IC requests BSP help for UCPB-Provident probe
THE INSURANCE Commission (IC) has asked the central bank to help investigate the United Coconut Planters Bank (UCPB) for alleged negligence in protecting the trust funds of pre-need firm Provident Plans International Corp.
In a statement e- mailed to reporters over the weekend, the insurance regulator said it has already requested for the Bangko Sentral ng Pilipinas’ (BSP) assistance in organizing a fact-finding investigation versus UCPB after allegedly mishandling Provident Plans’ trust fund deposits.
“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,” Insurance Commissioner Dennis B. Funa said in a statement.
The IC’s request to the central bank came after Counsel of Provident Plans Siguion Reyna Montecillo & Ongsiako Law Offices wrote a letter to the insurance regulator on UCPB’s alleged crime.
“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 which resulted in the impairment of the required capital and deficiency in required trust fund of the said pre- need company,” the Insurance Commissioner said.
“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,” Mr. Funa noted. He said the lender is required to submit a reply to the IC regarding the matter.
Prior to UCPB’s appointment as Provident Plans’ trustee, the pre-need firm’s trust funds were managed by Export and Industry Bank (EIB). UCPB replaced EIB as the trustee bank of Provident Plans in 2010.
In 2008, Provident Plans’ Investment Group, however, recommended the withdrawal of the seven-year trust fund deposits made by EIB last 2005 due to the resignation of key officers of EIB’s trust department, and after discovering that EIB incurred P2.7 billion in losses two years prior, which led to the suspension of EIB from stock trading.
It was EIB that invested the trust funds of Provident Plans in its own “Expert 7 Time Deposit” product which has a “double your money” feature and comes in the form of zero coupon government securities and a guaranteed interest rate of 17.86% gross rate per annum maturing in seven years.
The BSP closed EIB in 2012 after the bank failed to fulfill maturing obligations and due to insufficient realizable assets and its inability to continue business without inflicting losses on its depositors and creditors.
For their part, UCPB said they welcome the IC’s initiative and said its Trust Banking Group performed prudence in managing Provident Plans’ trust fund deposit accounts.
“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 Senior Vice-President and Secretary Ildefonso R. Jimenez was quoted as saying in a statement.
Meanwhile, Provident Plans said: “Despite possession of information regarding EIB’s precarious financial condition and the concerns raised by Provident, UCPB did not lift a finger to preterminate 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.”