Senate to probe series of bank woes after Metrobank fraud 

Senate leaders are backing an inquiry in aid of crafting remedial legislation to tighten internal controls of banks after a P900-million internal fraud that rocked Metrobank, following a series of glitches and skimming incidents in other big lenders.

The proposed probe would help address last week’s revelation by Metrobank that an internal audit discovered a scheme allegedly perpetrated by one of its own executives who has been arrested and detained by the National Bureau of Investigation (NBI).

Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla admitted the BSP was already investigating the matter, but expressed confidence it would not adversely impact Metrobank’s operation considering its stable financial profile.

Calls for a legislative inquiry, however, are being fueled by the series of incidents that hit other major lenders before Metrobank’s case erupted.

These included “a technical glitch” at Bank of the Philippine Islands, which wrongly debited sums from thousands of depositors for several days in June. It was followed by Banco de Oro Unibank, which warned its clients against skimming cases perpetrated by unscrupulous syndicates.

Security Bank reported similar cases. Later, government depository Land Bank of the Philippines also encountered similar problems that disrupted servicing of some clients.

Senate President Aquilino L. Pimentel III confirmed the Senate leadership fully supports an inquiry in aid of legislation to plug loopholes that enable fraudsters to illegally divert funds of bank clients.

“Yes. Yes, we have to be vigilant with our banks, since the banking industry is imbued with public interest; especially now that the role of banks in our society has grown,” the Senate leader told the BusinessMirror.

Pimentel III said depositors also need to be informed of new schemes perpetrated by hackers to avoid being victimized.

“ATM [automated teller machine] hacking, internal fraud, etc., all these issues must be explained to the depositing public in terms they understand,” he added.

Senate Majority Leader Vicente C. Sotto III also backed calls for a Senate inquiry to review bank controls.

Asked if senators will also move to check adequacy of banks’ internal controls against fraud and other crimes, Sotto replied, “Yes, of course.”

Sen. Francis G. Escudero, chairman of the Committee on Banks, Financial Institutions and Currencies that will spearhead the inquiry into the spate of bank mishaps, indicated they have yet to fix a date after consulting with his peers and Central Bank officials.

“I will consult with colleagues and BSP officials this week,” Escudero said in a text message to the BusinessMirror.

NBI files charges, BSP investigates

The NBI earlier filed charges of qualified theft, falsification of documents and violations of the General Banking Law against Metrobanks Vice President Ma. Victoria Lopez.

As head of the bank’s corporate management services division, she dealt directly with large corporate clients, one of them being Universal Robina Corp. (URC).

The NBI had said Lopez allegedly set up two bogus corporate loan accounts, disguising the fraudulent loans as drawdowns from a genuine P25-billion credit facility available to URC. The scam was tripped up by suspicious bank staff who verified the application with URC.

The BSP promptly launched an investigation, even as Escudero’s counterpart, Rep. Ben P. Evardone of Eastern Samar, who chairs the House Committee on Banks, also served notice it will open an inquiry.

On Friday URC, however, said in a statement it still trusted Metrobank: “We take this occasion to also reiterate our confidence with Metrobank as we continue to conduct regular, business-as-usual transactions with them.”

For its part, Metrobank gave the Philippine Stock Exchange an update and issued a statement assuring the public it was on top of the situation and was actively cooperating with authorities.

“Upon our own discovery, the bank immediately caused the arrest of the individual involved in this case, who has been detained by the authorities since Monday.

“The bank is reinforcing its commitment to the highest standards of integrity and upholds the protection of its customers as its main priority. No customer has been affected in this incident. In the context of the Bank’s P 1.9-trillion financial resources, rest assured that we continue to operate business as usual for the bank and our customers.

“The bank cannot further comment on the case as it has already been filed.”

Espenilla affirmed all banks are required to put in place strict internal controls to prevent crime and untoward incidents that disrupt operations or harm clients. He said the BSP probe will focus on the internal systems at Metrobank, but remained confident that the lender’s financial stability—it earned P16 billion in 2016—will allow it to weather the crisis without affecting its clients.

Butch Fernandez

Butch Fernandez is BusinessMirror’s senior political reporter based at the Senate. He has covered Malacanang (3 presidencies), the Office of the Vice President, the Senate, local governments and defense since 1984.