The aftermath of a bank that folded

A bank that closes is never good news--especially during the holidays!
[Photo from rainingpesos.com]

I've always been a believer of insurance--whether it's for a car, health, or life--having peace of mind knowing that there's a level of protection for the things that matter. When the LBC Bank closed in September of this year, the money I deposited in the bank went with it.

Let me start from the beginning. Three years ago, I started putting money to the LBC Bank, all of which under their 5-year time deposit offer. What got me to put my money there, despite the knowledge that it isn't the biggest bank in the country, is their 9% annual interest scheme, the highest rate in the market to my knowledge.

Plus, its sister company LBC (the courier) is one of the (if not the) largest in the country. This gave me assurance that the bank was stable enough to fulfill its promise of growing my funds while it is invested there.

Alas, the bank dissolved last September--a couple of days before I had to leave for my 7-week vacation in the US. This is why I never got to blog about it or even fully process it in my mind then. My hands were just so full I just had to put this issue on hold.

This incident made me so angry (I could use another adjective to describe how I felt but we don't want to be censored). In my mind, I was like, "oh, I'm so not looking forward to all the paperwork this entails."

When I came back on the first week of November, this is one of the things I put my attention to. I immediately called the Philippine Deposit Insurance Corporation (PDIC)--the entity that insures depositors' money for up to P500,000 in the event member banks close.

Fortunately, people who work for PDIC were very accommodating. Everytime I placed a call or visit their office (which is very near where I live in Makati, thank God), they were always very helpful and patient. I guess they knew that people who come to their office are already under some degree of stress (due to the closing of the bank).

Aside from all the paperwork I had to fill out (as I had predicted) including claim forms, everything went smoothly. I went to PDIC's office, gave the properly filled out claim forms I downloaded from their website, gave a photocopy of two valid IDs, and the passbooks of my deposits.

In less than 15 minutes, my checks were with me! The good thing is that the capital money I initially invested were returned to me in full, along with the promised interest up to the point that the bank closed. That's the service bank depositors deserved at the very least.

Through it all, I had to commend PDIC once more. For a government-run agency, it is highly effective and friendly. And, yet again, this incident only highlighted the value of insurance. Thanks, PDIC. No thanks, LBC (yes, even the courier)!

LBC can try to distance itself from its banking arm but they can rest assured that I'll never use their services ever again! I am sure this feeling is shared by the hundreds of thousands of their depositors who put their trust in their name, and those that LBC has broken.