Why PDIC shifted to liquidation of EIB

This is in relation to Raul J. Palabrica’s column on the closed Export and Industry Bank (“Rehabilitation, not liquidation,” Business, Inquirer, 5/31/13).

We wish to emphasize that the Philippine Deposit Insurance Corp. (PDIC) exerted its utmost to pursue and facilitate the rehabilitation of EIB after the stockholders and management surrendered its license to the Bangko Sentral ng Pilipinas on April 26, 2012. The PDIC, as receiver, determined that EIB can be rehabilitated, to the benefit of depositors and the general public, only if strategic third party investors (STPIs) interested to rehabilitate the bank would comply with the requirements for the rehabilitation of a closed bank, namely: capital strengthening, liquidity, sustainability and viability; and governance.

After prequalifying the STPIs on their ability to comply with these requirements for rehabilitation, two public biddings were held for the purpose. Unfortunately, the biddings, conducted on Oct. 18, 2012 and March 20, 2013, failed because no bids from prequalified STPIs were received.

Concurrently, PDIC undertook vigorous legal action to ensure that the rehabilitation efforts would not be frustrated or delayed by the case filed by Pacific Rehouse Corporation, Forum Holdings Corporation, East Asia Oil Company Inc., Pacific Concorde Corporation, and Mizpah Holdings Inc. to stop the bidding. The PDIC has also organized, since last year, numerous meetings and consultations with EIB depositors, creditors and stockholders nationwide to explain the rehabilitation process and the requirements for rehabilitation. Allow us to clarify that the consent of creditors and uninsured depositors is required under the law and was specifically imposed by the STPIs and the bank’s stockholders. PDIC, as receiver, merely coordinated the process for the benefit of all stakeholders of the bank.

Regrettably, after all the efforts taken to pursue the rehabilitation of EIB, the prequalified STPIs decided not to proceed. Thus, PDIC made the final determination that the bank can no longer be rehabilitated. The Monetary Board directed the PDIC to proceed with the liquidation of EIB in April 2013.

At this point, the sooner the bank’s assets are liquidated or converted into cash, the better for the uninsured depositors and creditors because delays in the liquidation of a closed bank will mean delay in the distribution of the remaining assets of the bank to its creditors, in accordance with the Rules on Concurrence and Preference of Credits.

Delay will also unduly increase the cost of liquidation to the detriment of EIB’s uninsured depositors and creditors.

We hope that we have sufficiently clarified the issues raised in Palabrica’s column with regard to EIB’s liquidation.

—JOSE G. VILLARET JR.,

vice president,

Corporate Affairs Group,

Philippine Deposit

Insurance Corp.,

Makati City