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BANK REVIEW

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Powers of Conservator T-R-A-Er
1.
2.
3.
4.
Take charge of assets, liabilities and management of the bank
Reorganize the management of the bank
Collect all monies and debts due said bank
Exercise all powers necessary for the restoration of its viability.
Upon the report of the head of the supervising or examining department, receiver may be appointed:
When the bank is unable to pay its liabilities as they fall due in the ordinary course of business; excluding
liabilities induced by financial panic
Insufficient realizable assets , to meet its liabilities
Cannot continue its business without involving probable losses to its depositors and creditors
Willfully violated cease and desist order, under Sec. 37 NCBA, that has become final, involving acts which
amount to fraud
CLOSURE=PLACED UNDER LIQUIDATION, upon designation of the MB of PDIC as receiver to proceed withy
takeover and liquidation. *No more rehabilitation.
EFFECT OF PLACEMENT UNDER LIQUIDATION Sec. 13(e) PDIC Law
1. Continues as a body corporate UNTIL termination of winding up period—only for the purpose of
liquidating, settling and closing its affairs/for disposal, conveyance or distribution of its assets.
Receiver represents bank in all cases.
Shall not be reopened and permitted to resume operations.
2. Cannot do business; grant new loans or accept new deposits. Only pre-existing debts, and foreclose
mortgages securing such debts.
*PDIC power to collect loans and other claims of closed bank
*Bank can be sue and be sued through the liquidator ONLY for the purpose of liquidation.
3. Powers and functions of directors, officers and stockholders terminated upon closure.
Prevented from
interfering with assets, records and affairs of the bank.
4. All assets deemed in custodia legis in the hands of the receiver—shall not be subject to attachment,
garnishment, execution, levy or any other court processes. (Any of such shall be lifted)
5. E-E Rel between closed bank and its employees terminated.
6. Liability to pay interest ceases.
*Except interests earned prior to closure of the bank and earned in the ordinary course of business
before declaration of insolvency.
*XPN-XPN: BSP may collect interest and all extended to the closed bank.
7. Not liable for penalties and surcharges for late payment and nonpayment of taxes.
8. Except of actions pending before the SC, all actions pending for or against such in any court or quasijudicial body shall be suspended (180 days).
9. Execution and enforcement of final decision of a court OTHER than liquidation court against its assets
shall be stayed.
10. Payment of docket and other court fees shall be deferred until action is TERMINATED with finality.
11. All ASSETS = presumed held by the bank as owner.
12. EXERCISE OF AUTH of RECEIVER = performed in the regular course of business.
13. ASSETS/DOCU = retain their private nature.
14. Deposits do not become preferred credits.\
PURPOSE OF RECEIVERSHIP
GENERAL
1. Restore to liquidity
2. Rehabilitate to solvency
3. Recommend liquidation
*Receiver represents the banks and takes control possession of assets.
Liquidator assumes the role of receiver upon liquidation.
SPECIFIC
1. To receive collectibles
2. To preserve the assets of the bank
3. To prevent the dissipation of its assets to the detriment of the creditors of the bank.
*Prescriptive period to foreclose a mortgage is not interrupted during the receivership.
GR: The bank is bound by the acts or failure to act of its receiver.
It may however, go after the receiver who is liable for any culpable or negligent failure to collect the assets of
the bank and preserve it.
*The receiver is limited to the administration of the bank’s properties.
He may however, have the authority without approval of liquidation court to ASSIGN ASSETS as payment to
secured creditors (the banks assets as collaterals to respective loan up to extent of outstanding obligations—
based on prevailing market value appraised by independent appraiser)
NOTICE OF CLOSURE Sec. 14 PDIC Law
Closure deemed effective upon notice.
Receiver’s authority to use reasonable force to take actual physical possession and custody
Directors, officers, employees and agents duty to account for, surrender and turn over to the receiver and
provide information relative to assets, records, and affairs of closes bank in their possession/management.
LGU and law enforcement agencies shall assist upon request of receiver during service of notice of closure
and actual takeover operations TO ensure orderly conduct & security and safety of personnel/employees.
CLOSE NOW HEAR LATER SCHEME Sec. 30 (d) NCBA
The MB may summarily and without need for PRIOR HEARING forbid the institution from doing business in PH
and designate PDIC as receiver for banking institution.
FINAL & EXECUTORY, but subject to judicial scrutiny via petition for certiorari filed by the stockholders
representing majority of the capital stock.
1. Protect the interest of all concerned (depo/creditors/stockholders + bank itself)
2. Protect the GP (Public interest warrants) Valid exercise of police power
3. Practicality and Necessity – as it would defeat the very purpose of the law when it invested the MB with
such authority. Grounded on practical and legal considerations to prevent dissipation of bank’s assets
Liquidation v Rehabilitation
Liquidation = winding up of a corporation so assets are distributed to those entitled to receive them
Rehabilitation = continuance of corporate life and activities IN AN EFFORT to restore and reinstate the
corporation to its former position of successful operation and solvency.
ACTIONS TO BE TAKEN Sec. 13(a) PDIC Law
Conventional Liquidation (memaid)
Purchase of assets and/or assumption of liabilities
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The receiver is given the authority to facilitate and implement the purchase of the assets of a closed
bank and THE ASSUMPTION OF LIABILITIES BY ANOTHER INSURED BANK w/o need of prior
liquidation court approval.
Subject to the Rules on Concurrence and Preference of Credits under the CC and other laws
TREATMENT OF FRANCHISE
BSP may, if public interest so requires, award an institution such of a bank under liquidation to operate in the
area where the said bank or its branches were previously in operation.
ASSETS:
After payment of all liabilities and claims against the closed banks
Surplus assets shall be paid at the legal rate of interest from DATE OF TAKEOVER to DATE OF
DISTRIBUTION
*Surplus dividends = remaining assets of a closed bank after satisfaction in full of all liquidation costs and valid
claims
WINDING UP RULES
Creditors and Individual Stockholders (duly auth rep or court-appt rep)
Have 6 months from DATE OF PUBLICATION OF NOTICE OF APPROVAL by court of FINAL ASSET
DISTRIBUTION PLAN
To claim
Creditors: payment of principal obligations and surplus dividends
Stockholders: to claim residual assets
*Within which the receiver only holds such assets as a trustee
*Failure to comply with documentary requirements within the period or refusal to accept such as payment/in
kind shall be deemed WAIVER OF RIGHT TO RECEIVE THE SAME.
*Any unclaimed assets shall be turned over to Bureau of Treasury
PDIC
A government instrumentality attached to the DoF
RA 10149: Defined as Government Instrumentalities with Corporate Powers (GICP) or Government Corporate
Entities (GCE) which are neither corporations or agencies; but are vested with some if not all Corporate
Powers, administering special funds and enjoying operational autonomy through a charter.
Governing Law: RA No 3591
Primary Functions:
To act as a
(1) Deposit insurer
o Providing insurance coverage on all insured deposits
 Should any insured bank fail to pay any assessment required
 Assessment is the equivalent of premium in deposit insurance that should be paid by the
insurer
 Or fail to correct the same within 30 days after written notice has been served by PDIC
 PDIC may file a case for collection before the appropriate court w/o prejudice to
imposition of administrative sanctions.
(2) Receiver and Liquidator of closed banks and
o No other receiver or liquidator may be appointed for closed banks.
(3) Co-regulator of banks
o PDIC prevents or lessens its exposure to payment of insurance claims.
Examination and Investigation of Banks
Examination = Evaluation of current status of bank and determination of its compliance with set of standards
(solvency, liquidity, rules and regulations).
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PDIC shall appoint an examiner (power to administer oaths) to examine, preserve testimony, and
compel presentation of books and documents necessary to ascertain the condition of the bank.
Examiner shall make a full detailed report of such condition.
*No examination can be conducted w/n 12 mos from the last examination date.
Two types:
1. Regular – Conducted independently or jointly with BSP; requires prior approval of PDIC BOD and MB;
conducted only after an interval of 12 mos from closing date of last one.
2. Special – Conducted anytime in coordination with BSP; by an affirmative vote of majority of all
members of PDIC BOD w/o need of MB approval; ONLY IF there is an impending or threatened bank
closure as determined by PDIC BOD.
Investigation
Conducted based on specific findings of certain acts or omissions SUBJECT of a complaint or Final Report
Examination by PDIC. It is based on the reports of examination.
VS Examination = It zeroes on specific acts uncovered by the former or which are cited in such complaint.
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