Insurance Commission asks BSP to investigate UCPB

Published June 30, 2020, 12:28 AM

by manilabulletin_admin


By Chino Leyco

The Insurance Commission asked the Bangko Sentral ng Pilipinas (BSP) to investigate United Coconut Planters Bank (UCPB) on possible gross negligence and fraudulent mismanagement of a pre-need company.

In a statement, Insurance Commissioner Dennis B. Funa on Sunday said that he sought the assistance of the BSP to conduct a fact-finding investigation on UCPB’s alleged negligence and mismanagement of Provident Plans International Corp. (Provident Plans).

“The IC wrote a letter to BSP Governor Nestor A. Espenilla, Jr., requesting that a fact-finding investigation be conducted on UCPB in connection with the handling of the trust fund deposits of Provident Plans,” Funa said.

“This request was prompted by the letter from Siguion Reyna Montecillo & Ongsiako Law Offices, counsel of Provident Plans, to the IC alleging that UCPB committed gross negligence and fraudulent mismanagement of Provident Plans’ Trust Fund Deposits,” he added.

According to the insurance chief, UCPB’s negligence and mismanagement possibly resulted in the impairment of the required capital and deficiency in required trust fund of the Provident Plans.

“Upon evaluation of Provident Plans’ request, we deemed it proper to refer the same to the BSP considering that the regulatory and supervisory powers over UCPB are vested on  it,” Funa said.

“Nevertheless, we required UCPB to submit to us their reply on the allegations of Provident Plans,” he added.

UCPB, meanwhile, said in a statement yesterday that it welcomes the initiative of the Insurance Commission, saying the fact-finding investigation will allow the lender to clarify its position.

The bank, however, reiterated that its Trust Banking Group exercised prudence in managing the Provident Plans’ account, “well within sound banking practices and prevailing regulations of the BSP.”

“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.

Before the appointment of UCPB as Provident Plans’ trustee, the trust fund of Provident Plans was being managed by Export and Industry Bank (EIB).

It was EIB which invested the trust funds of Provident Plan in its own “Expert 7 Time Deposit” product which had a double-your-money feature and came in the form of zero coupon government securities and a guaranteed interest rate of 17.86 percent gross rate per annum maturing in seven years.

When UCPB replaced EIB as Provident Plans’ trustee bank in 2010, the investment of the trust fund remained in EIB’s time deposit.

According to Provident Plans, “Despite possession of information regarding EIB’s precarious financial condition and the concerns raised by Provident, UCPB did not lift a finger to pre-terminate the Expert 7 Time Deposit. Instead, UCPB banked heavily on the supposed plan of Banco de Oro to acquire EIB and offered this as an excuse to Provident to justify its inaction.”

Provident Plans was among the companies that the IC found to be financially deficient after the regulation of the pre-need industry was placed under the IC in 2010, pursuant to Republic Act 9829. Pre-need firms were previously under the supervision of the Securities and Exchange Commission (SEC).

Based on the latest letter submitted by Provident Plans to the IC, Provident Plans is in the process of negotiating with new investors who will either acquire or invest in the company, in addition to raising new funds as part of its capital build-up program.