MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) has shuttered the Rural Bank of Luna (Isabela), bringing to 16 the number of financial institutions closed down by the regulator as part of efforts to weed out weak players in the industry.
The closed rural bank was placed under the supervision of the state-run Philippine Deposit Insurance Corp. (PDIC).
Under the PDIC Charter, a bank that has been placed under liquidation shall in no case be re-opened and permitted to resume banking business.
BSP officer-in-charge Nestor Espenilla Jr. said the country’s banking system has evolved over the years with the closure of some players as well as the mergers and consolidation of the others.
“The system is evolving so what we are seeing is the weaker players have decided to get out of the system or combine with the others. We keep saying compared with 10 years ago the banking system today, those that remain will continue to service the market is more stronger than the banking system 10 years ago,” he said.
Espenilla cited the weak banking system in Europe prompting the European Central Bank to release more liquidity in their financial system.
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“In Europe there is something wrong with the banking system so what is happening to them they are unable to grow even though the central bank there keeps releasing liquidity it doesn’t go out because the transmission channel, the financial system is a problem,” he said.
According to him, the Philippines has avoided that situation after laying down the groundwork for a healthy financial system.
“We have created a very robust financial system, very effective transmission mechanism and that translates to loans. That is why our loan growth is robust,” he said.
