BSP urged to probe UCPB over Provident charge
The Insurance Commission (IC) has sought the assistance of the Bangko Sentral ng Pilipinas (BSP) to conduct an investigation on the alleged negligence of United Coconut Planters Bank (UCPB) as trustee bank of pre-need firm Provident Plans International Corp.
“The IC wrote a letter to BSP Governor Nestor 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,” Insurance Commissioner Dennis Funa said in a statement.
According to Funa, the request was prompted by a letter from Siguion Reyna Montecillo & Ongsiako Law Offices, counsel of Provident Plans, alleging UCPB of gross negligence and fraudulent mismanagement of Provident Plans’ trust fund deposits.
The counsel said the negligence resulted in the impairment of the required capital and the deficiency in the required trust fund of the Provident Plans, which the IC is now considering to be placed under conservatorship.
“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 is vested upon it,” Funa said.
“Nevertheless, we required UCPB to submit to us their reply on the allegations of Provident Plans,” he added.
Before the appointment of UCPB as Provident Plans’ trustee, the latter ’s trust fund was being managed by Export and Industry Bank (EIB).
EIB invested Provident Plan’s trust fund 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.
“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 said.
Meanwhile, UCPB said in a statement it welcomes the initiative of the IC to conduct the investigation, as this would allow the bank to clarify its position.
UCPB also reiterated that its trust banking group exercised prudence in managing Provident Plans’ account, in compliance with the 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 Jimenez said.
Provident Plans is among the companies the IC has found to be financially deficient since the regulation of the pre-need industry was placed under the commission in 2010.
Based on the latest letter submitted by Provident Plans to the IC, the company is in the process of negotiating with new investors who will either acquire or invest in the company in addition to raising of new funds as part of its capital build-up program.