PEP Coalition

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BSP to ban banks of preneed firms

Manila Standard Today
Feb. 15, 2006

By Eileen A. Mencias

The Bangko Sentral ng Pilipinas will ban banks with preneed affiliates from serving as trustee banks of their sister companies.

BSP Deputy Gov. Nestor Espenilla Jr. said the central bank would issue a new rule that will ensure that dealings between trustee banks and the preneed companies are at arm’s length.

Espenilla said the move would safeguard the trust fund of a preneed company and take away the trustee banks from “temptation.”

Preneed planholders of Pacific Plans Inc. (PPI), a former subsidiary of the Rizal Commercial Banking Corp. (RCBC), had complained that RCBC’s trust department mishandled the trust fund of PPI in September. The planholders accused RCBC’s trust department of dumping P300 million worth of bad loans to the PPI trust fund to save the investment of a bigger client — PLDT Retirement Fund.

The ban will affect a handful of banks, namely Bank of the Philippine Islands (Ayala Plans Inc.), United Coconut Planters Bank (Cocoplans Inc.) and Philam Savings Bank (Philam Plans Inc.).

BSP director Leny Silvestre informed planholders of PPI that the BSP would consider their complaints when the bank regulator inspects the books of RCBC during a scheduled annual review.

Espenilla said BSP can do little “because preneed is not under its jurisdiction (although) it can be stricter on trustee banks.”

The BSP has thought of limiting the investments of trustee banks to certain assets as the liquidity problem of some preneed company stems from their huge real estate investments.

Espenilla, however, said putting up investment restrictions on the trust fund of preneed firms is the responsibility of the Securities and Exchange Commission.

“It’s more of SEC’s role,” Espenilla said. “We can only do so much on trustee banks.”

Economic Planning Secretary and Monetary Board member Romulo Neri has urged the BSP to take a more active role on the issue hounding the preneed industry, saying it plays a crucial role in mobilizing savings.

Three big preneed companies collapsed last year — Pacific Plans Inc., Platinum Plans and College Assurance Plan.

February 15, 2006 - Posted by | Philippine Newspapers/Web News | , , , , ,

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