The Banco Filipino closure can give lessons and reminders to all Philippine depositors about where and how to handle their savings accounts, time deposits and checking accounts.
1. Choose a bank that has been stable for decades.
Banco Filipino has been closed before, in 1985, and stayed closed until 1992, so it’s a wonder there were still many who trusted the bank and who still deposited more than 500,000 pesos — the PDIC insurance limit.
2. Choose a bank that has strong backing — meaning the owners have other big and reliable businesses and have strong standing in the business community.
This is not an endorsement of BDO, but when BDO lost 1.3 billion pesos in the third quarter of 2008 due largely to its investments in failed Lehman Brothers, BDO survived and grew even faster. Why? It had financial strength, both within the firm and in the business sector. The other Lehman-exposed banks, Metrobank and RCBC, also survived because they had financial strength and backing.
We can also see that people, particularly big depositors, trusted these banks as there was no bank run even when the Lehman collapse and its link with local banks was exposed by the media.
3. Spread out your deposits to different banks.
The PDIC insures deposits for only up to 500,000 pesos, so limit your savings and time deposits in one bank to 500K.
Breaking your savings and time deposits into several accounts under your name in the same bank or in different branches of the same bank will not work.
According to PDIC, in case of a bank closure, it will count savings accounts, checking accounts and time deposits under the same name in the main branch and in the branches as ONE account. If the total of these accounts exceeds 500K, you will be paid only 500K. You’ll get the rest after a time and only if there is still money left to be distributed.
Of course, if after your own due diligence, you’re 100% sure about the stability of your bank, you can deposit more than the 500K limit.
4. See balance sheets/financial reports on the Bangko Sentral ng Pilipinas website from time to time.
These reports can give a sign of possible problems. You don’t have to study the balance sheets. I-check mo lang kung nag-submit siya. You just check if your bank has submitted its financial report for the latest quarter when all other banks have submitted their reports.
Looking at the list of the top savings banks based on number of branches that I posted last January, I saw my note which says that Banco Filipino has no asset report for the quarter ended June 2010.
As I write this, I looked again at the BSP reports and I found out that since the first quarter of 2008 — the oldest report on the BSP page — Banco Filipino has not been submitting a report.
5. Scan the business pages of newspapers from time to time. Or Google your bank from time to time.
I googled Banco Filipino, and it’s a revelation that just last December 2010, the Manila Bulletin website mb.com.ph published an article about Banco Filipino expecting a financial relief package of 25 billion pesos.
6. Lastly, choose a bank that has no fight with the BSP.
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