As Depositor Insurer, it safeguards and builds up the Depositor Insurance Fund (DIF) and ensures prompt payment of Insured deposit. As Co- regulator, it exercises complimentary supervision of banks and adopts responsive resolution methods. And as Receiver and Liquidator of closed banks, it applies efficient management of receivership and liquidation function. The Bangkok Central Eng Philippians which is also known as BSP is the central bank of the Philippines. It was established on July 3, 1 993, pursuant to the provision of Republic Act 7653 or the New Central Bank Act of 1993.
The asps primary objective Is to maintain price stability conducive to a balanced and sustainable economic growth. The BSP also aims to promote and preserve monetary stability and the convertibility of the national currency. The BSP provides policy directions In the areas of money, banking and credit. It supervises operations of banks and exercises regulatory powers over non- bank financial institutions with quasi-banking functions. Discussion In the Philippine Star article entitled BSP backs changes in PAID charter last February 1, 2014 by Kathleen A.
Martin, it was indicated there that the Bangkok Central Eng Philippians has expressed support in the state deposit insurer’s proposal to amend its charter to better handle problematic banks. BSP Deputy Governor Nester A. Espanola Jar. Told reporters the proposed amendments to RA 3591 or the Philippine Deposit Insurance Corp.. (PAID) Charter will benefit depositors and clients of shuttered banks. “The valuable role of the PAID Is In the resolution of the problem bank… ND I think the most important (proposed amendment) is the additional resolution of creating a ridge bank as a way of resolving problem banks,” Especial said. A bridge bank. As appointed by other state deposit insurers, acts as a shell company that absorbs the assets and liabilities of an insolvent bank. It does so until the insolvent bank is ready for acquisition or for liquidation. Especial explained that if the PAID will be allowed by law to create one. It will be able to position a shuttered bank better In the market to fetch a fair price when bidding it out.
The PAID is mandated by law to act as the receiver of banks ordered closed by the central bank. This means the PAID takes charge of the shuttered bank’s assets and liabilities, examines and Investigates any irregularities in the banks records, and pays out deposit insurance claims of the clients. In paying out deposit insurance claims, the PAID liquidates closed banks’ toy 2 bridge bank will cut costs for the PAID when it liquidates closed banks’ assets or bids out the shuttered bank. Last year, a total of 18 banks were ordered closed and placed under the receivership of the PAID.
Conclusion Therefore, a decision for having additional resolution of creating bridge bank according to BSP Deputy Governor Nester A. Especial is right especially for the PAID for them to lessen their load of responsibilities since the role of PAID is in the resolution of the problem bank. Whereas many financial banking institution closed and it is the PAID responsibilities to took care of it where they are the one who liquidates closed banks assets or puts up shuttered bank for auction. This bridges bank acts as a shell company that absorbs the assets and liabilities of an insolvent bank.
It does so until the insolvent bank is ready for acquisition or for equitation. And by creating bridges bank, it won’t be too expensive for the PAID because there would be another company that will be responsible for the liquidation of assets and liabilities of those closed or insolvent banks. And also it can lower the cost of resolution where you have enough time to establish fair value and you have time to run a competitive bid. But then since we don’t have a bridge bank yet, so a lot of closed banks result in pay out. And it is a must to create a bridge bank for the better.
