliminary Injunction to prevent the rehabilitation of EIB is pending.

The PDIC earlier determined that EIB, under certain conditions, may be rehabilitated following expressions of interest from strategic third party investors to rehabilitate the bank. Pre-qualified investors indicated their preference to participate in the rehabilitation of EIB via purchase of assets and assumption of liabilities. The effort to pursue a re-bidding of EIB’s rehabilitation, following the failure of bidding on October 18, 2012, is intended to enhance recovery for the uninsured depositors and creditors of the closed bank.

The PDIC expressed concern that the low turnout of consents received from uninsured depositors and creditors of EIB may delay the bidding process.

The PDIC assured that it is closely monitoring and reassessing the feasibility of meeting the critical requirements for the rehabilitation of EIB as well as assessing other viable options.

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The Philippine Deposit Insurance Corporation (PDIC) was established on June 22, 1963 by Republic Act 3591 to provide depositor protection and help maintain stability in the financial system by providing permanent and continuing deposit insurance. Effective June 1, 2009, the maximum deposit insurance coverage is P500,000 per depositor. All deposit accounts by a depositor in a closed bank maintained in the same right and capacity shall be added together. A joint account shall be insured separately from any individually-owned deposit account.

PDIC news/press releases and other information are available at the website, www.pdic.gov.ph.

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