BF settles P4.2 billion advance
from old Central Bank
by Elena R. Torrijos

The long wait is over. The Monetary Board, the policy-making body of the Bangko Sentral ng Pilipinas (BSP), signed finally an agreement with the management and owners of Banco Filipino (BF) Savings Bank - after 14 years of legal skirmishes and brushes with the authorities - for the settlement of the claims of the old Central Bank (CB), which were now transferred to the BSP.

In a memorandum of agreement (MOA), BF has committed to pay in full the P 4.2 billion to the BSP, but the manner by which the payment will be made was not to be disclosed immediately. The claims of the old CB represents its loans and emergency advances given to BF at the height of the massive bank withdrawals which forced it to declare bank holidays before it was closed in 1984.

In exchange, the BSP will return the government securities, which the monetary authorities kept since the bank closed in 1985, which has ballooned to P 4.3 billion. Apart from this, the MOA also stated that the BSP will return to BF its still unquantified real estate assets and about P920 million in restricted deposits.

BF Vice Chairman Albert C. Aguirre said that the settlement of the BSP claims was entered into without prejudice to its case against the CB-Board of Liquidators (CB-BOL), the shell firm which holds the liabilities of the old CB.

BF has a pending case against the CB-BOL for damages amounting to about P 18.8 billion for illegal closure.

Aguirre said the MOA signals the end of a bad era for BF and looks forward to a better relationship with the BSP. He also took exceptional recognition to former BSP Governor Gabriel C. Singson for "initiating the settlement."

"I am grateful for him," Aguirre said, adding that the MOA will finally allow BF to return to normal operations.

For starters, Aguirre has already indicated to BSP Governor Rafael Buenaventura the plan to increase BF's capitalization to P 8 billion from its existing base of P 5 million.

The P 3 billion increase in the capital hike will be in the form of fresh infusion from the bank's existing stockholders. The Aguirre family holds the majority equity in BF of about 80 percent while the rest is spread among Nancy Ty, former Ambassador to Germany Bienvenido Tan and Antonio Tiu.