Metropolitan Bank and Trust Co. (Metrobank), the country’s second largest bank, on Friday assured its customers that the fraudulent transactions of an officer did not affect a single client of theirs.

“No customer has been affected in this incident,” the bank said in a statement, referring to reports of a P900-million bank fraud perpetrated by a Metrobank officer. “In the context of the bank’s P1.9-trillion financial resources, rest assured that we continue to operate business as usual for the bank and our customers,” the bank said, adding that it “cannot further comment on the case as it has already been filed.”

The Ty-controlled Metrobank did not identify the bank officer but the National Bureau of Investigation (NBI), in a press conference, identified the suspect as Maria Victoria Lopez, Metrobank’s vice president for corporate services. She is now in the custody of the NBI.

ENTRAPMENT

NBI spokesman Deputy Director Ferdinand Lavin said Lopez was arrested Monday during an entrapment operation conducted by the NBI’s Anti-Fraud Division (AFD) in Makati City. Lopez who is now in custody of the NBI has been charged Tuesday before the Makati City Prosecutor’s Office with qualified theft, falsification, and violation of the General Banking Law.

AFD head Irwin Garcia said Metrobank sought NBI assistance to conduct an investigation and the arrest of Lopez after the bank discovered irregularities in the transaction of one their corporate clients.

NBI Agent Norman Aguirre who is handling the case said the bank initially discovered the irregularity last June 30 when a letter request was made to have a P2.25-million manager’s check issued to a certain payee.

“That in itself is a red flag because the bank cannot issue a manager’s check to an individual payee, which is supposed to be for corporate clients only,” Aguirre explained.

The investigator said the bank also discovered Lopez also falsified transactions to make it appear the corporate client made P900 million and P850 million loans.

Lopez reportedly receives a monthly compensation of P250,000 from the bank.

Aguirre explained the corporate client has a P25-billion credit line with Metrobank and, being the corporate management head, Lopez, “upon her say so, the bank can issue large loans through the credit line of P25 billion.”

“The bank conducted an internal inquiry and confirmed with the client if the client has a loan with the bank or if it has throw downs in the credit line and much to their dismay they discovered that such loans are unknown to the client,” Aguirre cited.

He explained the bank every quarter of the year reprises and renegotiates with the corporate client the interest rate it has to pay for its loans.

“So, nung July 17, the date ng entrapment, the client was supposed to pay a certain interest, which amounts to P2.250 million,” he said.

BSP PROBE

The Gokongwei Group’s Universal Robina Corp. (URC) was the alleged recipient of these fraudulent accounts.

“Even as Metrobank continues to conduct an internal investigation on the matter, we would like to assure everyone that URC will not incur any financial loss whatsoever and that the integrity and security of URC and its active accounts at Metrobank remain unaffected by the said incident,” URC stated.

“We (also) reiterate our confidence with Metrobank as we continue to conduct regular, business as usual transactions with them.”

Meantime, the Bangko Sentral ng Pilipinas (BSP) said it will be conducting a probe on the case and to investigate the internal controls of the bank.

“No system is perfect but banks are expected to be resilient to these things,” BSP Governor Nestor A. Espenilla Jr. said. “We will have to look into the adequacy of those controls if in fact (there is a) significant crime.”

Espenilla said internal control problems for banks do happen but most are isolated issues. The BSP has strict banking rules and requires all banks to be well-capitalized and implement risk-based approaches.

ISOLATED CASE

Newly appointed central bank Deputy Governor Chuchi Fonacier – in charge of the supervision and examination sector of the BSP – said the banking industry will not suffer loss of integrity due to the latest incident.

“This is an isolated case. The banking system is well-capitalized. Metrobank is a big bank,” said Fonacier. “It can handle the situation. It is unfortunate that this thing happened. On the part of the BSP, we have to establish the facts and determine what needs to be done.”

In the meantime, the banking community is awaiting results of the BSP’s decision and sanctions if any, that it will impose against the bank involved.

Bankers Association of the Philippines (BAP) president Nestor V. Tan, who is also the president and CEO of BDO Unibank Inc., was quoted as saying that banks have oversight and adequate checks and balances to detect errors and avoid theft or bank fraud. He added that it will be premature to make any comment until the BSP has disclosed its findings.

“(The BAP) is confident that Metrobank will quickly resolve the recently reported theft committed by a senior official,” the BAP said in an official group statement.  “This appears to be an isolated incident and we are confident the facts will arise from the ongoing investigations being carried out by both Metrobank and the BSP.”

The BAP said the incident was “quite unfortunate” but remarked that banks have established internal controls and systems and instituted separation of functions to help prevent crimes. “Together with the BSP, we agree that Metrobank, the second largest banking institution in the country (with P1.9 trillion of assets) will quickly enforce the necessary remedial measures and policies required to prevent such incidents from happening again.” Metrobank has over 900 branches and in the first quarter, it reported a net income of P5.6 billion, up six percent year-on-year.

Espenilla has always said that the banking system is resilient with a strong capital base. He does recognize that when it comes to internal control framework, there is no one size that will fit all. Banks are expected to adopt internal control frameworks that are suited to their size, risk profile and complexity of operations.

 In cases of bank fraud, the central bank can file its own prosecution suit of an erring bank employee for violating BSP regulations such as falsification of documents and for reporting false statements to the BSP.

Fraudulent loans which are still reported as part of a bank’s total loan portfolio are submitted under the consolidated statements of condition, and the falsification of these documents when reporting to the BSP is a criminal offense. Sanctions will be imposed on a bank, or its directors and officers, if proven that they committed an error or went against BSP regulations. (With a report from Jeffrey G. Damicog)

Source:
courtesy of MANILA BULLETIN

by Lee Chipongian

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