The ‘sure’ in insurance

The PDIC needs to communicate better with distraught depositors of closed rural banks.

published 26 Jan 2009, MST

It's one thing to read the business pages and learn, as we did last month, that a chain of rural banks belonging to one Celso delos Angeles' Legacy Group first declared a bank holiday, then closed shop and was eventually taken over by the Philippine Deposit Insurance Corporation.

It's one thing to hear the central bank governor saying that the Legacy case was “isolated” and that the rest of the rural banking system -- nay the entire Philippine banking system -- was otherwise sound and stable.

It's also one thing to know about the PDIC's pronouncements that depositors of the closed banks need not worry since their claims would be processed, and soon. According to newspaper reports, the PDIC has deployed half its workforce to the field to attend to the concerns of depositors of the just-closed banks. Last week it was reported to have engaged the services of KPMG Manabat Sanagustin & Co. to screen depositors’ claims. If all goes well, payout can begin by the middle of next month.

But it's quite another to have your life savings and your retirement money in one of these banks without any idea when exactly you will recover them. The Christmas holidays came and went, and now it’s the New Year, even the Chinese New Year, and the uncertainty hangs over your head.

When you go to the PDIC offices to file your claim, hear the front liners tell you that there has yet been no memo from the president (PDIC president Jose Nograles) instructing them to release claim forms. You ask when the forms – numbered, they say, as this was “an unusual situation” -- would be made available. Heck, it's not like you're asking for your money back at once. You know there are processes to be observed. For crying out loud, you just want a claim form.

Receive the employees' answer: “Tawag-tawag na lang kayo. (Just call us every so often)” Go back week after week and hear the same answer every time. To additional questions you may come up with, you will be met with “we do not know” or “it is confidential.”

If it's a particularly bad day, some unthinking PDIC employee may ask: “Bakit naman ho kasi sa rural bank kayo naglalagay ng pera? (Why place your money in a rural bank in the first place)?” insinuating you are somehow at fault.

In the meantime, life goes on. You have bills to pay, a family to feed, tuition to settle. Maybe a dear uncle, cancer-stricken, needs your help. Where do you turn for answers?
**

Distraught would be a good way to describe two ladies, Mrs. P and Mrs. M, when I met them at a San Juan fastfood one morning. Both retired, they are depositors of the Rural Bank of Parañaque, one of the banks that were closed in December. ”Nagkakasakit na nga kami sa kakaisip, (we're getting sick just thinking about this)” they tell me.

The ladies don't belong to the “small depositors” category (below P100,000) whose claims the PDIC said it would service first. After all, both were successful professionals during their active years: one was an IT executive for a universal bank and the other a top marketing director of a distribution firm. They decided to invest their money in the rural bank because aside from having been around for decades, it offered double-your-money-in-six-years schemes. They figured it was prudent -- there were no risks because the bank, as all banks were, was under the regulation and supervision of the Bangko Sentral. Should anything untoward happen, their money is insured with the PDIC anyway. Now they are learning first-hand that reality is always more complicated than theory.

Mrs. M laments they are prevented from taking the first step in claiming their funds which they so unsuspectingly placed in the rural bank. At the time she opened her account, she did not know delos Angeles from Adam. Her masteral studies now on hold, she surfs the Internet regularly for developments on the situation.

She finds, for instance, that there is no dearth of official announcements from the PDIC saying claims would be processed as soon as it can. The company Web site (www.pdic.gov.ph) is complete with step-by-step procedures on claiming deposits. She has also just recently discovered that claim forms are actually available at the Web site, for downloading and printing. But for what? She recalls the words of the PDIC employees: these have to be numbered, and they are not yet accepting claims from those with deposits in excess of P100,000.

To console herself, Mrs. M thinks about the depositors of other rural banks in far-flung places. At least she could surf the Internet and know what's going on, helpless as she now feels.

**

Mrs. P, on the other hand, has to rein in her imagination. Not only she but several family members, including a daughter abroad, have placed their savings in the bank. She says she cannot be blamed for entertaining worst-case scenarios in her head. Who knows whatever became of their money? Elections were a year away, anyway. What if the PDIC itself invested in foreign funds and companies brought down by the global economic crunch? What if the money had been loaned to fictitious borrowers or any other form of money laundering scheme?

She says it takes a lot for her to keep her faith in the PDIC. Unfortunately, the feedback that she's getting from its employees every time she calls or goes to its offices are not reassuring.

The ladies are prepared to give the PDIC some time with which to process their claims, even as their need for their money is urgent as well. They are, however, entitled to answers, now. Timelines, requirements, next-step advisories -- all delivered in a compassionate tone. Maybe Mr. Nograles and his team need to remind their staff to at least try to sound compassionate when communicating with the likes of Mrs. M and Mrs. P.

Given depositors’ unfortunate situation, this isn’t really too much to ask.