Legacy Group Banks May Be Doomed

[TheMason]

Sorry to go off-topic, but this story from the US caught my eye this morning.http://www.msnbc.msn.com/id/28212191/Crooks are all over the place. Too bad this guy is 70 and likely won't spend a day in jail for what he did.

[Jollygoodfellow]

Sorry to go off-topic, but this story from the US caught my eye this morning.http://www.msnbc.msn.com/id/28212191/Crooks are all over the place. Too bad this guy is 70 and likely won't spend a day in jail for what he did.

Just shows that the money hidden under the bed is the safest place for it :th_unfair:

[Mike S]

But Tom ..... I have looked and looked and no one has hid any money under my bed ...... :th_unfair:

[Jerry]

Ahh thats why the wife is allways cleaning under the bed. Well the things your learn on the web. :th_unfair: Jerry,Gina and Cait

[Mr Lee]

And now starts the blame game and how the PDIC can try to wiggle out of paying the insurance since Legacy is the depositor and not the actual customer, let's see how all this plays out! http://www.tribuneonline.org/business/20081215bus1.html Court ruling blamed for Legacy debacleBy Ruben Hortelano 12/15/2008 The Chamber of Thrift Banks said yesterday the intervention of the courts prevented the Bangko Sentral ng Pilipinas (BSP) in exercising its function to regulate a group of banks that was placed under the control of the Philippine Deposit Insurance Corp. (PDIC) for a breach of banking laws. The CTB said the BSP was prevented from pursuing its mandate of protecting thousands of hapless depositors by an earlier lower court decision restraining it from acting on the reports of examination that found several deficiencies in the books of the banks. A court order issued in early 2007 prevented the policy-making Monetary Board from acting on findings that banks belonging to the so-called Legacy Group were undercapitalized. The group successfully obtained a restraining order and continued to operate as before although their individual capital base was considered disproportionately weak in relation to their deposit liabilities. PDIC president Jose Nograles, meanwhile, assured depositors of the eight banks placed under BSP receivership that PDIC will pay all valid claims for deposit insurance. The Legacy Group banks that declared a unilateral holiday include the Bank of East Asia based in Cebu City, the First Interstate Bank based in Tacloban City, the Philippine Countryside Rural Bank also in Cebu, the Rural Bank of Para�aque, Rural Bank of Bais in Negro Oriental, the Pilipino Rural Bank also in Cebu and the Rural Bank of San Jose in Batangas. He added that PDIC personnel have been immediately deployed to undertake receivership and claims operations. Since the receivership orders have been simultaneous, and covered banks with numerous banking units, a very large number of accounts, estimated at over 90,000 are involved. To speed up operations, personnel from PDICs Operating Division 2 in charge of claims, receivership and liquidation were augmented by personnel from other PDIC departments. They have been working overtime to make initial evaluation of the eight banks, in preparation for payout, Nograles said. The speed of payout depends on the availability and state of bank records and the completeness of documentary and other requirements submitted by claimants. The sheer volume of accounts involved, however, would mean a longer time will be needed to make the necessary examination and evaluation prior to payout, despite continuous overtime work rendered by PDIC, according to Nograles. We have to be sure that we are paying only valid claims to safeguard the PDICs Deposit Insurance Fund, Nograles said. The PDIC DIF is the source of payment for insurance claims. Nograles added, We are doing it as fast as we can, and we will begin with the small depositors. Announcements on schedule for distribution of claim forms, submission of claims, and payout as soon as possible. The CTB said it supports policies and programs that address concerns and challenges surrounding the banking industry. The CTB is one with the BSP in its effort to address the most fundamental challenge of achieving and maintaining a strong domestic financial system and securing economic growth for the country, its statement said. BSP Gov. Amando Tetangco Jr. had told reporters the recent closure of Legacy Group banks and the ongoing liquidation of their assets cannot be attributed to the global financial crisis. The problems of these banks predate the start of the current turmoil, Tetangco said.

[Guardian]

A sure way to break a bank is to have a run on it! http://www.sunstar.com.ph/network/no-bank-...fficial-assures No bank holiday, official assuresMonday, December 15, 2008 CEBU CITY -- Withdrawals from the Rural Bank of Carmen increased by about P1.2 million more than its regular transactions last Friday morning, as depositors reacted to reports about liquidity problems in banks under the Legacy group.But the Carmen bank appealed to clients to calm down, pointing out it has not declared a bank holiday, contrary to a report on Sunday."We will continue our operations today," said Maria Karen Pitoy, the bank's president. "All depositors who want to ask about our status should visit us at our office so we can explain to them the status of the bank.""It's business as usual," she assured. Most of the bank's clients come from Carmen and the neighboring towns of Catmon and Sogod.The Bangko Sentral ng Pilipinas (BSP) has assured the problems are limited to some rural banks under the Legacy group and are not linked to the turmoil that has shaken financial institutions abroad.These banks' problems "were brewing long before, but the BSP's hands were just tied," said Daniel Arcenas, president of the Cebu Federation of Rural Banks. The BSP had reported, after an examination last year, that the Legacy banks were under-capitalized, but rulings from the local and appeals courts kept the central bank from acting on its findings. The Supreme Court (SC) issued early this month a temporary restraining order on the enforcement of those court rulings, in effect giving BSP a chance to act.The BSP placed seven rural banks in the Legacy group under receivership of the Philippine Deposit Insurance Corp. (PDIC) last week. Three of them operate in Cebu: the Philippine Countryside Rural Bank, Pilipino Rural Bank and the Bank of East Asia.Pitoy told Sun.Star Cebu that while Legacy is their majority stockholder, they "operate independently" and have done so for more than 36 years, long before Legacy acquired shares of the bank. A town mayor is reportedly among the bank's stockholders.Pitoy spoke of ongoing negotiations with potential investors who are interested in the bank, but added that panic-driven rumors could scare these investors away. "Kalma lang unta ang mga kliyente (We appeal to our clients to stay calm)," she said in a phone interview.She said that depositors withdrew P1.5 million last Friday morning alone, compared to about P300,000 during normal days.To help prevent a bank run, the City Government is arranging for an information center this week, for which it has sought advice from the BSP and the PDIC.Calls from rural banks' depositors eased last week after the PDIC first placed the Rural Bank of Para

[Travis]

There is nothing free in this world, if it sounds to good to be true, then it will be.

[Mr Lee]

http://business.inquirer.net/money/breakin...red-rural-banksIrregularities in shuttered rural banks Loans without collateral, diversion of fundsBy Doris DumlaoPhilippine Daily InquirerFirst Posted 22:07:00 12/14/2008THE BANGKO Sentral ng Pilipinas has uncovered certain irregularities--such as the granting of loans without collateral and documentation or use of bank funds to pay for obligations of affiliated pre-need companies--in some of the padlocked banks affiliated with the Legacy group, a central bank report said.The BSP last week shut down and placed under the PDIC's receivership seven more banks affiliated with the Legacy group, using the leeway recently obtained from the Supreme Court in taking prompt action against insolvent banks.In some of the banks already placed under PDIC receivership, the BSP found circumstantial evidence that a large amount of questionable loans were granted to borrowers without collateral and without adequate documentation, the report showed."The loan documents were not properly filled out, the loan application forms had no approving authority portion, thus, the person or persons responsible for the grant cannot be ascertained, the addresses of the alleged borrowers were not stated, there were no credit investigation reports to support the financial capacity of the borrowers to serve as basis for the grant and most of all, the signatures appearing in the loan documents were doubtful," the report noted.Among the companies which were identified as beneficiaries of the unsecured and unauthorized loans were Legacy Motors and One Card Co. Inc.The BSP report also cited instances that bank funds were being used to pay for the obligations of pre-need companies identified or related to the Legacy group. But it was made to appear that the payments were granted by the bank as loans.The report noted that the use of bank funds to pay for obligations of Legacy companies was a "clear case of estafa/misappropriation" punishable under the Revised Penal Code. But for banks already placed under PDIC receivership, the PDIC as liquidator or receiver was cited as the proper party to file the criminal complaints.The seven Legacy-affiliated banks padlocked by the BSP last week were Bank of East Asia based in Cebu; First Interstate Bank in Tacloban; Philippine Countryside Rural Bank in Cebu; Rural Bank of Para

[johnrxx99]

Well, this seems to have gone the way predicted by some.Interesting use of words here - Bank Holiday: in the UK a day off work, in the Phils no more money.Looks like these were probably Ponzi schemes, paying high interest for as long as people deposited more. My worry is that when it is found out a lot of depositors where expats, especially in the pension schemes that were then assigned back to Legacy, some bright spark in the PDIC will find a loophole. I certainly hope that is not the case.

[Mr Lee]

My thought was that the PDIC will try to find a loop hole anyway. I am not sure but I think Legacy is the one to have made the deposits? and not the actual person who owned the funds? Can anyone tell me if this is this true and if so has anyone actually filled in the bank account card to open an account in their own name who invested in Legacy?My thought is that if it is what I think it is, then the deposits will be deemed to have been made by Legacy and not the investors and the total insured will be either p100,000 or p250,000 and not per depositor. JMHO