FSC fines Metrobank's Taipei branch NT$5m

"The fine is imposed on the grounds that Metrobank's internal auditing management was seriously flawed, violating article 123 of the banking law."

Gary Tseng, head of the FSC's banking bureau

The Financial Supervisory Commission yesterday imposed a record-high fine of NT$5 million on the Taipei branch of Metropolitan Bank & Trust Co (菲律賓首都銀行, Metrobank) for mismanagement in its internal auditing that led to US$2.66 million being embezzled last year.

"The fine is imposed on the grounds that Metrobank's internal auditing management was seriously flawed, violating article 123 of the banking law," said Gary Tseng (曾國烈), head of the commission's banking bureau.

In addition to the embezzlement, Metrobank was found to have disregarded instructions from the nation's financial regulators, which conduct examinations of banks on a regular basis.

According to Tseng, Jason Chen (陳翰輝), head of Metrobank's Taichung branch, took advantage of his managerial position to embezzle US$2.66 million last year before the branch was closed in June.

Chen, who has been indicted, is alleged to have falsified the central Taiwan branch's transactions with a New York-based bank so as to funnel cash into his own pocket, Tseng said.

Consequently, the financial regulator ordered the bank to dismiss Chen from his position as manager of the local branch for violating article 61 of the Banking Law (銀行法).

The law further forbids Chen from taking up any managerial position in the banking sector for the next five years.

Since the embezzlement further pushed the bank's assets into the red, the commission previously requested Metrobank to recapitalize by injecting over NT$45 million of capital into the bank. Metrobank currently has over NT$300 million in net assets, according to Tseng.

Moreover, the commission yesterday also ruled that the bank's Taipei branch breached the law by setting up money-remittance stands at places where foreign workers often gather on the weekends.

Tseng said that banks receiving approval are allowed to set up temporary shops to serve customers at certain places and for a certain period of time.

But Metrobank failed to apply for such approval, he said.

The nation's financial authorities had in 2002 suspended the bank from offering consumer banking business after discovering that its employees had received kickbacks for granting loans.

To safeguard consumers' rights, the commission demanded the bank dismiss chairwoman of the Taipei Branch Katie Kao (高國華) for negligence, Tseng said, adding that the commission may seek to penalize the bank's top management.

"A new replacement will be finalized by the end of this month," Tseng said.

Tseng added that the bank's top management from the Philippines had also expressed concerns over its local employees.