Mandaluyong City-based AMA Rural Bank has protested its closure by the Bangko Sentral ng Pilipinas (BSP) but senior monetary officials said the decision was appropriate.
BSP Deputy Governor Chuchi Fonacier said the policy-making Monetary Board’s decision to stop the rural bank’s operations is provided for in their new charter.
“Legal bases exist for the closure of AMA Rural Bank of Mandaluyong. Hence, the Monetary Board decided to prohibit AMA Bank from doing business,” Fonacier said in a text message.
The padlocked lender has condemned the central bank’s closure order which it considers unreasonable, saying its assets and resources allow them to operate ‘in every capacity.”
“The bank’s management regrets this development as the bank, based on its latest financial statement filed with the (BSP), is the 15th largest rural bank in the country in terms of assets with total resources at P2.76 Billion as of end September 2019,” it said.
“(Also,) The bank is liquid with its shareholders’ capital injection of an additional P405 million, and a total deposit due from BSP/Other Banks amounting to P246 million. Given this strength, AMA Bank assures our clients, employees, and stakeholders that we are fit to operate in every capacity. We challenge the closure as unreasonable,” the lender added.
According to AMA Rural Bank, they are exploring all possible courses of action to reverse the BSP’s decision and resume their operations.
Under the section 30 of the BSP charter, a lender may be prohibited from doing business in the country if it is unable to pay its liabilities, has insufficient realizable assets as determined by the BSP, having probable losses to its depositors and creditors and has willfully violated a cease and desist order that has become final.
The BSP stressed the recent AMA Bank closure along with another thrift bank on 8 November 2019 has negligible systemic impact as its contributions to the financial system is relatively small.
“The closures of AMA Rural Bank of Mandaluyong Inc. and Maximum Savings Bank, Inc. are not expected to adversely affect the Philippine banking system considering their relatively small size. As of 30 June 2019, their total assets are equivalent to only 0.02 percent and 0.002 percent, respectively, of the total assets of the banking system,” the BSP said.