Just when they thought it was all over, a string of bank runs on small and medium-sized institutions has emerged in recent days in parts of Asia, stirring unwanted memories of the regional financial crisis. The Philippines has been worst hit, following the abrupt closure of Urban Bank amid suspicions of fraud. A small number of institutions in Taiwan and the mainland have also been stung by heavy withdrawals. At this stage, the problem is not believed to be regionally endemic. 'These are isolated cases and country specific,' said Roland Bruce, regional banking analyst at Prudential-Bache Securities. 'I certainly don't think it is any indication of a region-wide problem.' Irrespective, this latest mini-outbreak has added weight to calls for a hastier and wider introduction of bank deposit insurance schemes by governments across Asia to provide a safety net and calm depositors' still fragile nerves. Blanket deposit guarantees were once knocked by the International Monetary Fund because of their potential for encouraging private banks to take unnecessary risks - a phenomenon known as 'moral hazard'. However, today they are preached by the IMF as a text-book formula for closing rotten banks without inducing panic. 'Once a banking crisis has become systemic, such a guarantee often becomes an integral part of the resolution strategy, notwithstanding its cost,' said a staff report published by the Washington-based international aid agency in March. The absence of deposit insurance spelled financial disaster for Indonesia in October 1997, towards the start of the Asian financial crisis. On that occasion, the IMF directed the snap closure of 16 of the country's worst banks, believing it could rescue the situation by taking them out of the equation. The problem was the disease was contagious and everyone knew it. Rather than halting its spread, the IMF's actions sparked nationwide bank runs which made a bad situation worse. It proved a costly lesson to learn. Following Urban Bank's closure last week in Manila, there were subsequent heavy withdrawals experienced by two other commercial banks, International Exchange Bank (iBank) and the Philippine Bank of Communications (PBCom). However, the existence of a deposit insurance corporation and swift precautionary action by the central bank, the government and bankers' association would appear to have stemmed contagion. Claude Touitou, banking analyst at SG Securities in Manila, said: 'It looks like the situation is back to normal. 'The queues in banks appear to have normalised.' On Tuesday, the Bankers' Association of the Philippines unveiled plans to let banks access emergency funds from each other faster than usual to shore up depositor confidence. This followed an emergency meeting of the group, made up of the nation's 50-odd commercial lenders. The association had been working on a framework for co-operation for three months and will now hasten its implementation. Urban Bank, which has experienced some problems with its real-estate investments, was shut down by the central bank after it could not meet withdrawal demands. Its shares have since been suspended while the central bank seeks out new owners. Several banks are rumoured to be interested, including one foreign player. Meanwhile, the central bank and Securities and Exchange Commission intend to conduct a joint fraud investigation into claims that Urban Bank had siphoned off some of its money to its investment subsidiaries for money market purposes. The country's economic managers have moved swiftly to reassure the public that the Urban Bank closure is strictly an isolated case and that the Philippine banking system remains one of the most solid in Asia. Central bank governor Rafael Buenaventura has insisted that iBank and PBCom have been merely victims of false rumour-mongering concerning their financial conditions. Felipe Medalla, director-general of the National Economic and Development Authority, said: 'Our banking system is solid. Their assets are more than enough to pay for all the liabilities. 'The bankers' association responded [to the recent heavy withdrawals] by providing a liquidity pool. That's why we are now confident that . . . all depositors of any bank should feel safe with their deposits.' Urban Bank accounted for less than 0.5 per cent of the country's banking system. The central bank has assured Urban Bank's small depositors they will be given priority in retrieving their funds. It is working with the Philippine Deposit Insurance Corp (PDIC) to meet their demands. As a matter of policy, the PDIC only covers deposits up to 100,000 pesos (about HK$18,860) per account. Big-time depositors are left to their own devices. India and South Korea are the only other Asian countries with permanent blanket bank deposit insurance schemes. A temporary blanket guarantee scheme was implemented in Indonesia in the wake of the financial crisis, but this is renewable every six months and only valid for senior obligations. In Thailand, there is a Financial Institutions Development Fund. This will be replaced by a proper bank insurance scheme, but at present there is no set date. South Korea intends to upgrade its scheme by next year. In Hong Kong, the issue is under review. The mainland, Malaysia, Singapore and Taiwan do not have schemes. Hong Kong and Singapore have such high capital-adequacy ratios for banks, some analysts feel a deposit-insurance scheme unnecessary.