The Philippine Deposit Insurance Corporation (PDIC) was named the 2013 Deposit Insurance Organization (DIO) of the Year by the International Association of Deposit Insurers (IADI), a Switzerland-based organization of 71 member deposit insurance organizations across the globe. The award is in recognition of the PDIC’s significant achievements in 3 categories, namely: in bank resolutions and payouts; compliance to the IADI Core Principles and international participation; and the deposit insurance system improvements. The recognition has distinctly marked PDIC’s 50th anniversary this 2013.

The DIO of the Year Award was conferred to the PDIC during the 12th IADI Annual Conference and Annual General Meeting (AGM) of Members in Buenos Aires, Argentina on November 7, 2013. Executive Vice President Cristina Q. Orbeta received the award as head of the PDIC delegation to the AGM. The DIO of the Year Award for 2013 was presented to PDIC for being the IADI member with significant achievements and for garnering the highest aggregate score based on 3 categories as cited above, which standards are based on current international practices.

The other recipients of special awards were the Deposit Insurance Agency of Russian Federation, “Award for Achievement in Banking Resolutions and Payouts”, Bank Guarantee Fund of Poland, “Award for Core Principles and International Participation”, and Kazakhstan Deposit Insurance Fund, “Award for Deposit Insurance System Improvements.”

The very first recipient of the DIO of the Year Award was the Central Deposit Insurance Corporation of Taiwan in 2005. Other previous winners were:

1. Canada Deposit Insurance Corporation (2006)
2. Fundo Garantidor de Creditos of Brazil (2007)
3. Federal Deposit Insurance Corporation (2008)
4. Savings Deposit Insurance Fund of Turkey (2009)
5. Deposit Insurance Corporation of Japan (2010)
6. Malaysia Deposit Insurance Corporation (2011)
7. Korea Deposit Insurance Corporation (2012)

PDIC’s award is the result of a comprehensive evaluation by the IADI Award Committee of the PDIC’s performance for a period of three years prior to IADI’s Annual General Meeting (AGM). The evaluation was based on the achievements of PDIC in cooperation with other stakeholders of the Philippine deposit insurance system in the following categories:

The first category recognizes the significant accomplishments by the DIO that has handled or experienced the resolution and/or payout process of one or more failed financial institutions during the assessment period, based on current international best practices.

For the evaluation period of October 2010 to October 2013, a total of 74 banks was ordered closed by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP). Based on its mandates as deposit insurer, co-regulator and statutory receiver, PDIC administered the ensuing resolution and payout processes based on policies and processes that are constantly enhanced in coordination with other financial regulators.

The closure of 74 banks during the three-year reference period included one commercial bank, three thrift banks and 70 rural banks. PDIC has been promptly reimbursing closed bank depositors with their insured deposits and has continuously enhanced its payout operations. PDIC had overhauled its payout processes such that the average time to start paying out deposit insurance claims was within 11 days from the time of bank closure, well within the benchmark of 30 days from date of closure stated in IADI Core Principle 17 (Reimbursing Depositors). The speed of processing was also significantly improved from 60 claims per day per claim servicing unit to 120 claims per day. The innovations introduced in the payout operations resulted to more claims processed at shorter time and reduced waiting time for the depositors. The assurance that valid deposit claims shall be paid promptly enhances depositors’ confidence in the banking system and financial stability.

During the reference period, the PDIC also approved the grant of financial assistance aggregating P1.81 billion to 9 banks as an incentive to acquire banks in distress. The grant of financial assistance was made under the provisions of bank strengthening programs jointly undertaken by the PDIC with the BSP, and the Land Bank of the Philippines (LBP).

This category recognizes the efforts by a DIO to be compliant with the IADI Core Principles for Effective Deposit Insurance Systems either by carrying out an evaluation of compliance or by making the necessary modifications to be compliant, as well as to recognize achievements in the international arena relating to the Core Principles or other areas.

During the evaluation period, PDIC has conducted a self-assessment of its compliance to the Core Principles which has been reviewed by a team of IADI experts. PDIC has also actively participated as resource persons and delegates to international events and seminars, and in the preparation of researches that provided bases for the development of guidance papers.

The PDIC Board of Directors noted in January 2013 the conduct of a self-assessment of compliance to Core Principles for Effective Deposit Insurance Systems with the objectives of ensuring that the PDIC adheres to the Core Principles, and in the process of self-assessment, to identify legal, policy and program gaps that need to be addressed to improve compliance. For 6 months, the self-assessment was carried out by a team of Management-level officers and aided by the Handbook developed by IADI for guidance.

The results of the self-assessment were reviewed and validated by an IADI team of experts without a workshop on June 24-26, 2013. The IADI team of experts agreed and confirmed the PDIC’s self-assessment on 14 out of the 18 Core Principles. It should be noted that the PDIC was the first DIO to conduct a self-assessment with a claim for compliance rating on each Core Principle supported by source documents, statistical information and documented results of consultation and research with concerned agencies and other safety-net players. This self-initiative inspired the development of the Self-Assessment Technical Assistance Program (SATAP) in IADI, which may be considered as an alternative approach to informing and sharing with DIOs the process of self-assessment of compliance with the Core Principles.

The PDIC organized 5 study visits for the period 2010-2013 for requesting DIOs and hosted 4 international conferences including the 39th IADI Executive Council Meeting and International Conference in June 2013. PDIC participated in 28 conferences/seminars/workshops sponsored by IADI or its members where PDIC acted as resource persons in 10 of these. In line with international capacity-building initiatives, the PDIC also participated in 8 foreign trainings, seminars, and conferences in 2010-2013 organized by the Asia-Pacific Economic Cooperation – Financial Regulators Training Initiative (APEC-FRTI), International Monetary Fund, the World Bank, Federal Deposit Insurance Corporation and other international organizations that promote financial stability.

This category gives recognition to the DIO that has implemented the most significant improvements to its deposit insurance system, either to make it more efficient, to enhance its mandate and powers, or to comply with international best practices.

From October 2010 to October 2013, PDIC has adopted enhancements in its processes and programs covering funding system, payout operations and exercise of oversight functions. The Corporation has also instituted legal reforms that extended or enhanced its mandate and powers. Lastly, PDIC has carried out clustered public awareness campaigns providing critical information about deposit insurance to its various stakeholders.

The PDIC is committed to continuously improve its IT infrastructure, processes and programs to deliver its mandates. In the areas of payouts, assessment collection, monitoring of insured banks and resolution activities, the PDIC has implemented several changes over the past 3 years.

Aimed at reducing the depositors’ waiting time, new payout models and processes are in place, such as waiver of the requisite filing of claims of the immediate payment of insured deposits with small balances, starting at P5,000 in 2010 to P15,000 in 2012. (This was further raised to P50,000 in December 2013). A Project Management Team (PMT) approach was implemented to handle claims settlement operations (CSO) which significantly reduced the process cycle. Under the PMT approach, significant activities leading to CSO are integrated under the management of a composite team headed by a Project Manager in lieu of traditional operations, which took into account separately and sequentially line functions of the responsible departments. These payout methodologies are regularly evaluated in view of continuing efforts to streamline processes and systems in CSO. For the last 3 years, PDIC’s CSO has consistently passed the annual surveillance and reassessment audit conducted by a third-party certifying body, thus sustaining its ISO 9001-2008 certification.

To speed up the process of premium assessment collections, PDIC made available a wide range of modes to remit payments from member banks: direct settlement to PDIC, registered mail, Real Time Gross Settlement or LBP online collection facility. The Corporation also implemented enhancements on its information technology (IT) systems and processes to improve its supervisory oversight functions on risk assessment and early detection of banks’ weaknesses. The PDIC likewise partnered with the BSP and other government agencies in formulating bank-strengthening programs to assist small banks and help them enhance their capabilities in meeting regulatory requirements.

Furthermore, the PDIC continuously conducts public awareness campaigns to increase the level of awareness on PDIC and the scope and limitations of deposit insurance. These campaigns provide the depositing public with the basic information on deposit insurance for their education, guidance and protection.

Finance Secretary and PDIC Board Chairman Cesar V. Purisima lauded the entire PDIC workforce for its contributions to the international recognition and financial stability in the nation. He urged the PDIC to sustain and continually improve its standards in the performance of its multi-faceted role as Deposit Insurer, Co-regulator of banks, and Receiver and Liquidator of closed banks.

The DIO Award is presented by the PDIC Board Members and Executive Committee led by President Valentin A. Araneta to Secretary of Finance and PDIC Board Chairman Cesar V. Purisima. With them are Executive Vice Presidents Imelda S. Singzon and Cristina Q. Orbeta; Directors Rogelio W. Manalo and Protacio T. Tacandong; and Senior Vice Presidents Alma Teresa R. Malanog, Ma. Ana Carmela L. Villegas, General Counsel Romeo M. Mendoza, Jr. and SVP Sandra A. Diaz.

PDIC President Valentin A. Araneta expressed humility over the award. He said that this manifested the hard work and service commitment of the Board, officers and staff of the PDIC. “The prestigious award is an affirmation that we have achieved our vision of becoming a world-class organization in depositor protection,” President Araneta said.

He added that 2013 continues to be a remarkable year and a true milestone for PDIC’s 50th anniversary celebration last June 21. “Winning the DIO Award is a fitting culmination to the concerted efforts of the Corporation on its 50th year. Rest assured that the international recognition bestowed by our global peers will continue to inspire us to provide public service excellence to depositors,” President Araneta affirmed.