The Last Days of UrbanBank

The Misadventures of the Street Strategist Vol. 13

Street Strategist's Home Page

 Read a sample chapter and the table of contents below



"Letter to the
Editor" of the
PDIC President


his has reference to a series of articles written by Thads Bentulan in his Street Strategist column for the past three weeks on Urban Bank. The articles carried half-truths so glaring that there was absolutely no doubt that these were biased in favor of his one- sided source.

Unfortunately, Mr. Bentulan, falling prey to inaccuracies and misrepresentations, attacked not only personalities but the very institutions that govern, regulate and ensure the financial soundness and stability of the banking system. Government regulatory bodies such as the Bangko Sentral ng Pilipinas (BSP or Central Bank of the Philippines) and the Philippine Deposit Insurance Corporation (PDIC) are mandated by law to ensure that banks are not misused and abused by bankers, whether they be owners or management. By citing inaccurate information, Mr. Bentulan also generalized that government regulatory bodies -- BSP and PDIC in particular -- have abused their powers and made unsound decisions that undermine the integrity of the very system that holds the Philippine economy together. As you are aware, we still are pursuing multiple estafa cases against Messrs. Arsenio Bartolome and Teodoro Borlongan.

Allow us, therefore, to set the record straight and rectify inaccuracies in the articles following Rising Bank Run particularly, Panic (BW, 8/30/01), and Tearful Holiday (BW, 9/06/01).


1. BSP's Reluctance in Accepting NFA Papers (Panic, 8/30/01)


From the articles he wrote, it could be gleaned that Mr. Bentulan understood the risk profile of financial papers guaranteed by the Republic of the Philippines. He should have likewise known that these papers are in fact classified by the BSP as non-risk loans on the balance sheet of any bank. For this reason, he should not have accepted his source's opinion that BSP rejected the NFA papers as gospel truth for, in fact, BSP did not.


2. Mr. Nazareno did not visit UB HQ on Holy Wednesday, April 19 (Tearful Holiday, 9/06/01)


Mr. Bentulan wrote that in the afternoon of April 19, Mr. Nazareno visited UB HQ and met some senior management staff who assured PDIC that everything was normal. Actually, after being told by BSP Deputy Governor Alberto V. Reyes that Mr. Bartolome wanted to see PDIC on Monday, April 24, Mr. Nazareno did not visit but just called Mr. Bartolome to ask him for the specific purpose of the meeting so that PDIC could prepare for it. In that conversation, Mr. Bartolome categorically denied that there was anything wrong with the Bank.


3. PDIC's Takeover of Urban Bank (Tearful Holiday, 9/06/01)


In his article, he mentioned that Urban Bank was not aware that PDIC was taking over the following day. On the other hand, he also mentioned that UBI's Mr. Bartolome invited Mr. Nazareno to the UB Headquarters (HQ) in the evening of April 25, 2000 and asked him to brief the bank officers and branch managers what to expect the following day. Based on this, Mr. Bentulan should have concluded that Mr. Bartolome could not have called Mr. Nazareno, if he did not anticipate that receivership could be a consequence of the declaration of a bank holiday and that PDIC would be the designated receiver. The briefing was conducted only after the UBI board confirmed the declaration of a bank holiday.


4. UBI was insolvent and not illiquid (Tearful Holiday, 9/06.01)


There has also been this nagging question on whether UBI was illiquid or insolvent, and Mr. Bentulan claims that the Bank was just illiquid. The auditors of UBI's white knight, Export and Industry Bank, in its long form audit, and PDIC in structuring the rehabilitation program for UBI, confirmed that UBI was insolvent. Based on EIB's auditors, the capital-to-risk assets ratio of the Bank was below the minimum required by the regulations; the statutory unimpaired capital as of March 31, 2001 was negative.


It will be unproductive to debate on all the items enumerated in the three articles that Mr. Bentulan published. However, it is very clear even from the few foregoing corrections that Mr. Bentulan's source has not been feeding him correct information. We would, therefore, appreciate if these corrections will be given a prominent space to rectify the misinformation Mr. Bentulan has sowed. It will also do justice if Mr. Bentulan will give equal space to this response in his CD-ROM.





Table of Contents





Unproximate Cause

July 12, 2001


The Journalist’s Quandary

(July 26, 2001)


Prelude to a Failure

(Aug 2, 2001)


Smart Move Twisted

(Aug 9, 2001)


Strategic Downgrade

(Aug 16, 2001)


Rising Run

(Aug 23,2001)



(Aug 30, 2001)


Tearful Holiday

(Sept 6, 2001)


Darkest of Days

(Sept 13, 2001)


“Letter to Editor”

of PDIC President

(Sept 20, 2001)


Escape Artist

(Sept 27, 2001)


“Letter to Editor”

of Central Bank Governor

(Oct 23, 2001)


“Letter to Editor”

of Urban Bank President

(Oct 29, 2001)


The 8:46 A.M. Fax

(Apr 25, 2002)


My Memories of Ted

(Apr 14-15, 2005)