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The Metropolitan Bank and Trust Co.’s (Metrobank) main office on Sen. Gil Puyat St. in Makati City. TMM FILE PHOTO

Metrobank slapped penalties over fraud

By Riza Lozada

Metropolitan Bank and Trust Company (MBTC), one of the biggest banks in the country has been sanctioned including setting aside a P4.45 billion provision over alleged fraud by one of its executives.

The Bangko Sentral ng Pilipinas (BSP) penalties were imposed on the MBTC after one of its vice presidents was arrested in July on suspicion of stealing P1.75 billion from the bank.

Some directors and officers at MBTC, better known as Metrobank, will also be suspended, the central bank said. Metrobank declined to name the suspended officials.

Metrobank is also required to set aside P4.45 billion of its capital to cover for “higher operational risk” from any similar cases.

“The board and senior management accept accountability and command responsibility for the incident and commits to implementing the directives,” Metrobank said in a statement.

It stressed that an audit showed no customers were affected by the alleged fraud, describing it as an “isolated incident”.

The BSP said that in imposing the sanctions, the policy-making Monetary Board “took into consideration MBTC’s strong financial condition and immediate corrective actions to contain further financial damage.”

Together with medium to long term initiatives that will serve to improve governance, controls, and compliance, the MB re-affirms the safety and soundness of MBTC.

The sanctions imposed ranged from reprimand to suspension of directors and officers who failed to perform adequate oversight and have been complacent or remiss of their duties and responsibilities.

The requirement for a higher provison for operational risk is subject to periodic review and would be lifted when the Metrobank is determined to have put in place adequate risk control measures to address the weaknesses noted.

Metrobank was also required to execute and submit a Letter of Commitment, to be implemented and completed within one year, to enhance corporate governance, credit administration, internal controls and audit, risk management, and customer on-boarding and monitoring processes.

Metrobank said in a statement that it appreciates the BSP’s affirmation of its strong financial condition, safety and soundness.

The board and senior management accept accountability and command responsibility for the incident and commits to implementing the directives. Metrobank assures the public that bank operations remain business as usual.

After conducting a full audit, the bank reiterates that no customer was affected.

“This is an isolated incident. The perpetrator acted alone and for her sole benefit. She has been apprehended and cases against her have been filed,” Metrobank said in a statement.

Metrobank added that it proactively reviews and improves its systems, which is exactly how the fraud was detected. The bank’s control framework remains effective and even stronger.

Thus, the BSP recognized the immediate actions taken by Metrobank, as well as the medium to long-term initiatives that will serve to further improve governance, compliance, and control.

With P2 trillion in assets and P210 billion in equity, Metrobank said it is in a strong position to set aside P4.45 billion of capital reserve in line with the BSP’s directive.

In addition, the bank has proactively absorbed the entire amount related to this incident in the third quarter. Despite this, the growth momentum of the bank remains robust and results for the year are ahead of plan, the Metrobank statement said.

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