METROBANK SCANDAL

A senior executive has been arrested and charged for defrauding Metropolitan Bank and Trust
Co. (Metrobank) in a scandal that sent the lenders shares tumbling on Friday.
National Bureau of Investigation officials presented Maria Victoria Lopez, a vice president at the
corporate services unit of Metrobanks head office in Makati City, to reporters on Friday
afternoon, hours after the banks and financial intermediaries committee of the House of
Representatives announced an inquiry into the fraud that hit the Philippines second-largest bank.
NBI officials said Lopez, who appeared at the news conference with her face covered with a
shawl, was suspected of stealing P1.75 billion in loans from Metrobank.

The Philippine Daily Inquirer was the first to report on the fraud, stating in its Friday edition that
Metrobank, owned and controlled by George Ty, may have lost as much as P2.5 billion after the
suspect allegedly funneled disbursed loans into fictitious accounts created in the name of one of
the banks biggest corporate clients, Universal Robina Corp. (URC).
A trusted employee of the bank for 30 years, earning a monthly salary of P250,000, Lopez was
arrested on Monday while trying to move the stolen money to an unspecified personal account,
NBI spokesperson Ferdinand Lavin said.

Biggest loser
The biggest loser of this is the integrity of the banking system, Lavin said.
The NBI filed charges of theft, violation of the banking law and falsification of documents
against Lopez at the Makati City Prosecutors Office on Tuesday.
Metrobank did not confirm how much was stolen or detail the timeframe of the fraud, but
stressed that it did not affect its customers.
In the context of the banks P1.9-trillion financial resources, rest assured that we continue to
operate business as usual for the bank and our customers, the listed lender said in a statement.

Metrobank is investigating whether there were other people involved in the fraud, Lavin said.
URC, a large food processing company, said on Friday the fraudulent loans had been drawn from
its credit facility with Metrobank.
We thank Metrobank president Fabian Dee for giving us a heads-up advice that URC will not
be financially impacted in any way by this incident, the company said in a statement.

Investors sell their shares

The fraud, however, wiped out nearly P15.2 billion off the paper value of Metrobank on Friday
as investors sold down the stock.
Metrobank shares closed 5.03 percent lower on Friday to P86.90.
The lenders parent company, GT Capital Holdings, fell 2.85 percent to P1,195.
URC shares closed 0.62 percent down to P161 Friday.
But Bangko Sentral ng Pilipinas (BSP) Gov. Nestor Espenilla told reporters he had no doubt
Metrobank would be able to absorb the blow.
Banks have controls so that these kinds of things can be mitigated and withstood, Espenilla
said.
But he added: We have to look into the adequacy of those controls if in fact a significant crime
happened.

House inquiry
Eastern Samar Rep. Ben Evardone, chair of the House banks and financial intermediaries
committee, said his panel would inquire into the fraud.
The discovery of the fake accounts in Metrobank is very alarming, Evardone said in a
statement.
The adverse effects of the existence of fake bank accounts is more damaging than fake news
because this [involves] actual money of depositors, he said.
Evardone did not say when the inquiry would be held, but said BSP officials would be invited to
the hearings.
Metrobank officials will also be questioned to determine how the fraud happened, he said.
We will look into their protocols and procedures [to see] why fake accounts were allowed to be
opened, he added.
The Inquirer reported on Friday that the money in the fake accounts was siphoned off
electronically into other accounts in other banks and into the pocket of Lopez.
Initial investigation showed that Lopez made two separate loansP900 and P850 millionfrom
URCs P25-billion credit line.

Promissory note
Lawyer Norman Anire of the NBI told the news conference that Metrobank discovered the fraud
after noticing that one promissory note intended for the payment of interests was irregular.
Based on the presentation of the bank their employees discovered the falsified letter
directing the bank to issue a managers check in favor of an individual payee. That itself is a red
flag, Anire said.
He explained that since the owner of the credit line was a corporate account, the bank cannot
issue a managers check to an individual payee.
Anire said bank officials decided to verify the loans with URC and learned that the company had
made no such loans.
The NBI officials could not provide more details, as they did not have full information from
Metrobank.
It seems that because the credit line used to facilitate the theft belonged to a valued client, bank
officials did not question the transactions.
To cover her tracks, Lopez would pay the interest on the loans and she was supposed to pay
P2.250 million in interest, the funds for which she debited from URCs account, on the day she
was arrested.

I was surprised
Lopez, who is a year short of retirement from the bank, lives in a posh village in Quezon City.
She owns nine cars, the cheapest of which, according to NBI officials, is a Range Rover.
The officials did not say how many children Lopez has, but some of them, according to them, are
in school in the United States.
Lopez talked to the Inquirer briefly, but kept the shawl that covered her face.
No, she said when asked whether the money really went to her personal accounts.
When asked whether she worked alone, Lopez fell silent.
She said she was in her office when NBI agents arrested her in an entrapment operation on
Monday.
I was surprised, she said. WITH REPORTS FROM DJ YAP AND AFP

MANILA (2nd UPDATE) - A bank executive allegedly forged signatures and breached
protocols to defraud one of the country's largest lenders, National Bureau of Investigation
officials said Friday.

The suspect, Maria Victoria Lopez, was arrested on July 18 after she allegedly attempted to shift
P2.25 million in interest from unauthorized loans, officials said.

Lopez was presented to reporters wearing an orange detainee's shirt and with her face wrapped
with a shawl.

The interest payment was for one of 2 borrowings from a P25-billion pool. The bank's client,
which was authorized to borrow from the fund, denied executing the 2 loans worth P900 million
and P850 million, officials said.

The NBI did not name Metrobank, the country's largest lender, which on Friday confirmed
the arrest of an individual for alleged fraud. The bank's admission came after the Philippine
Daily Inquirer reported the case.

"The biggest loss on this is the integrity of the banking system and the internal control system of
the bank," said NBI spokesman Ferdinand Lavin, adding authorities were "doing everything" to
safeguard the industry.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi Fonacier meanwhile assured that
the incident is an "isolated case" and that the banking system is "well-capitalized."

"Metrobank is a big bank. It can handle the situation," Fonacier told reporters.

Lopez had worked for the bank for 3 decades and was earning around P250,000 per month as
head of corporate services. She could be tried for qualified theft, falsification of documents and
violation of banking laws, officials said.

"She's not cooperating. She's not talking," Lavin said, adding an investigation was underway to
determine if other people were involved.

Lopez allegedly directed the issuance of a manager's check to an individual, a "red flag" because
such checks are issued only to corporate clients, said Norman Aguirre, the NBI agent on case.

"There were irregularities in the documents itself, indicating falsification such as different fonts,
dubious signatures," Aguirre said.
"The bank conducted an internal inquiry, confirmed that the client has a loan with the bank or if
they have draw-downs. Much to their dismay, they discovered such loans were unknown to the
client," he said.

BSP Governor Nestor Espenilla said regulators were investigating the fraud, the latest in a wave
of controversies to hit the banking system since last year.

Espenilla said he expected the lender, controlled by taipan George Ty, to be "resilient."

In February 2016, unidentified hackers shifted $81 million from Bangladesh's foreign reserves to
an RCBC branch in Makati City.

The BSP fined the Yuchengco-owned lender a record P1 billion over the incident, which
exposed the vulnerabilities of the financial system to money laundering.

Legislators also recently investigated local banks over glitches.

Last month, Bank of the Philippine Islands' digital channels were paralyzed for 2 days due to
what it said was an "internal error."

The country's largest lender, BDO Unibank, later admitted that 7 of its ATMs were
"compromised" in a "skimming" attack that allowed unauthorized transactions.

Sources:

http://news.abs-cbn.com/business/07/21/17/how-nbi-caught-metrobank-executive-linked-to-
fraud

http://www.philstar.com/headlines/2017/08/02/1723774/metrobank-sues-top-exec-2-others-fraud