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CA orders BSP to reopen AMA Rural Bank

The Court of Appeals has ordered the Bangko Sentral ng Pilipinas to restore AMA Rural Bank of Mandaluyong Inc. to its full operational status.

By Eileen Mencias

It also ordered the Philippine Deposit Insurance Corp. to return all the assets and records it has seized from the bank.

The central bank ordered the closure of AMA Rural Bank in November 2019 due its chronic capital deficiency, substantial losses and for engaging in unsafe or unsound banking activities.

In a 36-page order, CA former 3rd division chair Associate Justice Japar Dimaampao nullified the Monetary Board Resolution that ordered the closure of AMA Rural Bank and placed it under the receivership of the PDIC.

The court said AMA Bank, which is not in dire straits, should be given an opportunity to be heard as mandated by the “close now, hear later scheme.”

The scheme allows the BSP to close banks without prior notice and hearing if it can no longer pay its liabilities in the ordinary course of business or if it has insufficient realizable assets or its continued operations could involve probable losses to creditors and depositors.

According to the CA, the BSP unjustifiably prevented AMA Bank from complying with its directives and corrective measures to improve its financial position, resulting in grave abuse of discretion.

“Ploughing through the records with a fine-tooth comb, we find and so hold that the BSP-MB whimsically and arbitrarily issued MB Resolution No 1705D” based on the premise that AMA Bank cannot continue business without involving probable losses to its depositors or creditors or that it has willfully violated a cease and desist order on fraudulent transactions.

Dimaampao said AMA Bank can continue operations without involving probable losses to depositors and creditors, adding that no depositor had complained of ever having difficulties withdrawing money from the bank.

The CA cited a letter issued by PDIC saying AMA Bank had sufficiently addressed its concerns in its 2018 regular examination and that the bank was not losing money although its net income had declined.

AMA Bank reported a net income of P58.2 million in 2015. Its profit plunged to P5 million in 2016 and jumped to P68.6 million in 2017 only to fall again in 2018 and 2019.

Dimaampao said the alleged acts of unsafe and unsound banking practice are not compelling grounds for AMA Bank’s closure.

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