Govt not obligated to bail out Banco Filipino – BSP

The government isn’t obligated to rescue embattled banks that have failed to comply with the rules and regulations of the Bangko Sentral ng Pilipinas, said the lawyer of the central bank on Friday. Speaking to reporters before the Department of Justice hearing, lawyer Sandra Coronel said that it would be illegal for BSP to bail out allegedly errant banks like Banco Filipino Mortgage and Savings Bank (Banco Filipino), which was closed and placed under receivership of Philippine Deposit Insurance Corp. (PDIC) last March. “The government is not in the business of bailing out corporations and banks that have clearly violated the regulations. Over the years, we have repeatedly given warnings on Banco Filipino for them to follow BSP regulations. Otherwise, depositors’ money will be wasted," Coronel said. “They expect the government to bail them out. That’s really unfair and illegal, that is why BSP resisted the demand to bail them out. BSP and Monetary Board officials have to defend their decision in a forum like this — that it is really not proper to use government funds to bail them out," the lawyer added. The DOJ panel led by Senior State Prosecutor Rosanne Balauag is hearing the two complaints that BSP and BF filed against each other. On Friday, direct respondents in the case filed their respective counter-affidavits. BSP's defense: BF was forum shopping Banco Filipino’s complaint accused central bank officials of committing graft practices by denying the emergency loans the bank requested for and by failing to support to reorganize and rehabilitate the beleaguered Banco Filipino. The thrift bank alleged that the Monetary Board — the BSP’s policy-making body — pressured Banco Filipino into paying its emergency loans. But Coronel said that their first argument is that Banco Filipino cannot bring the matter to the DOJ because it has already filed the same graft charges before the Office of the Ombudsman. “Our primary issue is jurisdiction, because a similar graft case against BSP and the Monetary Board was already filed with the Ombudsman and we have filed our counter-affidavits here. It should be left with the Ombudsman the subsequent investigations. Clearly, the case against them (BSP and MB officials) have no merit, but we still discussed that fact even if there is no jurisdiction [at the DOJ]," Coronel added. The named respondents in Banco Filipino’s complaint are BSP Gov. Amando Tetangco Jr., BSP Deputy Governors Nestor Espenilla Jr. and Juan de Zuniga Jr. and Monetary Board members Juanita Amatong, Alfredo Antonio, Ignacio Bunye, and Peter Favila. Coronel said that the seven officials went to the DOJ last Thursday to affirm the authenticity of their counter-affidavits. Banco Filipino's defenses The BSP, on the other hand, has charged Banco Filipino with the following offenses stemming from its alleged violations of central bank regulations:

• Willful refusal to file audited financial statements for 2002 to 2007
• Falsification and issuance of false statements to hide the true financial condition of the bank
• Willful refusal to report directors, officers, stockholders, and other related interest or DOSRI loans
• Willful refusal to comply with numerous BSP laws and directives and
• Willful refusal to cease the conduct of unsafe, hazardous, and unsound bank practices.

Speaking to reporters, Banco Filipino lawyer Julieta Morales, said that the BSP has only filed cases against the thrift bank after it refused to withdraw the cases it had previously filed against the central bank. “None of these cases would have been filed by BSP against Banco Filipino officers if the bank only agreed to dismiss all these cases, the damage suits they had filed against BSP for illegal closure," Morales said. She added that the BSP did not give Banco Filipino its P25-billion financial assistance package because of the cases the thrift had filed against the BSP. “They made it a condition that the financial assistance will not be released unless BF agrees to dismiss all the damage suits that it has filed," Morales said. But Coronel accused Morales of diverting the issue because the compromise deal to dismiss the cases was made “several years ago" and had nothing to do with the cases on hand. It was Banco Filipino that offered to withdraw the cases against the BSP in exchange for the grant of the P25-billion financial assistance, said Coronel. However, Banco Filipino later wanted to get the multibillion-peso bailout without withdrawing the cases against the central bank, she added. “They [Banco Filipino officials] are citing as ground for graft the allegation that we [BSP] are forcing them to withdraw the cases in exchange for a bailout. But it was them who proposed that there be a bailout and that includes withdrawal," Coronel told GMA News Online in a separate interview. “And then suddenly, they don’t want to withdraw anymore," the BSP lawyer said. — MRT/VS, GMA News