MANILA, Philippines - The governor and officials of Bangko Sentral ng Pilipinas, and members of policy making body, the Monetary Board, have been cautious in handling issues regarding Banco Filipino Savings and Mortgage Bank, a thrift bank with a checkered past.
After the Supreme Court made its landmark decision in 1991 nullifying Banco Filipino's previous closure on grounds that the Central Bank (CB) and the Monetary Board members acted arbitrarily, most of the monetary officials have been sued for issuing orders that are either favorable or not to Banco Filipino.
A BSP lawyer had told ANC's Business Nightly that the Banco Filipino experience had made the regulators cautious toward banks in trouble.
The following were the cases filed against central bank's previous and current governors.
CENTRAL BANK Governors:
Jose B. Fernandez, Jr. (19 January 1984 - 19 February 1990)
Under Fernandez's watch, Banco Filipino, then the biggest thrift bank in the country, along with other banks experienced heavy withdrawals. Banco Filipino was forced to declare a bank holiday on July 17, 1984 and was closed 6 months later on Jan. 25, 1985 on orders of the CB, allegedly due to weak financial position.
The decision was made in the course of the CB supervision department's special examination, which found Banco Filipino insolvent. The Supreme Court considered the closure arbitrary since the examination report was not yet final.
As a result, Banco Filipino sued the regulators and attached the estate of Fernandez and 3 more CB officials in its P18.8-billion consolidated damage suit.
In 2009, the Supreme Court ruled that Banco Filipino can run after Bangko Sentral ng Pilipinas (BSP), which was created after CB was closed, and its monetary officials, leaving the heirs of Fernandez still empty handed decades after the the first time Banco Filipino was padlocked.
Jose L. Cuisia Jr. (20 February 1990 - 2 Juy 1993)
It was during his time that the Supreme Court decision nullifying the bank closure was handed down. However, he delayed Banco Filipino's reopening since he required that the bank settle first the P3 billion in emergency loans that the central bank extended to it. Of the amount, P2 billion was used by Banco Filipino to service withdrawals before it went on bank holiday, and P1 billion was left with the bank and invested by CB receivers into government securities during the period Banco Filipino was closed.
Cuisia asked the bank to pay half of the P3 billion first, then the other half after it reopens. But the bank owners declined and instead asked that the loans be paid within a 10-year term at zero interest. Cuisia rejected the proposal. Three to four days before he stepped down as Central Bank governor, he was sued by the bank but was later exonerated by the Ombudsman.
BANGKO SENTRAL NG PILIPINAS (BSP) governors:
Gabriel C. Singson (6 July 1993 - 5 July 1999)
Under Singson's watch, Banco Filipino reopened in 1994. He is the only governor who was spared from Banco Filipino-related suits.
There were long-drawn negotiations on how to settle the emergency loans.
Rafael B. Buenaventura (6 July 1999 - 3 July 2005)
Six months after Buenaventura succeeded Singson, he signed a Memorandum of Agreement that allowed Banco Filipino to exchange its real estate properties (illiquid assets) for the government securities (liquid assets) — the P1 billion portion of the P3 billion emergency loans in the 1980's.
The MOA was supposed to be a compromise because for years, Banco Filipino had been adamant in not acknowledging that it owed the BSP for the emergency loans. The MOA mentioned that the deal was Banco Filipino's “cost of buying peace” with its regulator. BSP had to write off about P10 million in booked interests.
The MOA also lifted BSP’s controllership over Banco Filipino in 2000.
Some members of the Aguirre family who did not agree with the terms of the MOA filed a graft case against Buenaventura at the Ombudsman.
He passed away in 2006.
Amando Tetangco Jr. (4 July 2005-Present)
Under Tetangco's watch, there were negotiations on a financial assistance to finally settle the lingering issue on the past emergency loans (the P2 billion portion of the P3 billion total emergency loans in the 1980's). The first proposal of Banco Filipino was P125 billion, which was trimmed down to P25 billion in 2009.
Fast forward to 2011, the Monetary Board, which is chaired by Tetangco, ordered Banco Filipino closed for the second time.
Banco Filipino sued Tetangco and other Monetary Board members for violation of the Anti-Graft and Corrupt Practices.
In turn, the BSP filed criminal charges against the directors and officers of BF for numerous violations of central bank laws and unsound banking practices.