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Letter to the Editor - PDIC's role in EIB rehab |
RECEIVERSHIP AND BANK MANAGEMENT GROUP March 26, 2014 MS. LETTY JIMENEZ-MAGSANOC Dear Ms. Magsanoc: This is in relation to the article of Mr. Raul J. Palabrica entitled, “Hopeful bank rehabilitation” published in his column, Corporate Securities Info (CSI) in the Philippine Daily Inquirer on March 21, 2014 commenting on the rehabilitation of the closed Export and Industry Bank (EIB). It should be clarified that the EIB’s closure was triggered by the April 26, 2012 letters of its Board of Directors advising the Bangko Sentral ng Pilipinas (BSP) that they will not open their branches effective April 27, 2012. Thus, the Monetary Board of the BSP placed the EIB under the receivership of PDIC. As receiver, PDIC worked on the rehabilitation of EIB as allowed under The New Central Bank Act. PDIC talked to and received expressions of interest from Strategic Third Party Investors (STPIs) to rehabilitate the bank, with some STPIs actually doing due diligence. PDIC also conducted an information campaign for EIB’s uninsured depositors and creditors nationwide to explain to them the financial condition of the bank, their chances of recovery, and the requirements to rehabilitate the bank in order that their recoveries could be enhanced. During these fora and the numerous meetings with EIB depositors, PDIC explained why the consent of depositors and creditors was necessary for the process to proceed legally. This consent was in fact also required by the stockholders as a condition to their approval of the sale of the substantial assets of the bank, and by the STPI. Mr. Palabrica mentioned in his article that PDIC put “legal roadblocks” on the offer of Banco de Oro Unibank to take over EIB’s operations. May we clarify that once a bank is under receivership, there is a clear-cut legal process that must be observed. In fact, PDIC exerted all efforts to gather depositors’ and creditors’ consents to ensure that all possible stumbling blocks for its rehabilitation are addressed. Despite efforts exerted to explain to EIB depositors and creditors the requirement for their consent, only 56% of the uninsured depositors representing 62% of the total amount of uninsured deposits gave their consent. This, notwithstanding, PDIC proceeded with the conduct of two biddings for EIB’s rehabilitation, on October 18, 2012 and on March 20, 2013. Both biddings were declared a failure since none of the pre-qualified STPIs submitted a bid. These biddings were conducted in spite of the efforts of a group of companies with claims against E-Securities, an EIB subsidiary, to prevent the conduct of these biddings. This group – composed of Pacific Rehouse Corporation, Forum Holdings Corporation, East Asia Oil Company, Inc., Pacific Concorde Corporation and Mizpah Holdings, Inc., was initially able to secure a 72-hour temporary restraining order (TRO) from the Regional Trial Court (RTC) to prevent the bidding for EIB’s rehabilitation on October 18, 2012. Not satisfied, the same group proceeded to file before the Court of Appeals (CA) a Petition for Certiorari and Prohibition with Prayer for Issuance of TRO and/or Preliminary Injunction to prevent further efforts at bidding. The CA denied the said petition in a decision which has now achieved finality. In the absence of investor interest as shown by the two failed biddings, PDIC was constrained to submit to the Monetary Board, its determination that EIB can no longer be rehabilitated. The Monetary Board has since ordered the liquidation of EIB. Since EIB is now under liquidation, proposals to purchase the bank may take the form of purchase of assets and assumptions of liabilities by an STPI. The recovery of uninsured depositors and creditors may be enhanced by the value that the STPI will contribute. We hope that this letter has clarified the matters raised in Mr. Palabrica’s column with regard to the role of PDIC in EIB’s rehabilitation. In the spirit of fair and balanced reporting, we request that this letter be published in its entirety. Thank you very much. Very truly yours, ATTY. NANCY L. SEVILLA-SAMSON cc: MR. RAUL J. PALABRICA Click to see article - PDIC's role in EIB rehab |
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