Banking industry estimates that some P12 billion in deposits nationwide may have been lost with the collapse of the 10 Legacy Group-related banks that declared a "bank holiday" last week.

It is considered "lost" because those not covered by the P250,000 insurance coverage of PDIC will be a loss for depositors; those covered by the PDIC - a loss of all of us taxpayers - because it is taken away from the P44-billion reserves of PDIC, a government-owned corporation.

The P12-billion deposit loss is about a huge 27% or more than one-fourth of the P44-billion reserve capital of PDIC. PDIC has to be recapitalized as well with people's money.

There are currently 2,011 rural banks in the country with an arithmetic average of P54-million average deposits per rural bank from an aggregate total industry deposit of P108 billion.

Probably due to its attractive "Double Your Money" in Five Years Promo, the Legacy Group was able to corner P12 billion of the P108-billion total industry deposit or a substantial 11% of total.

Since there are 10 known affiliated banks of Legacy Group, the average deposit of each bank would be a stupendous P1.2 billion. Since the Pilipino Rural Bank (PRB) based in Cebu had three branches (including Tagbilaran City), it would be reasonable to note that each branch had deposit carnage of P300 - P400 million?

Did Boholanos lose the amount of P300 - P400 million in PRB in this city?

Because of the Bank Secrecy Law, it would be hard to pry open the books of the branch - aside from the BSP, PDIC and inside information records. Many would be too embarrassed to admit the investment mistake or would like to keep the amounts secret for various personal reasons.

According to an August 2008 Philippine Daily Inquirer report, the Legacy Group of Banks disclosed total assets of P17.8 billion of which P12 billion was in deposits which they had to service from a cash level of only P2.8 billion. The rest of the P14 billion was in loans and other assets.

Records also show that since last year, the BSP wanted to recommend "receivership" of the Legacy Group banks to the Monetary Board for being undercapitalized by P2.8 billion. Somehow, the Legacy Group was able to wangle a TRO from the Manila Trial Court sala of Judge Nina Velasquez - preventing the BSP from implementing the findings of its examiners.

The BSP went to the Court of Appeals but was overtaken by events last week that saw an almost programmed declaration of bank holidays of the banks - one after the other.

Meantime, the brains behind the Legacy Group named Celso de los Angeles Jr. is said to have sold out of the group earlier and is reportedly now a town mayor of Sto. Domingo Albay.

Just for the record, the names of the banks that declared "bank holiday" are as follows: Rural Bank of Parañaque, Rural Bank of Bais in Negros Oriental, Pilipino Rural Bank in Cebu and its branches, Rural Bank of San Jose in Batangas, Bank of East Asia in Cebu, Philippine Countryside Rural Bank in Cebu and First Interstate Bank in Leyte; Dynamic Bank (Rural Bank of Calatagan) in Batangas, San Pablo City Development Bank (Laguna) and the Nation Bank in Bacolod City.

Meantime the mother company of these bank The Legacy Group has been in business since 1997 dealing with pension, educational and memorial pre-need plans, micro-financing, automobile and motorcycle financing, credit card and lending to OFWs.

Their affiliate names are: Legacy Consolidated Plans Inc., Legacy Scholarship Pension Plans, Credit Plans Inc., Legacy Motors and Legacy Credit Card.

What is troubling are news from Manila that the Pension Plan of the Legacy Group which was authorized to sell 1 billion pension plans was able to corner as early as 2003 - a total of 700,000 military soldiers and public school teachers. Will they be able to claim anything from their pension plans when they retire?

The poor military privates who fight our battles - with little sophisticated arms and few ammunition - will retire with worthless pension plans? Will our underpaid public school teachers - often terrorized and humiliated during elections - still earn a blissful retirement life if their pension plans are worth nothing? It is a disturbing thought - considering that there are allegedly 700,000 plan holders.

It would be prudent if Boholanos with such pre-need plans (pension, education, memorial) check on the status of their pre-need plans and loans with these companies, if they have any.

Prudence should dictate that.

It has been a sad week for the banking industry, indeed. We hope the problem will not extend to the pre-need industry.

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