BSP readies sanctions vs Metrobank

MANILA, Philippines—The Bangko Sentral ng Pilipinas is set to decide on sanctions to be imposed on the Metropolitan Bank & Trust Co. after one of its branches allegedly engaged in unsafe and unsound practices that led to over P60 million in losses for one of its corporate clients.

The Office of Special Investigations (OSI) of the BSP said that Metrobank failed to exercise diligence in its dealings with oil importer Zhenron Corp., which filed an administrative complaint earlier in 2011 against the bank.

In its ruling, penned by legal officer Cristina Colico, the central bank’s OSI said Metrobank violated rules on safe and sound banking practices. It turned over the case to the central bank’s Supervised Banks Complaints and Evaluation Group, which will decide on the penalties to be imposed.

OSI said that concerned officials of Metrobank “violated their duty to exercise meticulous care and extraordinary diligence” on the bank’s dealings with Zhenron.

In another development, four officials of Metrobank were charged with estafa for taking a total of P10.3 million from Brent International School Manila as fees for an alleged $17.1-million loan to the latter that never materialized.

In a sworn complaint filed with the city prosecutor of Biñan, Laguna, Brent’s finance director Edna Ballesteros named Metrobank president Antonio Abacan, senior vice president Eligio Labog, Jr., senior vice manager Godofredo Cruz and account officer Arlene Ordoñez as respondents.

The P10.3 million was allegedly for the upfront fee, documentary stamp tax and other fees for the loan. The bank, however, did not release the loan, prompting Brent to seek the return of the P10.3 million from Metrobank.

Reacting to the complaint, Metrobank said the criminal complaint had no factual and legal basis.

“In the bank’s over 48 years of operation, Metrobank has been consistently committed in providing service with integrity, placing the highest premium on transparency with the best interest of its stakeholders in mind,” the bank said.

In the first complaint, Zhenron, which is owned by couple Maureen and Seiichi Hori, the firm accused Metrobank of taking more than P60 million from the company, consisting of about P31 million from its peso deposit account and about P31 million worth of insurance policies by falsely claiming that Zhenron had unpaid interest obligations.

In 2009, Zhenron secured five trust receipts, which are forms of loans for importers, worth about P700 million.

Zhenron claimed that before the loans matured, it had instructed Metrobank to take over its dollar time deposits with the bank worth P700 million as payment.

But the complainant said Metrobank made it appear that Zhenron asked for extensions of the maturities of the loans. Loan extensions are charged interests. Thus, by 2010, the interest on the loan had ballooned.

Zhenron insisted that it never asked Metrobank to extend the maturities of the loans.

Bank officials named in the complaint were branch manager Wilfredo Pajarin and account manager Marie Christine Blancaflor. Other bank branch officials that the central bank’s OSI said were responsible for the case were Eligio Labog Jr., Rey Maraingan and Godofredo Cruz.

“As business affected with public interest and because of the nature of their functions, banks are under obligation to treat the accounts of their depositors with meticulous care, always having in mind the fiduciary nature of their relationship,” the BSP said in the ruling.