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By Francis Allan L. Angelo

MICRO, small and medium enterprises (MSMEs) will have easy access to bank loans sans collateral with the establishment of the Iloilo City Coopreneurs Surety Fund (ICCSF).

The ICCSF is the first credit surety fund (CSF) established by the Bangko Sentral ng Pilipinas (BSP) in an urban center. In the entire country, ICCSF is the seventh CSF established after the provinces of Cavite, Aurora, Bohol, Negros Oriental, Compostela Valley and Davao del Norte.

BSP Deputy Governor Diwa Guinigundo and Monetary Board Member Juanita Amatong led the launching and signing of the memorandum agreement on the ICCSF on Tuesday in Iloilo City.

The CSF is a fund generated from contributions by well-capitalized and well-managed cooperatives with counterpart funding from the concerned local government unit and other donor agencies.

Mr. Guinigundo said the launching of the ICCSF aims to help MSMEs access bank loans without burdening them with collaterals.

“MSMEs still struggle to find access to lending facility because of lack of collateral, unstable income and lack of trace record. Some 60% of MSMEs’ credit needs are unserved and their growth is under utilized. The CSF aims to pave the way for these enterprises borrow from lending institutions,” Mr. Guinigundo said.

Mr. Guinigundo said the CSF will provide surety cover to MSMEs who want to borrow money from banks and other lending institutions. The surety cover will be issued by the ICCSF in favor of the creditor bank.

The fund contributors of the ICCSF are 11 Iloilo City-based cooperatives that will pitch a total of P1.6million.

The Iloilo City government will provide counterpart funding of P2million while the Industrial Guarantee and Loan Fund will provide P5million.

The Land Bank of the Philippines and Development Bank of the Philippines (DBP) will also contribute to the CSF.

Banks that will extend loans secured by the CSF can rediscount up to 80% of such loans with the BSP.

The fund will be administered by an oversight committee composed of 12 representatives of CSF contributors. The committee will assign a trustee bank as administrator of the fund.

The fund shall be invested in safe and high-yielding instruments such as government securities.

Mr. Guinigundo said the BSP will monitor the operation of the CSF and its working environment aside from providing technical training in screening borrowers.

DBP CEO and President Reynaldo David said that aside from contributing to the fund, DBP is also on the process of simplifying loan processes for cooperatives and MSMEs backed by the CSF.

“Some banks sometimes require MSMEs and cooperatives voluminous paper works. Half way through filling up these documents, the business owner gets tired and gives up. The streamlining will result in less paper works,” Mr. David added.

Mr. David said DBP will also train ICCSF stakeholders assess the credit worthiness of borrowers who seek coverage from the CSF.

Iloilo City Vice Mayor Jed Patrick Mabilog said the establishment of the ICCSF is timely as it will help entrepreneurs affected by typhoon Frank last year and the global financial crisis.

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LEGACY BANKS’ WOES WORRY ILONGGO INVESTORS

By Francis Allan L. Angelo

 

SINCE Saturday, Lady (not her real name) thought of committing suicide after learning that seven banks under the Legacy Group of Rural Banks declared bank holiday.

 

Lady, a merchant in Iloilo City, is just one of the hundreds of investors of Legacy Group of Co. owned by a certain Celso de los Angeles, incumbent mayor of a town in Bicol region.

 

Her more than P15-million investment is in danger of going down the drain after the Bangko Sentral ng Pilipinas (BSP) placed 10 rural banks affiliated with the Legacy group under the receivership of the Philippine Deposit Insurance Corporation (PDIC).

 

The banks that were taken over were:

 

1. Philippine Countryside Rural Bank (PCRB) with branches in Mandaue City, Lapu-Lapu City and Liloan in Cebu,

2. Bank of East Asia based in Minglanilla, Cebu

3. First Interstate Bank in Tacloban City.

4. Rural Bank of Paranaque

5. Rural Bank of Bais in Negros Oriental

6. Pilipino Rural Bank (with branches in Mandaue and Argao in Cebu and Tagbilaran City in Bohol)

7. Rural Bank of San Jose in Batangas.

 

The BSP said in a statement that it had been monitoring these banks well before the global financial crisis began, because of potentially unsafe and unsound banking practices.

 

Lady asked not to be identified for the meantime to protect her family and avoid embarrassment.

 

Lady said she was convinced to invest more than P15 million in Legacy group sometime in 2002 after De los Angeles enticed them with the “double your money” scheme in three years.

 

The investment went into Legacy Scholarship Pension Plans, Inc. which acquired two other pre-need companies, All Asia Plans, Inc. and Consolidated Plans, Inc. in 2002.

 

Lady said she has to mortgage her properties in order to come up with a capital for Legacy group and enjoy the “double your money” scheme.

 

When she heard that Legacy rural banks folded and taken over by the government, Lady feared that her hard-earned money in the last 29 years would go up in smoke.

 

Lady said her investments and that of more than 100 investors might go down the drain since the banks are tied to Legacy plans and its affiliate company, One Card, which specializes in credit card services. 

 

“I was thinking of committing suicide because of what happened. They assured that the banks were liquid with P500 million in trust funds. But why did this happen? We felt like pigs that were fattened for six years only to be slaughtered in the end,” she said.

 

Lady said she cannot transfer some of her earnings to other banks for fear of money-laundering charges aside from the assurance of Legacy that business was solid.

 

Legacy also retained Lady’s certificate of time deposit with the rural banks as part of the investment agreement.

 

The interest on her investment came not in form of cash but items offered by Legacy such as cars, Lady added.

 

“My child also tried to commit suicide when we learned what happened. We even heard stories that another investor who forked P100 million to Legacy already committed suicide. But that is not confirmed,” she said.

 

Yesterday, Lady said she and other investors in Iloilo and Negros received assurance from a certain Edgardo Cando, Legacy senior vice president for Visayas-Mindanao, that their principal investments will be returned to them.

 

Top brass from Legacy will also arrive in Iloilo and Negros on December 19 and 20, respectively, to confer with the investors on how to return their money.

 

“What I want is to get back my money because we have nothing left. If Legacy cannot make good of their word, then we will come out and sue them. We ask the government to help us,” she said.

 

The Legacy banks folded a week after the Supreme Court issued a temporary restraining order on enforcement of lower court rulings that favored the so-called “Legacy Group banks.”

 

The high tribunal’s decision effectively gave the BSP the green light to act on adverse findings made during their last examination of the 10 financial institutions scattered around the country.

 

The financial institutions covered by the SC ruling are Rural Bank of Parañaque Inc., Rural Bank of San Jose (Batangas) Inc., Rural Bank of Carmen (Cebu) Inc., Pilipino Rural Bank Inc., Philippine Countryside Rural Bank Inc., Rural Bank of Calatagan (Batangas) Inc. (now Dynamic Rural Bank), Rural Bank of DARBCI Inc., Rural Bank of Kananga (Leyte) Inc. (now First Interstate Rural Bank), Rural Bank of Bisayas Minglanilla (now Bank of East Asia), and San Pablo City Development Bank Inc.

 

Except for San Pablo City Development Bank, all were found by BSP examiners to be undercapitalized during their latest audit done on July 31, 2007.

 

Banking sources say the 10 rural banks hold a combined P12 billion in deposits, comprising 11 percent of the P108.1 billion in deposits held by the country’s 2,011 rural banks.

 

They were found to have an aggregate capital deficiency of P2.5 billion. The banks all operate under the aegis of the Legacy Group, which is primarily involved in selling pre-need plans.

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