Congress call for Congressional Investigation on LBC Bank Closure

Bangko Sentral ng PilipinasA lawmaker has called for a congressional inquiry on the closure of LBC Development Bank which was placed under receivership of the state-run Philippine Deposit Insurance Corporation (PDIC).

In House Resolution 1730, Rep. Julieta Cortuna (Party-list, A TEACHER) said a congressional investigation should be conducted to determine the current status and financial condition of LBC Development Bank and its management by the Bangko Sentral ng Pilipinas (BSP).

Cortuna said the LBC Development Bank was placed under PDIC on September 9, 2011. By virtue of Monetary Board Resolution 1354, the BSP ordered PDIC to gather and validate all bank records and administer its assets for the benefit of all creditors.

Cortuna said the BSP declared that the thrift bank was placed under receivership due to insolvency, unsustainable operations that are detrimental to depositors and creditors and violation of cease and desist order to unsafe and unsound practices.

The placement of LBC Development Bank under receivership came as a surprise to the bank’s depositors given the institution's track record, according to Cortuna.

Citing reports, Cortuna said the thrift bank declared in 2009 that it has total assets of P5.5. billion, net income of P39.8 million and a total capital of P514.3 million.

"The latest records show that as of June 30, 2011, LBC Development Bank had estimated total losses of P6.09 billion," Cortuna said.

Cortuna said there is a need to initiate measures so that stringent monitoring and frequent evaluation of the performance of thrift banks will be imposed.

"It is imperative for the BSP to review its existing policies and requirements on the accreditation of thrift banks to prevent the occurrence of such problems," Cortuna stressed.

According to reports, LBC Bank was previously awarded the "superbrand" status by Superbrands Philippines Council for being one of the most reliable and trusted brands.