Two of the nation’s biggest banks have received “huge” fines from the Bangko Sentral ng Pilipinas for internal fraud and involvement in a money laundering scam in a span of two years. But some bankers are puzzled over the contrasting penalties imposed on the two banks.
Rizal Commercial Banking Corp., the ninth largest lender in terms of assets, was slapped with a hefty P1-billion penalty for its unfortunate role in an $81-million money laundering scam in February 2016. RCBC owned up to its transgression and paid the fine.
The Monetary Board, the policy-making body of the Bangko Sentral ng Pilipinas, meanwhile, approved sanctions on Metropolitan Bank & Trust Co. over a P1.75-billion internal fraud. The penalties ranged from reprimand to suspension of directors and officers who failed to perform adequate oversight or have been remiss of their duties and responsibilities.
Metrobank was also ordered to allocate approximately P4.45 billion of its capital on a consolidated basis to cover for higher operational risk. The Monetary Board said the requirement was subject to periodic review and would be lifted “when the bank is determined to have put in place adequate risk control measures to address the weaknesses noted.”
Investigations showed Metrobank executive Maria Victoria Lopez allegedly forged signatures and breached protocols to defraud Metrobank. She was arrested on July 18, 2017 after she allegedly attempted to shift P2.25 million in interest from unauthorized loans.
Metrobank’s “penalty” of P4.45 billion, meanwhile, appears severe but the bank actually will not shell out a single centavo from its coffers.
The bank on a closer look was ordered to “allocate” P4.5 billion of its capital for “higher operational risk.” While the amount appears bigger than the P1-billion fine imposed on RCBC for the cyber heist episode with Bangladesh, Metrobank’s was actually a “non-penalty.” The fine was a mere accounting procedure and entailed no actual monetary pain on Metrobank.
Without going into technical details that involve computing Metrobank’s qualifying capital and minimum ratio, P4.5 billion is a mere drop in the bucket of the bank’s hundreds of billions or even trillions of pesos in loanable and investible funds. It is not an out-of-pocket expense that will hurt Metrobank in the same way RCBC parted with its own hard cash.
RCBC, it seems, did not get its fair share from the bank regulator. Thus, when should the Bangko Sentral come down hard or ease up on a bank? One banker naughtily noted that the Monetary Board had two members associated with Metrobank, including its former president, putting the Bangko Sentral and the MB in a bad light. To prevent such suspicions in the future, there must be a formal set of rules and penalties on erring banks and officials.
Bangladesh’s finance minister should be sued for being too irresponsible―especially given his high position in government―for urging the “wiping out RCBC from this world.”
RCBC claimed that the theft of $81 million of Bangladesh’s Central Bank’s funds was clearly an inside job and that BB was engaging in a massive cover-up by maligning RCBC and refusing to divulge its findings.
RCBC said in a statement BB must be compelled to disclose its findings, which are crucial to the global fight against cybercrime.
BB had been asked to share the result of its investigation. BB, instead, has been coming out with empty sound bites like “wiping out RCBC” which, coming from a Bangladeshi finance minister, is “extremely irresponsible”.
“At least five reports―SWIFT, FireEye, an international cyber security outfit, Bangladesh’s own finance minister, its government-appointed panel and a Bangladeshi expert―point to a conclusion that somebody inside BB would have made the heist possible,” RCBC said.
BB reportedly had no firewall to protect its system and used second-hand $10 switches, making itself vulnerable to hackers. The hackers in January last year did trial runs but apparently BB did nothing to protect its system.
“Bangladesh police investigated some BB people but only for negligence. Up to now, we do not know if anybody has been taken to court,” RCBC said.
“BB should stop making RCBC its scapegoat. RCBC has revealed everything it legally could to the Senate and to the Bangko Sentral ng Pilipinas. BB, however, has concealed everything it could. The contrast is telling,” RCBC added.
BB also wanted RCBC to return the stolen money. “If it was stolen by your own people, why ask us? We are actually a victim of BB’s negligence,” RCBC replied.
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