United States court dismisses Bangladesh Bank case vs RCBC, Bloomberry for roles in 2016 heist

THE COMPLAINT filed against Rizal Commercial Banking Corp. (RCBC) and a local casino by Bangladesh Bank in relation to the 2016 heist has been junked by a US court as it cited the failure of the petitioner to state a federal racketeering claim and as the court refused to exercise jurisdiction over all other state law claims by the petitioner.

In a filing with the local bourse on Monday, the Yuchengco-led lender said the Federal Court of New York granted its motion to dismiss the case in an opinion and order dated March 20.

“The case filed by Bangladesh Bank was dismissed for failure to state a federal racketeering claim. The Court also declined to exercise jurisdiction over all other state law claims of Bangladesh Bank,” RCBC said in a filing.

RCBC’s motion was based on the grounds that the case belonged to a Philippine court and the lack of subject matter jurisdiction of the federal court on the issue.

In a separate filing, Bloomberry Resorts Corp., the parent unit of another defendant, Bloomberry Resorts & Hotels, Inc., which operates Solaire Resort & Casino where the stolen money was laundered through, explained that the US court found the petitioner to have failed to state a Racketeer Influenced and Corrupt Organizations (RICO) claim or RICO conspiracy claim.

The said civil case was filed by Bangladesh Bank to collect the $81 million it allegedly lost to North Korean hackers who sent multiple remittance orders out of the central bank’s account with the Federal Reserve Bank of New York.

Some of these orders were said to be allowed to be transacted through four correspondent banks in New York and were then remitted to alleged fictitious accounts with RCBC where they were transacted, converted and lost.

“[A] part of which went through Philippine casinos where they were used to purchase gaming chips and were played in the casino and junket rooms,” Bloomberry Resorts said in its filing with the local bourse.

In January 2019, a Makati City court convicted Maia Santos-Deguito, a former RCBC branch manager, for eight counts of money laundering for the $81 million stolen from Bangladesh Bank’s account with the Federal Reserve Bank of New York in 2016.

Ms. Deguito had to pay $109.5 million in fines and was sentenced to imprisonment for four to seven years for each count.

BONDS
Meanwhile, in a separate development, RCBC said it is eyeing to raise at least P3 billion from its latest offering of fixed-rate peso bonds to be used to boost asset growth, refinance its maturing liabilities and for other funding purposes.

The lender said they pushed through with the bond issuance despite the Luzon enhanced community quarantine due to the coronavirus disease 2019 pandemic as it wants to boost confidence in the capital markets’ capacity to provide support for business activity.

In a separate filing with the local bourse on Monday, the bank said this upcoming bond issue is the fourth tranche of its P100-billion bond and commercial paper program where P69.5 billion remains unissued.

The bonds have a tenor of two years and carry a rate of 4.848% per annum. They will be offered until March 27, unless the offer period is adjusted, depending on RCBC’s assessment.

“The funds raised from the bond offer will be utilized to support asset growth, refinance maturing liabilities, and other general funding purposes,” the bank said.

The Hongkong and Shanghai Banking Corp. (HSBC) is the sole lead arranger and bookrunner for the transaction, while RCBC Capital is the financial advisor for the bond issuance. Together, RCBC and HSBC will be the selling agents for the papers.

The lender said they eye to list the bonds on the Philippine Dealing and Exchange Corp. on April 7, subject to market and other conditions.

Before this tranche, RCBC also tapped the local market in 2019 for the first three issuances out of its P100-billion bond program through the P15-billion ASEAN Green bonds issued in February 2019, P8 billion in ASEAN sustainability bonds in June 2019, and the P7.5 billion issued in November.

The bank said they acknowledge the challenges in logistics and execution in offering the bonds due to the lockdown.

“By proceeding with the program documentation set up and with the bonds issuance, the bank works towards conveying to the public that capital markets remain open to support business activity,” it said.

Last week, Bank of the Philippine Islands said it expects a delay in the listing of the P42 billion it raised via bonds this month due to the disruption in business operations due to the quarantine.

Meanwhile, BDO Unibank, Inc. postponed its P5-billion offer of two-and-a-half-year bonds in a move to allow investors to reassess their investment and liquidity amid the month-long lockdown in Luzon.

RCBC saw its net income jumped 25% to P5.4 billion in 2019, supported by the better performance of its core business, high margins, strong trading gains, as well as higher fee-based income.

Revenues also climbed 35% to P35.9 billion bolstered by growth in its interest income from loans and receivables.

Its shares closed at P16.50 apiece on Monday, down by 50 centavos or 2.94% from previous session. — LWTN