BSP sets sanctions for Metrobank following fraud case investigation

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Metrobank building in Makati -- BW FILE PHOTO

By Melissa Luz T. Lopez,
Senior Reporter

THE CENTRAL BANK has ordered the suspension of officers and required additional capital reserves from the Metropolitan Bank & Trust Co. (Metrobank) yesterday as it completed a probe into an internal fraud discovered in July, even as it noted the lender’s corrective actions to maintain its “safety and soundness.”

In a statement, the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) told the listed lender to reprimand and/or suspend directors and officers which “failed to perform adequate oversight” that led to the embezzling of as much as P1.75 billion.

Initial reports pegged the amount pocketed from the scheme — said to be engineered by former bank vice-president and corporate service management head Maria Victoria S. Lopez — at P900 million.

The BSP also ordered Metrobank to add P4.45 billion to its reserves to cover for “higher operational risk” following the fraud case, which brought to light lapses in the bank’s internal protocols. This would be on top of the other capital buffers required of banks, including the reserve standard at 20% of total asset base.

“The requirement is subject to periodic review and would be lifted when the bank is determined to have put in place adequate risk control measures to address the weaknesses noted,” the central bank said.

The bank must also execute a letter of commitment within a year that would bind them to tighten internal rules to “enhance corporate governance, credit administration, internal controls and audit, risk management, and customer on-boarding and monitoring processes,” the BSP said.

To recall, Ms. Lopez reportedly crafted fake loan disbursements using the bank’s long-time client Universal Robina Corp. in multiple tranches worth P30 million. Upon discovery of these, Metrobank lodged a complaint before the National Bureau of Investigation on July 13, which led to her arrest that month.

The bank officer has been held in custody over charges of qualified theft, falsification, and violation of the General Banking Law in an entrapment operation.

The listed lender said yesterday that it will comply with the penalties imposed by the regulator, as it assured that this is an “isolated” case and that their operations remain business as usual.

“The board and senior management accept accountability and command responsibility for the incident and commits to implementing the directives,” Metrobank told the local bourse.

The lender added that it is conducting proactive reviews to enhance safeguards in its system to deter fraudulent transactions. The bank maintained that Ms. Lopez “acted alone,” as discovered during an internal audit.

Despite the penalties, the Monetary Board said Metrobank remains “safe and sound” given its strong financial condition and the “immediate corrective actions” taken following the discovery of the crime.

BSP Deputy Governor Chuchi G. Fonacier has said that the regulator will be reminding financial firms to strictly observe existing rules on corporate governance risk management, particularly the prescribed employee rotation and double controls to prevent such incidents.

Metrobank said it has enough cash to cover the additional reserves sought by the BSP, adding that they have “proactively absorbed” losses from the incident under their third quarter financial report. Still, the bank said its growth momentum “remains robust.”

It is the second-biggest lender in the country, with a P1.99-trillion asset base as of end-September.

The bank reported P15.7 billion in consolidated net income for the first nine months, up from P14.3 billion booked during the same period last year.

Shares in Metrobank ended at P95.85 each yesterday, up from P93.90 apiece on Monday. Share prices experienced a slight dip during the morning session to a low of P92.75 before inching upward later in the day.