LBC Bank receivership puts OFW depositors in a bind

Mercy Garcia, a mother of a freshman college student in the Philippines, had planned Saturday morning to remit $200 to her daughter for her second trimester tuition, which was due that day. When she went to LBC’s Garapan branch, Garcia was told that their system was offline.

Garcia got concerned and stressed out as well upon finding out that her daughter, who’s taking up a course in International Relations, could not withdraw the $300 that Garcia had previously sent her.

“Actually, my daughter was still able to withdraw some of the money on Thursday. I was anxious because Saturday was the last day for her enrollment and we were running out of time,” Garcia told Saipan Tribune.

Garcia’s daughter is among the 321,516 depositors of LBC Development Bank, a thrift bank owned by the LBC Group that was placed under receivership of the Philippine Deposit Insurance Corp. by the Monetary Board of the Bangko Sentral ng Pilipinas (central bank).

“As receiver, PDIC took over the bank on Sept. 9, 2011. PDIC shall gather, verify, and validate all bank records and administer and preserve its assets for the benefit of all creditors,” PDIC said in its website.

PDIC said that LBC Development Bank, a 20-unit thrift bank headquartered in Poblacion, Makati City, has an estimated total deposit liabilities of P6.09 billion (about $140 million) and insured deposits amounting to P3.73 billion (about $86 million).

Inquiring depositors

Garcia thought that LBC’s system going offline on Saturday was only temporary since there had been incidents in the past when the system would go down then go back up again within 24 hours.

“I was told by the LBC Garapan branch that they received an email notification from Manila that there was just a shutdown in the system. Nobody knew that the bank had already closed down,” she said.

Garcia disclosed that she sent the additional $200 to her daughter through LBC’s Instant Peso Padala, which would let her daughter claim the money over the counter at any LBC branch.

A graphic artist on Saipan, who sends remittances both through LBC and PNB, said in an interview that he remitted $400 to his family in the Philippines around 10am on Friday.

“It just so happened that I sent the money that time through LBC. When my family went to withdraw the money on Saturday, they couldn’t because it was offline,” he said, agreeing to speak on condition of anonymity.

He said that since his family didn’t receive the remittance, he again sent money through PNB remittance.

When news about the receivership broke out, Garcia and the graphic artist were among the LBC depositors on Saipan who went to the two LBC branches on Saipan to find out more about happened to their money.

An LBC staffer, who declined to be identified, said they already received many calls from depositors who inquired about the process of making deposit claims.

“A lot of them already called. You can’t stop them because it’s all over the news. What we do is we ask them to fill out forms for deposit claims which we then forward to our Manila office,” said the LBC staff.

PDIC said that 99.4 percent of the 321,516 LBC Development Bank accounts as of June 30 are fully covered by deposit insurance, assuring them that it will pay all valid deposit insurance claims “as soon as possible.”

“We request depositors to await further announcements on claims operations. PDIC shall give periodic updates as soon as the examination of bank records is complete. These will be posted in bank sites and the PDIC website, www.pdic.gov.ph,” PDIC said in a statement.

Garcia is optimistic that she will be able to retrieve her money.

“I know it’s not the fault of LBC Saipan. Who would have thought that something like this would happen? They were also not informed right away about what happened. I will wait until our money is returned to us,” she added.

The receivership incident has prompted Garcia, the graphic artist, and other LBC bank depositors on Saipan to transfer to other remittance companies.