State deposit insurer Philippine Deposit Insurance Corporation (PDIC) has built up its Deposit Insurance Fund (DIF) to P216.85 billion as of the fourth quarter of 2020, and settled 100 percent of the 7,072 valid deposit insurance claims within its target turnaround time (TAT) for banks ordered closed in 2020.
The DIF represents PDIC’s overall capacity to respond to insurance calls due to bank failures. The prompt settlement of deposit insurance claims, on the other hand, provides affected depositors the needed relief.
In a report to Finance Secretary Carlos Dominguez III, PDIC President Roberto Tan said its DIF posted a double-digit growth of 10.3 percent or P20.33 billion from its 2019 level of P196.52 billion. The increase resulted in an adequacy level of 6.91 percent in terms of ratio of the DIF to the banking system’s estimated total insured deposits. The ratio was above the minimum target of 5.5 percent for 2020. President Tan said that PDIC will endeavor to maintain adequate DIF cover at prudential level.
Secretary Dominguez said that PDIC’s record of performance has been marked by the prudential management of the deposit insurance fund and the prompt settlement of deposit insurance claims.
The DIF consists of reserves for insurance losses of P193.64 billion, retained earnings of P20.21 billion, and Permanent Insurance Fund of P3.0 billion.
In a report, the World Bank said that in order to reimburse depositors after bank failures, contribute to the stability of a financial system and build public confidence in a deposit insurance system, deposit insurers must have operational readiness to be able to act quickly after a bank failure and sound funding arrangements are essential aspects of this readiness. Further, it said that “depositor confidence depends, in part, on knowing that adequate funds for deposit insurance would always be available to ensure the prompt reimbursement of their claims.”
The PDIC also reported that of the total deposit insurance claims involving 7,072 deposit accounts in five banks closed in 2020, 6,733 accounts involved deposits of P100,000 and below, were settled within target turn-around-time to eligible depositors, while 339 were for deposits with balances of more than P100,000.
President Tan said that the PDIC aims to continue the prompt settlement of deposit insurance claims by expanding to digital payment platforms this year, including Instapay and the Multi-Channel Disbursement Facility of a government bank. The Corporation will also strive to maintain or improve on the 90 percent satisfaction rating it received from clients and other stakeholders in 2020, he added.
As liquidator of closed banks, the PDIC was also able to cut its non-cash portfolio by reducing its closed bank loans by 12,502 accounts last year, exceeding its target of 12,121 accounts for 2020. The PDIC disposed of 709 real property assets in 2020, an accomplishment rate of 129 percent over its goal of 549 for that year. The PDIC also successfully maintained in 2020 its ISO 9001:2015 certification for claims settlement operations, assessment of member banks, real property disposal, loans management and examination of banks, including support processes.
President Tan added that PDIC is also targeting in 2021 the reduction of loan accounts by 17,825 and real property assets by 807 from the baseline set in 2019.
To support the government’s COVID-19 response efforts and comply with the provisions of the Bayanihan 1 and 2 laws (RA Nos. 11469 and 11494), the PDIC extended the statutory deadlines for filing of deposit insurance and creditors’ claims; granted relief measures to lessees, borrowers and property buyers; and swiftly addressed the settlement of special claims.
The PDIC reiterated its commitment to deliver value-added services to its clients and stakeholders and to fulfill its core mandates as deposit insurer and statutory receiver of closed banks with operational excellence, in order to protect the depositing public and promote financial stability.
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