Banks Under Legacy Group, Bankrupt?

Double Your Money in Five Years

Few of my relatives invest their money to the banks under the Legacy Group hoping that their millions of Pesos will be doubled in five years.

One of them tried to convince my aunt to invest into this product of the Legacy Group. But my aunt consider this a scam because she couldn’t believe that a bank, especially a rural bank, could really pay its depositors under the “Double Your Money in Five Years” product.

Another relative explained to us that the “Double Your Money in Five Years” product is really a legal bank’s product, and I know it is really true. But the doubt of my aunt whether that certain rural bank under the Legacy Group could really survive paying its depositors in high interest is also true. My aunt used the big banking companies as her example to backup her doubt to the Legacy Group that offer the “Double Your Money in Five Years” product because those big banking companies offer only a very low interest rates in deposits made by depositors. And for my aunt, the reason why these big banking companies offer low interest rate is for them to survive paying the interest of the deposits of their clients.

My aunt predicted that in just a short time, these banks of the Legacy Group will experience bankruptcy just because they couldn’t cope up their needs to pay the depositors the interests under the “Double Your Money in Five Years” product.

Banks under Legacy Group, Undercapitalized

The BSP (Banko Central ng Pilipinas) examiners found the banks of the Legacy Group undercapitalized. These banks are:

  1. Rural Bank of Parañaque Inc.
  2. Rural Bank of San Jose (Batangas) Inc.
  3. Rural Bank of Carmen (Cebu) Inc.
  4. Pilipino Rural Bank Inc.
  5. Philippine Countryside Rural Bank Inc.
  6. Rural Bank of Calatagan (Batangas) Inc. (now Dynamic Rural Bank)
  7. Rural Bank of DARBCI Inc.
  8. Rural Bank of Kananga (Leyte) Inc. (now First Interstate Rural Bank)
  9. Rural Bank of Bisayas Minglanilla (now Bank of East Asia)

The San Pablo City Development Bank Inc is one of these banks under the Legacy Group but it is not included on the list of the banks found by the BSP examiners as undercapitalized.

Note: Undercapitalized is define as “business has insufficient capital to carry out its normal functions“.

Two Banks in Visayas, in Holiday

December 11, 2008

The rural banks under the Legacy Group that offer a product like “Double the Money in Five Years” are already in bank holiday. Two of these banks in Visayas are already in Holiday: The PCRB (Philippine Countryside Rural Bank) and its sister company, the Pilipino Rural Bank Incorporated (PRBI).

The affected branches of the PCRB are in the cities of Lapu-lapu, Mandaue and Cebu, and in the towns of Consolacion and Liloan. The PRBI branches are in Mandaue City, Argao, Tagbilaran City.

Note: A bank holiday is a temporary bank closure which happens when a bank does not have sufficient money to conduct normal business transactions.

Source: Inquirer.Net

Parañaque Bank in Bank Holiday

Update: December 11, 2008

The Parañaque Bank, a bank under the Legacy Group, is the third bank that declared bank holiday. The PDIC is now taking over the bank.

The Philippine Deposit Insurance Corp. (PDIC) has taken over the Rural Bank of Paranaque, Inc. (RBPI), the third domestic lender to declare a bank holiday this week.

The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) placed the lender under receivership following its declaration of a bank holiday on December 8 through resolution number 1616 issued on December 9.

“PDIC is mandated to gather and preserve the assets and liabilities of the bank, as well as control, manage, and administer its affairs. This is done for the benefit of both depositors and creditors of the bank,” the PDIC said in a statement issued Wednesday.

souce: GMANews.TV

Rural Bank of Minglanilla, in Bank Holiday

Update: December 12, 2008

It was reported that there are actually three banks of the Legacy Group in Visayas that declared Bank Holiday. We already knew earlier that the PCRB (Philippine Countryside Rural Bank) and  the Pilipino Rural Bank Incorporated (PRBI) were on Bank Holiday. The third bank of the Legacy group that declared Bank Holiday is the Rural Bank of Minglanilla or the Bank of East Asia.

The Bangko Sentral ng Pilipinas Cebu regional office has confirmed that the Pilipino Rural Bank, Inc. and Philippine Countryside Rural Bank, Inc. have declared bank holidays. The Bank of East Asia, formerly Rural Bank of Bisayas Minglanilla, also declared a bank holiday on Wednesday.

All three are under the Legacy Group and covered by a recent Supreme Court ruling that upheld the central bank’s move to close them for capital deficiency.  (source)

Updated List of Banks in Holiday and Closed

Update: December 13, 2008

I wrote a post which contains updated list of Banks in Bank Holiday and are Closed by the Monetary Board. Please visit the post >>> “Banks in Bank Holiday

Two Banks in Holiday, Now Closed

Update: December 17, 2008

Legacy Group’s two banks that declared Holiday are now closed by the regulators.

The regulator has placed Batangas province-based Dynamic Bank (formerly known as Rural Bank of Calatagan) and Laguna-based San Pablo City Development Bank under the receivership of the Philippine Deposit Insurance Corp. (PDIC).

The order transferred to the state deposit insurer the responsibility of recouping the bank’s unpaid obligations.

The two banks are part of the Legacy group headed by businessman and Sto. Domingo (Albay province) Mayor Celso G. de los Angeles, Jr. (source)

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Leave a Reply 3 comments

James | PinoyMoneyTalk-dot-com - December 11, 2008 Reply

Actually, Legacy has been offering the double your money products for several years now. I was already thinking of investing here two years ago but my conservative side fortunately prevailed. A number of members from my site, however, ventured into those investments and now are waiting for the next steps by PDIC. Hopefully, they’ll be able to recover their money.

Some active discussions about this issue:

Legacy rural banks on bank holiday?
Double your money investments in Legacy banks - December 12, 2008 Reply

I hope no big banks file bankcruptcy. :D

Johan Marzan - December 12, 2008 Reply

The practices of Legacy Group is really as scam. Thier off of doubling your deposits in five years is already a scam from its introduction. I was wondering why the Central Bank auditors were not able to uncover this.

Their modus operandi is to offer that “product” to investors. If they are not enticed, they provided additional ‘cream” for the offer, they will give computer units and other appliances. You deposit more and you will be given a car.

To give an assurance that their “investment” is safe, they issue certificate of time deposits in P100,000. ( We will discuss later why.). These CTDs were issued by their rural banks. Yes, these rural banks simply fill up their CTD forms and issued these to the “ivestors”. But in reality, the rural banks did not received any cash. The cash was directly transferred to Legacy head Office for “lending” to the Legacy stockholders and other operating expenses.

These issued CTDs were never recorded in the books of the said banks. Again, why issue CTD’s in P100,000? so that the PDIC will shoulder (PAY) the said amount once the rural banks go bankrupt. A good auditor will notice the sudden increase in the amount of time deposits a few months before their rural bank declares bank holiday. Why? To include such deposits (without any money) in their claims with the PDIC.

Well, we have nothing to blame but the GREED of the investors.

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