BSP probe sought over UCPB’s ‘negligence’ of Provident Plans
The Insurance Commission (IC) has asked the Bangko Sentral ng Pilipinas (BSP) to investigate United Coconut Planters Bank (UCPB) for its alleged role in the poor financial state of pre-need firm Provident Plans International Corp.
In a statement over the weekend, Insurance Commissioner Dennis B. Funa said the call for help was prompted by a letter from the pre-need firm’s lawyers “alleging that UCPB committed gross negligence and fraudulent mismanagement of Provident Plans’ trust fund deposits, which resulted in the impairment of [its] required capital and deficiency in required trust fund.”
UCPB denied the allegations.
The IC chief said Provident Plan’s request was forwarded to BSP since it has the regulatory powers over banks.
“Nevertheless, we required UCPB to submit to us their reply on the allegations of Provident Plans,” Funa added.
Last month, the Department of Finance (DOF) said the IC might place Provident Plans under conservatorship due to its financial situation.
Based on the commission’s assessment, Provident Plans had P340.6 million in capital impairment on top of P284 million trust fund deficiency as of December last year.
Quoting the insurance and pre-need industry regulator, the DOF said “the primary cause of [Provident Plans’] capital impairment and trust fund deficiency is the unrecoverable investment with its previous trustee bank, the Export and Industry Bank (EIB), and the neglect by its new trustee bank, the UCPB, in protecting the trust fund.”
“Provident Plans told the [IC] that it has regularly met with its new trustee bank—UCPB—but the latter apparently did not do anything to protect the trust fund investment of the pre-need firm in EIB,” Funa had said in June.
In a statement Sunday, UCPB said it “welcomes the initiative of the [IC] as this will allow the bank to clarify its position.”
“The bank reiterates that its trust banking group exercised prudence in managing the [Provident Plans’] account, well within sound banking practices and prevailing regulations of the BSP,” UCPB added.
“We shall provide the central bank all the information it needs so it can study the issue closely. We are confident that the BSP will affirm UCPB’s due diligence as a trustee bank,” UCPB spokesperson Ildefonso R. Jimenez said.
Provident Plans sells education, memorial and pension plans, with 70 percent of its sales comprised of life policies. It currently has 38,000 plan holders.
Funa had said that “while Provident Plans manifested before the [IC] in February and March this year that it has a ‘white knight’ investor to cover up its capital impairment and trust fund deficiencies, it has yet to receive any concrete plan or letter of intent from this supposed investor.”
