Two Philippine banks hit by panic withdrawals

Two Philippine banks hit by panic withdrawals

MANILA (DPA): Two Philippine commercial banks have been hit by
heavy withdrawals following the closure of one bank and
widespread rumors of more bank runs, officials said Saturday.

Jittery depositors packed several branches of the
International Exchange Bank (iBank) and the Philippine Bank of
Communications (PBCom) and lined up Friday and until the early
hours of Saturday.

Central Bank Deputy Governor Alberto Reyes said the "special
operations" of iBank and PBCom were permitted "to pay all those
who wanted to withdraw their money", but he stressed that the two
banks were financially sound.

The "unusually large cash withdrawals" were apparently in
reaction to the closure of Urban Bank, which has been hit by
panic withdrawals of nearly half its deposits since last month
following its downgrade from a commercial bank to a thrift bank.

The downgrade was imposed after it failed to meet the Central
Bank's new higher capital requirements, which were imposed to
insulate the banking system from shocks similar to the 1997 Asian
financial crisis.

The 28-branch Urban Bank, which has more than 14,000
depositors nationwide, was the largest bank to fall since the
Orient Bank shut down in 1998. It has been temporarily taken over
by state-run Philippine Deposit Insurance Corp.

On Friday, Central Bank Governor Rafael Buenaventura stressed
that there are several existing credit facilities for banks hit
by liquidity problems, including loans which could be secured
with government securities.

Short-term loans were also available for qualified banks
through a rediscounting facility. Banks with special deposit
accounts with the central bank can also withdraw them if
necessary, Buenaventura said in a statement.