MANILA -- (UPDATE) The central bank on Sunday said it has closed AMA Rural Bank of Mandaluyong Inc. and Maximum Savings Bank Inc., with the Philippine Deposit Insurance Corporation (PDIC) ready to pay valid claims from depositors.
In a resolution dated Nov. 7, the monetary board of the Bangko Sentral ng Pilipinas (BSP) prohibited the 2 banks from doing business in the country pursuant to Section 30 of the New Central Bank Act.
Under the law, a bank may be placed under receivership and liquidation proceedings if it is unable to pay its liabilities, has insufficient realizable assets, cannot continue in business without involving probable losses to its depositors or creditors, or has willfully violated a cease and desist order.
"The closures of AMA Rural Bank of Mandaluyong, Inc. and Maximum Savings Bank, Inc. are not expected to adversely affect the Philippine banking system considering their relatively small size," the BSP said.
As of June 30, the banks' total assets are equivalent to 0.02 percent and 0.002 percent, respectively, of the total assets of the banking system, it added.
The PDIC said all valid deposits and claims shall be paid up to the maximum deposit insurance coverage of P500,000.
As of June 30, the AMA Rural Bank has 8,434 deposit accounts with total deposit liabilities of P1.4 billion, of which 92.06 percent or P1.3 billion are insured deposits, according to the PDIC.
The bank of AMA group, however, said it was liquid, citing P2.76 billion in assets, making it the country's 15th largest rural bank as of end-September 2019.
"Given this strength, AMA Bank assures our clients, employees and stakeholders that we are fit to operate in every capacity," it said.
"We challenge the closure as unreasonable. Guided by legal measures, we are exploring all possible courses of actions to resume our full operations and continue to serve you."