The closure of Palawan Bank and Rural Bank of Cuyo within almost five years of each other has left many Palaweños in shock and uncertainty. These banks were iconic institutions in Palawan, having been established by locals and serving the community for many years. The closures have not only affected depositors but also had a significant impact on the local economy. It may very well be have an effect on some Palaweños trust or distrust in the banking sector as a depository for their savings.

The Downfall of Palawan Bank

Palawan Bank, officially known as Palawan Development Bank, was closed down by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) on May 6, 2019. The decision came after the bank’s total deposit liabilities exceeded P500 million, with 19,857 deposit accounts holding a total of P503 million. Alarmingly, 81% or P408 million of these were insured deposits.

The Philippine Deposit Insurance Corp. (PDIC) stepped in to manage the closure and ensure that depositors were compensated. The PDIC assured that all valid deposits would be covered up to the maximum insurance amount of P500,000. Despite these assurances, the sudden closure left many depositors anxious and uncertain about the future of their savings.

Palawan Bank’s Legacy

Palawan Bank was a 10-unit thrift bank headquartered in Barangay San Miguel, Puerto Princesa. It had five branches across Palawan (Brookes Point, Narra, Quezon, Roxas, and Taytay) and four in Cebu (Carcar, Liloan, Minglanilla, and Naga). The bank played a crucial role in the local economy, providing financial services to many Palaweños.

Rural Bank of Cuyo’s Closure

Similarly, the Rural Bank of Cuyo faced its own challenges and was also closed, with the PDIC servicing depositors’ claims onsite. The closure of these banks in quick succession has raised concerns about the stability of local banking institutions in Palawan.

The PDIC’s Role

The PDIC has been proactive in addressing the needs of depositors affected by these closures. They have set up mechanisms to ensure that all valid claims are processed efficiently. For Palawan Bank, depositors with balances of P100,000 or less were assured that they didn’t need to file claims, provided they had no outstanding obligations.

Impact on the Community

The closures have not only shaken the confidence of depositors but have also impacted the local economy. These banks were not just financial institutions; they were part of the community, established by locals and serving the financial needs of many Palaweños.

The Way Forward

The loss of these banking icons highlights the need for stronger financial oversight and support for local banks. It also underscores the importance of deposit insurance and the role of the PDIC in protecting depositors’ interests. As Palawan moves forward, there is a collective hope that the lessons learned from these closures will lead to a more robust and resilient banking system.

In the meantime, depositors are urged to stay informed about their rights and the processes for claiming their insured deposits. The PDIC continues to provide assistance and ensure that depositors are compensated fairly and promptly.

Also, these closures may have an effect on the feeling of trust or distrust of Palaweños in the banking sector and may cause them to opt instead to rely on non conventional ways. Because of this, they maybe susceptible and maybe lured into investments and get rich quick schemes that may have undesirable results. Without any clear explanation on the closure, definitely there are depositors who may have lost some money in the process -since there are limits on the amount to be recovered- as nobody had expected such a sudden decision.

The closures of Palawan Bank and Rural Bank of Cuyo serve as a sobering reminder of the challenges faced by local banking institutions and the effect it has on the local depositors. However, they also provide an opportunity for reflection and improvement among the authorities, ensuring that the financial future of Palaweños is secure and stable and that they should be more transparent in their decision making especially when people’s savings are at stake.