Global debt watcher Fitch Ratings said it expects Rizal Commercial Banking Corp. to remain profitable despite the P1-billion penalty imposed by Bangko Sentral ng Pilipinas in connection with the bank’s involvement in the $81-million laundering scam in February this year.
Fitch said in a report the fine was unlikely to materially weaken the bank’s medium-term financial profile, despite being significant relative to its net income.
“The penalty is equivalent to roughly 20 percent of RCBC’s 2015 net profit, and is the largest-ever imposed by Bangko Sentral ng Pilipinas. We believe this demonstrates the regulator’s firm view of the seriousness of the incident, in which $81 million siphoned from the Bangladeshi central bank’s account with the Federal Reserve Bank of New York were coursed through accounts at RCBC among other conduits,” Fitch said.
“However, the fine is a one-off, and we expect RCBC to remain profitable in 2016. The charge on its own does not significantly weaken the bank’s medium-term profitability or its existing capital, funding and liquidity strengths,” Fitch said.
Fitch expressed hope RCBC would continue to strengthen its operational policies and controls to avoid similar incidents in the future.
Fitch said other potential repercussions could have affected the bank’s rating—such as a loss of key correspondent banking relationships—appeared to have been averted since the details of the case first became public in the first quarter of 2016.
“In imposing the fine, the Philippine regulator acknowledged RCBC’s efforts to improve its anti-money laundering risk management systems and governance. We expect such efforts to continue, which should help to strengthen both RCBC and the banking sector,” Fitch said.
Bangko Sentral said the fine affirmed its strong commitment to ensure the stability of the financial system through strong and effective regulation of financial institutions.
RCBC said Friday it would comply with Monetary Board’s order by paying P1 billion to Bangko Sentral. It said the amount would be paid in two equal tranches over a one-year period, P500 million upon approval by the Monetary Board and P500 million one year after.
RCBC president and chief executive Gil Buenaventura said the bank already made provisions for the payment. Buenaventura said that “together with the payment of this amount, RCBC is instituting changes in its AML system and processes, making it among the most prepared in terms of thwarting money laundering attempts in the Philippines and the region.”
He said RCBC’s focus was to move forward and continue its ongoing program to put in place more robust processes, systems, and checks and balances.
“As a result, we expect this newly strengthened RCBC to be even more profitable and efficient both in terms of operations and in serving its customers,” Buenaventura said.
RCBC posted a net profit of P2.6 billion in the first half.