Board Governance

Union Bank of the Philippines remains steadfast in upholding good corporate governance towards achieving its corporate vision and business goals in a manner consistent with Smart Banking and its attributes of being Relevant, Expert and Challenging Conventions. The governance structure of the Bank is discussed hereunder. The Bank has a well-structured and efficient Board of Directors (the Board) providing it with the right leadership, strategic oversight and control environment. The Board propels the Bank towards its ultimate goal of maximizing long term value for shareholders while also taking into account the interest of its stakeholders.

UnionBank of the Philippines Board of Directors

A combination of core competencies makes up the membership of Board. As a body, the Board demonstrates integrity and adherence with the principles of good governance and accountability to ensure a high standard of governance and oversight. Individually, members have a spread of skills and experiences that works correspondingly with each other. Each member also carries independence of character. This kind of structure and composition enables the Board to fulfill its duties and responsibilities which are provided in the Bank’s By-Laws and Manual on Corporate Governance (CG Manual).

The Bank is committed to have diversity in membership in the Board. Subject to the qualifications and disqualifications set forth in the Bank’s CG Manual, there exists no discrimination against gender and age in the nomination of the members of the Board.

The Board is composed of fifteen (15) members, including three (3) independent directors (ID), ten (10) non-executive directors (NED), and two (2) executive directors (ED). Profiles of the members of the Board are provided in the Bank’s Annual Report (SEC Form 17-A) and Definitive Information Statement (SEC Form 20- IS).

The Bank has a Nomination Sub-Committee that pre-screens the qualifications of, and prepares a final list of all candidates for its Board and key officers. Screening policies and parameters are set in place enabling the Committee to effectively review the qualifications of the nominees for regular and independent directors. After the nomination, the Nominations Sub-Committee prepares a final list of candidates that contains all the information about all the nominees for directors, as required by law and shall be made available to the appropriate government agency in-charge of monitoring compliance and to all stockholders through the filing and distribution of the Information Statement or in such other reports where the law or regulations require the Bank to submit. The name of the person or group of persons who recommended the nomination of directors shall be identified in such report including any relationship with the nominee. Only nominees whose names appear on the final list of candidates shall be eligible for election. No other nominations shall be entertained after the final list of candidates shall have been prepared. No further nominations shall be entertained or allowed on the floor during the actual stockholders’/memberships’ meeting. The members of the Board comply with the fit and proper rule of the Bangko Sentral ng Pilipinas (BSP). Every election, Board members attest that they have all the qualifications required of a director and do not possess any of the disqualifications specified in the Manual of Regulations for Banks (MORB) of the BSP. The Board members hold office for one (1) year or until their successors are elected and qualified in accordance with the Bank’s By-Laws. Members are apprised of their general and specific duties and responsibilities as directors prescribed by the MORB and are required to certify that they fully understand the same.

For 2014, the independent directors of the Bank’s Board were retired Supreme Court Chief Justice Reynato S. Puno, Mr. Carlos T. Raymond, Jr. and Mr. Francisco S.A. Sandejas. The Bank defines an independent director as a person holding no interests or relationships with the bank that may hinder his independence from the bank or management or will interfere with the exercise of independent judgment in carrying out his responsibilities as a director. He should comply with all the qualifications required of an independent director and should not possess any of the disqualifications therefore as provided in the Securities Regulation Code (SRC) and the MORB; and has not withheld nor suppressed any information material to his qualification or disqualification as an independent director.

In 23 October 2015, the schedule of board and committee meetings for 2016 was presented and subsequently approved by the Board. The Board held eighteen (18) meetings from January 2016 to December 2016 including special meetings, organizational meetings, strategic planning meetings and special board meeting for non-executive directors.

Board of Directors Meeting Attendance
Director %
 
Justo A. Ortiz (Chairman) 100
Jon Ramon M. Aboitiz (Vice Chairman) 88
Edwin R. Bautista 94
Erramon Isidro M. Aboitiz 94
Stephen G. Paradies 72
Luis Miguel O. Aboitiz 100
Sabin M. Aboitiz 100
Juan Antonio E. Bernad 100
Emilio S. De Quiros, Jr.* 100
Emmanuel F. Dooc ** 100
Michael Victor N. Alimurung *** 100
Amado D. Valdez **** 100
Mona Lisa B. Dela Cruz 94
Nina D. Aguas 83
Reynato S. Puno (ID) 94
Carlos Bell T. Raymond, Jr. (ID) 100
Francisco S.A. Sandejas (ID) 100
*Director of the Bank until December 16, 2016
**Director of the Bank starting December 16, 2016
***Director of the Bank until November 25, 2016
****Director of the Bank starting November 25, 2016

 

 

ANNUAL STOCKHOLDERS MEETING ATTENDANCE
(May 27, 2016)
 
Justo A. Ortiz (Chairman)
Jon Ramon M. Aboitiz (Vice Chairman)
Edwin R. Bautista
Erramon Isidro M. Aboitiz
Stephen George A. Paradies
Juan Antonio E. Bernad
Sabin M. Aboitiz
Emilio S. De Quiros, Jr.
Luis Miguel O. Aboitiz
Nina D. Aguas
Mona Lisa B. Dela Cruz
Carlos Bell T. Raymond, Jr. (ID)
Reynato S. Puno (ID)
Francisco S.A. Sandejas (ID)

The Corporate Governance Committee is responsible for making recommendations to the Board regarding required trainings and continuing education of directors. All members of the Board have attended a one and a half day corporate governance orientation seminar for bank directors at BSP-accredited institutions in compliance with the requirements of the MORB. These include extensive discussion on topics involving audit, risk and governance, financial stewardship and accountability. They also undergo orientation on the Bank’s businesses as soon as they assume their positions. Representatives from key segments of the Bank present their respective business to newly elected directors. Continuing education is also provided which include training by the Bank and by outside service providers.

In October 29, 2014, in compliance with SEC Memorandum Circular No. 20 Series of 2013, the members of the Board of Directors of the Bank attended a three-hour corporate governance refresher course from an accredited provider of the SEC.

The Board Assessment process is undertaken annually to measure board efficiency through a balanced and objective platform against the goals that the board has set at the beginning of the year, roles and responsibilities as mandated by the various regulatory agencies as well as the Bank’s own Manual on Good Corporate Governance. Further, the assessment provides the Board and its committees valuable information that can be used as a guiding tool in succession planning, objective setting as well as analysis of whether they have accomplished the purpose for which they were established and to act to address any concern emanating therefrom.

The Assessment was enhanced in 2017 to include components designed to gather an all-inclusive view of the Board’s performance. The Assessment now consists of three (3) components, namely, (1) Self-Assessment as collegial body (2) Individual Self-Assessment and (3) Independent Assessment. Each component is considered vital to ensure that the evaluation is comprehensive and objective by allowing peer review of the board as a collegial body, individual self-review and an executive review by the Corporate Secretary, Chief Risk Officer and the Chief Compliance and Corporate Governance Officer. This unique take on the evaluation showcases the Bank’s dedication to a transparent governance regime.

To assist the Board in competently acting upon its responsibilities, it established ten (10) committees, namely, the Executive Committee, the Risk Management Committee, the Market Risk Committee, the Operations Risk Management Committee, the Audit Committee, the Trust Committee, the Technology Steering Committee, the Corporate Governance Committee, the Nominations Sub-Committee, and the Compensation & Remunerations Sub-Committee. The members of these committees also conduct periodic assessment of their specific committees’ performance.

Their composition and functions are summarized below.

Executive Committee (ExComm)

The Executive Committee is composed of seven (7) members of the Board. It acts and exercises such functions and powers which are reserved for the Board during intervals between Board meetings, except the power to initiate reversals of, or departure from fundamental policies, procedures and guidelines prescribed by the Board itself, and subject to such restrictions as the Board may determine. All matters passed and acted upon by the ExComm are reported to the Board of Directors and subject to revision and alterations by the Board provided that no rights or third person are affected thereby.

The Committee held thirty-six (36) meetings from January 2016 to December 2016 during which it reviewed and endorsed numerous transactions to the Board.

Risk Management Committee (RMC)

The Risk Management Committee consists of seven (7) members of the Board of Directors who possess a varied range of knowledge and expertise concerning the Bank’s risk exposures. The Committee develops appropriate strategies for preventing the occurrence of risk events and minimizing losses when these do happen. It oversees the Bank’s risk management system to ensure that it remains effective, authority limits are observed, and immediate corrective actions are taken whenever limits are breached or risk events occur. The RMC also develops and implements appropriate risk management strategies and defines the measures for managing and controlling its major risks.

The Committee conducted regular discussions on the Bank’s risk exposures and management of these risks, approved new/updated risk management policies and limits and newly developed risk management models and tools, and reviewed the performance of existing risk management structures and models.

Some of the highlights of the RMC’s accomplishments for 2016 are the following:

  • Approved new and/or updated credit risk management tools.
  • Updated the Committee’s charter, policies and work programs.
  • Reviewed and updated bank-wide top residual risks.
  • Approved new/updated product program policies/features.
  • Provided guidance on the management and reporting of various risk exposures.

The Committee held twelve (12) meetings from January 2016 to December 2016.

Market Risk Committee (MRC)

The Market Risk Committee is composed of six (6) members that includes the Chairman of the Board of Directors, the President and four (4) other members of the Board. The Committee sets policies and standards for market risk, interest rate risk and liquidity risk in terms of identification, measurement, monitoring and control. The Committee’s specific duties include, among others, management and reporting of market risk, interest rate risk in the banking book and liquidity risk; ensuring that the risk management processes for these risks satisfy corporate policy; review of the Treasury Portfolio (including contingent accounts); review and endorsement of Treasury Risk Limits for Board approval; endorsement of Treasury-Related Product Programs and Manuals for approval of the Board of Directors; approval of models and systems used to calculate market, interest rate and liquidity risks, and; promotion of continuous development of risk programs and infrastructure.

In 2016, the Committee approved new policies, along with updates of old policies and guidelines, limits, models and investment opportunities to ensure their relevance to industry trends, regulations and best practices.

The Committee held twelve (12) meetings from January 2016 to December 2016.

Operations Risk Management Committee (ORMC)

The Operations Risk Management Committee is composed of five (5) members of the Board and three (3) members from Senior Management. The Committee covers, among others, (1) the adequacy of the Bank’s policies, procedures, organization and resources for preventing, or limiting unexpected loss due to deficiencies in information systems; business, operational and management processes; employees skills and supervision, equipment and internal controls; (2) periodic or special risk assessments conducted in various businesses and operating units of the Bank to proactively uncover operational risks that can result to actual loss or damage; (3) results of internal audits, BSP examinations and investigation of administrative cases that highlight trends indicative of present or emerging exposures to specific operational risks; (4) risk assessment of major information systems to be implemented in the Bank; (5) regulatory compliance issues, whether currently existing or anticipated to arise as a result of new regulations; and (6) business continuity strategies, plans and procedures.

Some of the highlights of the ORMC’s accomplishments for 2016 are the following:

  • Assessed the adequacy of the Bank’s policies, procedures, organization and resources for preventing, or limiting the damage from unexpected loss due to deficiencies in information systems, business, operational and management processes, employee skills and supervision, equipment and internal controls.
  • Reported the results of periodic or special risk assessments conducted in various businesses and operating units of the Bank to proactively uncover operational risks that can result to actual loss or damage to the Bank.
  • Summarized the results of internal audits, BSP examinations and investigation of administrative cases that highlight trends indicative of present or emerging exposures to specific operational risks.
  • Performed risk assessment of major information systems implemented in the Bank
  • Reviewed regulatory issues whether currently existing or anticipated to arise because of new laws or regulations particularly those that affect the bank operations.
  • Reviewed and endorsed the Bank’s Business Continuity Plan, strategies and resources.

The Committee held four (4) meetings from January 2016 to December 2016.

Audit Committee (AuditComm)

The Audit Committee is composed of five (5) members of the Board who are knowledgeable in accounting, auditing, or related financial management matters. The committee is composed of non-executive directors and two (2) independent directors including the Chairman. The Committee members’ skills, qualifications, and experience are appropriate for them to perform their duties as laid down by the Board (for profiles of the members, refer to the Bank’s Annual Report submitted to SEC in SEC Form 17-A, pages 28-32).

In behalf of the Board of Directors, the Audit Committee provides oversight of the Bank’s financial reporting and internal control, as well as internal and external audit function. It is also responsible for setting up the Internal Audit Division (IAD) and the appointment of the internal auditor and the independent external auditor who both report to the Audit Committee.

Moreover, the Audit Committee is mandated to monitor and evaluate the adequacy and effectiveness of the Bank’s systems of internal control, risk management and corporate governance.

The accomplishments provided by the Audit Committee demonstrated the efficiency that comes along the fiduciary relationship it holds with the Board.

  • External Audit

    The Committee supervised the activities of external auditor Punongbayan & Araullo through review and endorsement to the Board of the following: (1) 2015 Year-End Audit Results; (2) Audited Financial Statements of UnionBank and its subsidiaries and the Trust and Investment Services Group as of 31 December 2015; (3) Financial Statements Audit Based on Regulatory Accounting Practices (RAP) as of 31 December 2015; (4) Interim 2016 Audit Results as of 31 October 2016, and: (5) 2016 Audit Plan.

  • Internal Audit

    The Audit Committee provided oversight of IAD activities through the review and discussion of the reports that included the following:
    1. Approval of the 2016 Annual Audit Plan, IAD Manual revisions, Revised Audit Rating Systems for 10 non-branch audit areas.
    2. Discussion and endorsement of the following to the Board: BSP Report of Examinations (ROE) Findings on IAD, Status of IAD-Related ROE Directives and Interim Audit Report.
    3. Discussion of assurance engagement reports and cases from the IAD-Fraud Investigation Unit.
    4. Review of the IAD’s 2015 performance.

The Committee also regularly tracked open audit items and approved various amendments to the IAD Manual and Audit Charter to ensure that these are in accordance with ISPPIA standards.

Using the Self-Assessment Questionnaire prepared based on the requirements of SEC Memorandum Circular No. 4 (Series of 2012), in assessing the Audit Committee’s performance in 2016, the Audit Committee rated itself EXCELLENT. This rating was validated by the Bank’s Chief Compliance and Corporate Governance Officer confirmed by the Audit Committee and the Board of Directors.

The Audit Committee held thirteen (13) meetings in 2016.

Trust Committee (TrustComm)

The Trust Committee is composed of five (5) members: three (3) of whom are members of the Board, the President, and the Trust Officer. No member of the Audit Committee sits concurrently as a member of the Trust Committee in compliance with Sec. X 406.1 of the MORB.

The Trust Committee acts within the sphere of authority as may be provided in the Bank’s By-Laws, and/or as may be delegated by the Board such as, but not limited to: the acceptance and closing of trust and other fiduciary accounts; the initial review of assets placed under the trustee’s fiduciary custody; the investment, reinvestment, and disposition of funds or properties; and the review of trust and other fiduciary accounts at least once every twelve (12) months to determine the advisability of retaining or disposing of the trust or fiduciary assets and/or whether the account is being managed in accordance with the instrument creating the trust or other fiduciary relationship.

In 2016, the Committee approved the establishment of two (2) new Unit Investment Trust Funds (UITFs) namely, the High Net Worth Peso Intermediate Term Fund and the High Net Worth Peso Medium Term Fund. Similarly, a new trust system was utilized (Prospero). Lastly, through the guidance of the Trust Committee, the Trust Department was awarded by the Chartered Financial Analyst Society for best risk adjusted returns, top three (3) for three (3) of its UITFs.

The Committee held twelve (12) meetings from January 2016 to December 2016.

Technology Steering Committee (TSC)

The Technology Steering Committee is composed of seven (7) members, including two (2) members of the Board. It is responsible in overseeing the overall information technology (IT) strategy of the Bank and to ensure its alignment with the Bank’s business strategies and objectives. In addition, the Committee monitors IT performance, status of major projects and other IT-related issues.

Some of the highlights of the TSC’s accomplishments for 2016 are the following:

  1. Proactive IT Governance through the following reports and governance activities:
    1. Threat Landscape Monitoring and Assessment Report
    2. Customer complaints monitoring, online surveys and web performance optimization
    3. Bank-wide IT Risk Register and IT incidents reporting
    4. Review of key strategic plans including IT Strategic Plan and Information Security Strategy
  2. Ensuring Improved Regulatory Compliance through the following:
    1. Review and endorsement of seven (7) new policies and procedural documents including the CMPG Service Delivery Manual (Project Management), IT Risk Management Manual, and Project Quality Assurance function.
    2. Revision and enhancement of four (4) existing policies including Password Retention Policy, Information Security Manual, and Mobile Device and Wifi Policy.
  3. Set up of Innovation Management through the following:
    1. Streamlining of innovation projects and initiatives through a reporting framework and setting up a project endorsement process.
    2. Successful endorsement of 16 innovation and security driven project proposals including those for fraud management, prepaid card host, API platform and disaster recovery, to name a few.
    3. Completion of nine (9) initiatives/projects including the new systems, host readiness, assessments and others relating to the Bank’s overall strategic plans.

The Committee held twelve (12) meetings from January 2016 to December 2016.

Corporate Governance Committee (CGComm)

The Board is primarily assisted by the Corporate Governance Committee in fulfilling its corporate governance responsibilities. The Committee recommends governance policies to the Board based on the regulations of the BSP, the SEC, the Philippine Stock Exchange (PSE), as well as those which are internationally recognized as industry best practices. It serves as the primary resource for the Board to study and evaluate itself, as a body, and its Committees’ structure, policies and practices with the objective of raising the bar for the Bank’s corporate governance.

The specific duties of the Committee include: (1) providing oversight to the implementation of the corporate governance framework including regular review of the same to ensure that it remains appropriate vis-a-vis the Bank's size, complexity, business strategy and business and regulatory requirements; (2) adoption of corporate governance policies and ensure that these are reviewed and updated regularly, and consistently implemented in form and substance; (3) making recommendations to the Board regarding continuing education of directors; (4) overseeing the periodic performance and evaluation of the Board, its Committees and senior management including its sharing and discussion to be able to come up with concrete action plans for implementation, and; (5) exercise of oversight on the Anti-Money Laundering Committee (AMLACOM) as well as that of the Compliance and Corporate Governance Office of the Bank through regular reporting.

The Committee has seven (7) members of the Board, two (2) of whom are Independent Directors, including the Chairman, and one (1) executive director. The Committee annually evaluates the governance state of the Bank by using as benchmark various metrics, such as the PSE’s Corporate Governance Guidelines Disclosure, the ASEAN Corporate Governance Scorecard, which is based on the governance principles of the OECD, and other relevant governance metrics.

In 2016, the Committee oversaw the following:

  1. Statistics review of various compliance reports related to money laundering, customer complaints, administrative cases and other compliance activities.
  2. Discussions on new regulations set forth by the various regulatory agencies.
  3. Approval and implementation of additional measures to strengthen the Bank’s anti-money laundering stance.
  4. Status of continuous AML and Corporate Governance seminars.
  5. Results of the BSP’s Report of Examination (ROE) and directives.
  6. Status of administrative cases and investigations.

The Committee held five (5) meetings from January 2016 to December 2016.

Related Party Transaction Committee (RPT Committee)

The Related Party Transaction (RPT) Committee is composed of five (5) members of which three (3) are Independent Directors, including the Chairman, with the Head of Internal Audit and Chief Compliance Officer as non-voting members from Senior Management. The Committee is responsible for assisting the board in fulfilling its corporate governance responsibilities on related party transactions (RPTs), reviewing and endorsing all significant RPTs for the approval or confirmation of the board and formulating, implementing and updating of the Bank’s RPT policy in accordance with existing regulations. The Committee was constituted on 22 May 2015.

In 2016, the Committee reviewed the RPT Policy and approved the creation of an RPT Database. Throughout the year, the Committee continuously reviewed various transactions and endorsed those RPT transactions requiring board approval to the Board.

The Committee held twelve (12) meetings from January 2016 to December 2016

Nominations Committee (NomComm)

The Nominations Committee is comprised of seven (7) members of the Board, one of whom is an Independent Director, and one (1) non-voting member in the person of the Human Resources Director. The Committee is responsible for reviewing the qualifications of and screening candidates for the Board and key officers of the Bank. It oversees the implementation of programs for identifying, retaining and developing critical executives or officers and the succession plan for various units in the organization.

The Nominations Committee successfully screened and recommended two (2) nominees to the board in 2016 to replace outgoing directors.

The Committee held three (3) meetings from January 2016 to December 2016.

Compensation and Remuneration Committee (CompRem)

The Compensation and Remuneration Sub-Committee is composed of seven (7) members of the Board, with the Chairman who is an Independent Director. It is responsible for overseeing implementation of the programs for salaries and benefits of senior management and Directors, as may be applicable. It monitors adequacy, effectiveness and consistency of compensation program vis-à-vis corporate philosophy and strategy.

The Committee held seven (7) meetings from January 2016 to December 2016.

The Bank’s Corporate Secretary plays a pivotal role in assisting the Board in the performance of its duties. In all the activities of the Board, the Corporate Secretary ensures that Board policies and procedures are observed. The Board has separate and independent access to the Corporate Secretary who, among others, oversees the adequate flow of information to the Board prior to and during meetings, and serves as an adviser to the Directors on their responsibilities and obligations.

Atty. Joselito Vergel De Dios Banaag is the Bank’s current Corporate Secretary. He joined the Bank in November 2015 after the retirement of the previous Corporate Secretary, Atty. Fe B. Macalino. Atty. Banaag’s profile is provided in SEC Form 17-A.

UnionBank of the Philippines Conglomerate Structure
  1. Executive Committee Charter
  2. Corporate Governance Committee Charter
  3. Risk Management Committee Charter
  4. Operational Risk Management Committee Charter
  5. Market Risk Committee Charter
  6. Related Party Transaction Committee Charter
  7. Trust and Investment Committee Charter
  8. Technology Steering Committee Charter
  9. Audit Committee Charter
  10. Nominations Committee Charter

EXECUTIVE COMMITTEE CHARTER

INTRODUCTION

While the powers of the Bank shall be exercised, the business conducted and the property controlled by the Board of Directors , the Unionbank stockholders deemed it necessary that there shall be created an Executive Committee (EXCOM) composed of members of the Board of Directors who will regularly meet prior to the monthly meeting of the Board of Directors to ensure that prudent and sound management of the Bank is realized at all times. (from the Bank’s By-Laws)

POWERS, DUTIES AND RESPONSIBILITIES

  1. The Executive Committee shall have and exercise such functions and powers which are reserved for the Board of Directors during intervals between meetings of the Board except the powers to initiate reversals of , or departure from fundamental policies, procedures and guidelines prescribed by the Board of Directors and such other restrictions as the board may determine including the limitation of their functions to those which are recommendatory or advisory;
  2. In addition to the foregoing, the Executive Committee shall exercise the following functions:
    1. Approve credit and loan transactions whether clean or secured within a pre-defined limit;
    2. Conform or note approvals within Management’s level of delegated authority limits;
    3. Endorse credit transactions beyond the EXCOM approving limits for the approval of the Board of Directors;
    4. Approval of such other transactions as may be initiated by bank units within the Committee’s limit of transactions;
    5. Perform such other function that the Board of Directors may in its discretion, delegate to the Executive Committee.

REPORTING RESPONSIBILITY

All matters passed and acted upon by the Executive Committee shall be reported to the Board of Directors by way of the submission of the minutes of the meetings for Board notation. The decision of the Executive Committee shall be subject to revision or alteration by the Board of Directors provided that no rights or third persons are affected thereby.

COMPOSITION

  1. The Committee shall have seven (7) directors to be designated by the Board of Directors. The members of the Executive Committee shall consist of either regular members or alternate members in the event that regular members cannot attend and quorum is required for the meeting.
  2. The Committee shall have a Chairman to preside at the meeting and in his absence, the Vice-Chairman shall preside. In the event that the Chairman and the Vice-Chairman is not present at the meeting, the remaining members in attendance and constituting a quorum shall nominate among themselves a presiding Chairman for the meeting.
  3. Vacancy in committee membership shall be filled up by the Board of Directors.

QUORUM REQUIREMENT

  1. In all meetings of the Executive Committee, four (4) members must be present to constitute a quorum to transact business.
  2. Only directors of the bank shall sit as members of the Executive Committee meetings.

FREQUENCY OF MEETING

Weekly, unless cancelled due to lack of quorum or materials for action, i.e. no less than ten (10) transactions for approval.

RESOLUTION

Affirmative votes of at least four (4) members attending the meeting.

COMMITTEE SECRETARIAT

The Office of the Corporate Secretary of the Bank shall provide secretariat services comprising of receiving all materials for action by the Committee, schedule of the meeting, ensure that all materials are received by the members at leas one (1) business day prior to the meeting, preparation of minutes of the meeting and custody of the minutes and materials presented to the Committee for action.

 


CORPORATE GOVERNANCE COMMITTEE CHARTER

INTRODUCTION

In line with the thrust of the Bangko Sentral ng Pilipinas Circular No. 749 on the Guidelines in Strengthening Corporate Governance in BSP-Supervised Financial Institutions, this charter shall guide the Corporate Governance Committee (CGC) in its execution and fulfillment of its roles in assistance of the Board of Directors’ corporate governance responsibilities.

POWERS, DUTIES AND RESPONSIBILITIES

  1. Assist the Board of Directors in fulfilling its corporate governance responsibilities.
  2. Be responsible for ensuring the Board’s effectiveness and due observance of corporate governance principles and guidelines.
  3. Review and evaluate the qualifications of all persons nominated to the Board as well as those nominated to other positions requiring appointment by the Board of Directors through its sub-committees.
  4. Oversee the periodic performance evaluation of the Board and its Committees through the conduct of self-assessments.
  5. Conduct an annual self-assessment of its own performance.
  6. Make recommendations to the Board regarding the continuing education of Directors and their assignments to various Board committees, succession plan for the board members and senior officers, and their remuneration commensurate with corporate and individual performance through its sub-committees.
  7. Conduct oversight functions over the Anti-Money Laundering Committee (AMLACOM) through refular reporting of matters taken during its meetings.
  8. Conduct oversight functions over the Compliance and Corporate Governance Office of the Bank through regular reporting.
  9. Conduct an evaluation of the function of the Chief Compliance and Corporate Governance Officer on an annual basis. The evaluation shall be conducted every January to cover the previous year.
  10. Review its Charter on an annual basis and recommend updates or amendments thereto, if necessary.

REPORTING RESPONSIBILITY

The CGC shall be directly reporting to the Board of Directors of the Bank

COMPOSITION

  1. The Committee shall have seven (7) directors, two (2) of whom shall be Independent Directors, including the Chairman of the Committee, and one (1) of whom shall be from the Bank’s Senior Management.
  2. In the event of resignation or incapacity of any member of the Committee to perform his/her duties and responsibilities, the Board of Directors shall appoint a qualified member to the committee.

QUORUM REQUIREMENT

There shall be a quorum and business shall proceed, when a majority of the regular members are present.

FREQUENCY OF MEETING

The Committee shall meet at least once every quarter on a regular basis. Special meetings may be convened upon the request of any of the members thereto. Notices shall be sent to the members of the Committee in writing through electronic mal or similar modes at least one (1) day prior to the date of the meeting.

RESOLUTION

All determinations of the Committee shall require an affirmative vote of the majority of those present at the meeting and entitled to vote.

COMMITTEE SECRETARIAT

The Office of the Corporate Secretary is designated as the Committee Secretariat who shall be in charge of the following:

  1. Keeping of records and minutes of the Committee meetings.
  2. Preparation of the minutes of the Committee meetings.
  3. Prepare and/or submit the appropriate documents, reports or memorandum as approved by the Committee.
  4. Initiate the convening of the Committee for its regular or special meetings.
  5. Other duties and functions necessarily included in the execution of the above-enumerated responsibilities.

 


RISK MANAGEMENT COMMITTEE CHARTER

INTRODUCTION

The Risk Management Committee (RMC) of the bank is a board committee whose members shall possess a range of expertise as well as knowledge of the institution’s risk exposures to be able to develop appropriate strategies for preventing losses and minimizing the impact of losses when they occur. It shall oversee the system limits to discretionary authority that the Board delegates to management, ensure that the system remains effective, that the limits are observed and that immediate corrective actions are taken whenever limits are breached.

POWERS, DUTIES AND RESPONSIBILITIES

  1. Be responsible for the development and oversight of the Bank’s risk management program;
  2. Possess a range of expertise as well as adequate knowledge of the bank’s risk exposures to be able to develop appropriate strategies to prevent losses and minimize the impact of losses when they occur;
  3. Oversee the system limits to discretionary authority that the Board delegates to management;
  4. Ensure that the system remains effective;
  5. Ensure that the limits are observed and that the immediate corrective actions are taken whenever limits are breached;
  6. Identify and evaluate exposures, assess the probability of each risk becoming a reality and shall estimate its possible effect and cost;
  7. Ensure priority area of concern are those risks that are most likely to occur and are costly when they happen;
  8. Develop a written plan defining the strategies for managing and controlling the major risks;
  9. Identify practical strategies to reduce the chance of harm and failure or minimize losses if the risk becomes real;
  10. Implement the risk management plan;
  11. Communicate the risk management plan and loss control procedures to affected parties;
  12. Conduct regular discussions on the bank’s current risk exposure based on regular management reports and direct concerned units or offices on how to reduce these risks;
  13. Review and revise the plan as needed;
  14. Evaluate the risk management plan to ensure its continued relevancy, comprehensiveness and effectiveness;
  15. Revisit strategies, look for emerging or changing exposures and keep abreast of developments that affect the livelihood of harm and loss.

REPORTING RESPONSIBILITY

The Committee shall directly report to the Board of Directors of the bank

COMPOSITION

  1. Seven (7) board members composed of either regular or alternate members.
  2. There shall be a Chairman of the committee to preside at the meeting and a Vice-Chairman to act in the absence of the Chairman. When both the Chairman and the Vice-Chairman are absent, the members constituting the quorum shall elect their chairman to preside at the meeting.
  3. Vacancy in the committee shall be filled up by the Board of Directors.

QUORUM REQUIREMENT

In all committee meetings, four (4) members whether regular or alternate members shall constitute a quorum.

FREQUENCY OF MEETING

Once a month.

RESOLUTION

Affirmative votes of at least four (4) members in attendance at the meeting.

COMMITTEE SECRETARIAT

The Office of the Corporate shall provide secretariat services comprising of receiving all materials for action by the Committee, ensure that all materials are received by the members at least one (1) business day prior to the meeting, preparation of the minutes of the meeting and custody of the minutes and materials presented to the Committee for action.

 


OPERATIONAL RISK MANAGEMENT COMMITTEE CHARTER

INTRODUCTION

The Operational Risk Management Committee (ORMC) of the bank is a board committee whose principal responsibility is to review risk management policies and practices relating to bank-wide operational risk.

POWERS, DUTIES AND RESPONSIBILITIES

  1. Be cognizant of and identifies with the nature and complexity of the major operational risk of the bank and the operating environment the bank is exposed to which goes to the extent of risks arising from transactions or relationships with third parties, vendors, suppliers including Outsourced Service Providers (OSP), and clients of services provided. Further, the financial and non-financial impact of operational risk to which the bank is vulnerable to should also be a part of the evaluation;
  2. Approve the operational risk management framework which shall form part of the Bank’s enterprise risk management system and shall cover all business lines and functions of the bank, including outsourced services and services provided to external parties. The operational risk management framework should be aligned with the provision of BSP 900 which incorporates:

    2.1 An enterprise definition of operational risk;
    2.2 Adequacy of Bank’s policies, procedures, organization and resources for preventing, or limiting the damage from unexpected loss due to deficiencies in information systems, business, operational and management process, employee skills and supervision, equipment and internal controls;
    2.3 Governance and reporting structures including the roles and responsibilities of all personnel;
    2.4 Feedback mechanism; and,
    2.5 Standards and tools for operational risk management.
    In this respect, the board shall:
    2.5.1 Develop an operational risk management strategy that is aligned with the Bank’s overall business objectives. Relatively, the board shall take the lead in deciding and setting the operating risk appetite of the business and operational risk thresholds or limits that articulates the nature, types and levels of operational risk that the bank is willing to assume and taking into consideration as well as the bank’s financial condition and strategic direction which should be subsequently communicated throughout the organization;
    2.5.2 Define and approve appropriate thresholds or limits to ensure that the level of operational risk is within the tolerance level of the Bank and is cushioned by adequate capital. Consequently, the board shall approve policy on breach regularization which should establish escalation procedures for approving or investigating breaches, approving authorities, and requirements in reporting to the appropriate level of management or board;
    2.5.3 Ensure that operational risk is appropriately considered in Capital Adequacy Assessment Process of the bank;
    2.5.4 Ensure that it is apprised and receives up-to-date and evolving key information on operational risk exposures and vulnerabilities as well as data on the performance of the operational risk management framework and information that may significantly alter the risk profile of the bank. Providing oversight, the board shall continue to challenge the reliability and soundness of the operational risk information it was able to obtain;
    2.5.5 Ensure an effective feedback and communication system for proper dissemination of business objectives, risk appetite, the operational risk management framework, and the respective roles and responsibilities of personnel and officers at all levels in terms of implementing the operational risk management framework and that the aforementioned are fully understood by the subjected personnel;
    2.5.6 Be responsible for steering senior management with clear supervision and direction to adhere to the principles underlying the operational risk management framework. The board shall warrant senior management’s implementation of the policies, processes and procedures, and response and feedback generation on the operational risk management process. In respect to this, a reporting system shall be established to provide employees the avenue for addressing their concerns without reservation and fear of negative consequences and;
    2.5.7 Ensure that the operational risk management framework is subject to an independent review on a periodic basis to ensure that it is still aligned with the Bank’s risk profile and that the framework continues to address and effectively manage the bank’s operational risks.
  3. Approve the outsourcing framework of the Bank which makes up of a system for evaluating and managing the risks of all standing and potential outsourcing arrangements and policies relevant to this endeavor. The Board shall also provide oversight on all outsourcing activities and ensure effective management of risks arising from these activities;
  4. Ensure compliance with all applicable laws, rules and regulations on internal control, internal audit and disclosure;
  5. Provide oversight on the adequacy of resources, including personnel complement, and are supported by appropriate technological systems. The use of technological systems must be commensurate to the activities being undertaken;
  6. Provide oversight on the implementation of a sound business continuity management framework. The Board shall instill a culture of placing importance on business continuity by supplying the incumbent resources that support the Bank’s business continuity initiatives.
  7. Report to the Risk Management Committee/ Board of Directors the results of operational risk and control assessments conducted by the Business and Support Units, summarized results, if any, of internal audits, BSP examinations, and investigation of administrative cases that highlight trends indicative of present or emerging exposures to specific operational risks.

REPORTING RESPONSIBILITY

The Committee shall directly report to the Board of Directors of the bank. It shall also report its findings to the Risk Management Committee by providing the latter with the minutes of the meeting.

COMPOSITION

  1. The Operational Risk Management Committee shall be composed of at least five (5) members , two members of the Board of Directors, one (1) Independent Director and two (2) non-voting members from the Senior Management.
  2. The Committee shall have a Chairman who will preside over all meetings and in his absence, any member chosen by the remaining members present at said meeting.
  3. Vacancy in the committee shall be filled up by the Board of Directors.

QUORUM REQUIREMENT

In all committee meetings, four (4) members must be present to constitute a quorum.

FREQUENCY OF MEETING

The Committee shall have at least four (4) meetings in a year.

RESOLUTION

Affirmative votes of at least four (4) members in attendance at the meeting.

COMMITTEE SECRETARIAT

The Office of the Corporate shall provide secretariat services comprising of receiving all materials for action by the Committee, ensure that all materials are received by the members at least one (1) business day prior to the meeting, preparation of the minutes of the meeting and custody of the minutes and materials presented to the Committee for action.

 


MARKET RISK COMMITTEE CHARTER

INTRODUCTION

The Markey Risk Committee (MRC) of the Bank is a board committee whose principal responsibility is to review risk management policies and practices relating to market risk, interest rate risk in the banking book, and liquidity risk.

POWERS, DUTIES AND RESPONSIBILITIES

  1. Set policies and guidelines for the measurement and reporting of market risk, interest rate risk in the banking book and liquidity and ensures that the risk management process satisfy the corporate policy;
  2. Review the Treasury portfolio (including the contingent accounts) on a monthly or regularly basis and recommend valuation reserves, as necessary:
  3. Review and endorse the Treasury Risk Limits for Board approval;
  4. Endorse Treasury-related investments, product programs and manuals for the approval of the Board;
  5. Approve models and systems to measure market risk, interest rate risk in the banking book and liquidity risk;
  6. Promote the continuous development of market risk programs and infrastructure, understanding this to be an evolutionary and dynamic process;
  7. Ensure that the Business Units provide for ongoing review and validation of the adequacy and soundness of market risk policies, assumptions and practices;
  8. Create and promote a risk culture that requires and encourages the highest standard of ethical behavior by risk managers and risk-taking personnel;
  9. Encourage the professional development and training of management and staff in risk management, risk controls and risk-taking activities;
  10. Monitor the sensitivity of the Bank’s financial condition to the effects of market volatility and adverse price changes of the Bank’s portfolio of financial instruments, and oversee the Bank’s liquidity position through the Bank’s Asset and Liability Committee (ALCO)

REPORTING RESPONSIBILITY

The Committee shall directly report to the Board of Directors of the bank. It shall also report its findings to the Risk Management Committee providing the latter with the minutes of the meeting.

COMPOSITION

  1. The Market Risk Committee shall be composed of six (6) members, the Chairman, the President and four (4) other members of the Board of Directors. The members shall be composed of regular and alternate members.
  2. The Committee shall have its Chairman who will preside at the meetings and in his absence, any member chosen by the remaining members present at the said meeting.
  3. Vacancy in the committee shall be filled up by the Board of Directors.

QUORUM REQUIREMENT

In all committee meetings, four (4) members must be present to constitute a quorum.

FREQUENCY OF MEETING

The Committee shall regularly meet, monthly.

RESOLUTION

Affirmative votes of at least four (4) members in attendance at the meeting.

COMMITTEE SECRETARIAT

The Office of the Corporate shall provide secretariat services comprising of receiving all materials for action by the Committee, ensure that all materials are received by the members at least one (1) business day prior to the meeting, preparation of the minutes of the meeting and custody of the minutes and materials presented to the Committee for action.

 


RELATED PARTY TRANSACTION COMMITTEE CHARTER

INTRODUCTION

The Charter sets out the authority, responsibility, membership and operation of the Related Party Transaction Committee (RPTC) of the Bank.

POWERS, DUTIES AND RESPONSIBILITIES

  1. Assist the Board of Directors in fulfilling its corporate governance responsibilities on related party transactions (RPTs)
  2. Review and endorse all significant RPTs, including DOSRI, which shall require final board approval or confirmation;
  3. Formulate, revise and approve policies or guidelines on RPTs.
  4. Require adequate resources, including the authority to procure the assistance of independent experts, if necessary, to assess fairness of the transaction;
  5. Conduct an annual self-assessment of its own performance;
  6. Review its Charter on an annual basis and recommend updates or amendments thereto, if necessary;
  7. Conduct oversight functions over the Related Party Transactions Committee (RPT Review Committee) through regular reporting of matters taken during its meetings.

REPORTING RESPONSIBILITY

The Committee shall directly report to the Board of Directors of the bank

COMPOSITION

The Committee shall be composed of three (3) non-executive and independent directors, with the Chief Compliance and Corporate Governance Officer and Head of Internal Audit Division as non-voting members.

QUORUM REQUIREMENT

There shall be a quorum and business shall proceed, when a majority of the regular members are present.

FREQUENCY OF MEETING

The Committee shall meet every month on a regular basis. Special meetings may be convened upon the request of any of the members thereto. Notices shall be sent to the members of the Committee in writing or through electronic mail or similar modes at least one (1) day prior to the date of the meeting.

RESOLUTION

All determinations of the Committee shall require an affirmative vote of a majority of those present at the meeting and entitled to vote.

COMMITTEE SECRETARIAT

The Office of the Corporate shall provide secretariat services.

 


TRUST AND INVESTMENT COMMITTEE CHARTER

INTRODUCTION

The Trust and Investment Committee (TIC) shall ensure that Trust and Other Fiduciary and Investment Management business of the Bank shall be carried out through a Trust and Investment Services Group which shall be organizationally, operationally, administratively and functionally separate and distinct from the other departments and/or business of the Institution.

POWERS, DUTIES AND RESPONSIBILITIES

  1. Ensure that fiduciary activities are conducted in accordance with applicable laws, rules and regulations, and prudent practices;
  2. Ensure that policies and procedures that translate the Board’s objectives and risk tolerance into prudent operating standards are in place and continue to be relevant, comprehensive and effective;
  3. Oversee the implementation of the Risk Management framework and ensure that internal controls are in place relative to the fiduciary activities;
  4. Adopt an appropriate organizational structure/ staffing pattern and operating budgets that shall enable the TISG to effectively carry out its functions;
  5. Oversee and evaluate the performance of the Trust Officer;
  6. Conduct monthly meetings, or more frequently as necessary, depending on the size and complexity of the fiduciary business; and
  7. Report regularly to the BOD on the matters arising from fiduciary activities.

REPORTING RESPONSIBILITY

The Committee shall submit reports to the Chairman of the Board, the Board of Directors, or any of its committees, whenever circumstances require.

COMPOSITION

The Committee shall be composed of at least five (5) members including the President, the Trust Officer and three (3) directors who are appointed by the Board of Directors on a regular rotation basis and who are Non-Executive directors or an Independent Director who are not part of the Audit Committee or those considered as qualified “Independent Professionals”.

QUORUM REQUIREMENT

There shall be a quorum and business shall proceed, when a majority or when the attendance of a minimum of three (3) members is met.

FREQUENCY OF MEETING

The Committee shall meet at least once every month, or whenever necessary, to discuss, agree and prepare reports on Committee recommendations and reports.

RESOLUTION

All determinations of the Committee shall require an affirmative vote of a majority of those present at the meeting and entitled to vote.

COMMITTEE SECRETARIAT

The Office of the Corporate shall provide secretariat services.

 


TECHNOLOGY STEERING COMMITTEE CHARTER

INTRODUCTION

This Charter establishes the objectives and functions of the Technology Steering Committee (TSC) relative to its IT oversight mandate. It will provide the framework that shall clearly define the committee’s roles, authorities and responsibilities, as well as, guide the TSC in the performance of its functions as defined.

POWERS, DUTIES AND RESPONSIBILITIES

IT GOVERNANCE

  1. The TSC shall review the IT Strategic Plan (ITSP), as developed by Technology Management Service (TMS) in consultation with Business Units and other IT stakeholders, to ensure its alignment with the Bank’s corporate/business strategies, purpose and core values. The TSC shall ensure that the ITSP is formally documented, approved by the BOD, communicated to all stakeholders and reviewed annually.
    The TSC shall likewise monitor all technology-related budgetary requirements as indicated in the ITSP and endorse the related CAPEX requirements to the Policy Committee.
  2. Relative to major IT projects and initiatives as proposed by project proponents, it is the TSC’S responsibility to:
    a) Review, approve and monitor the projects that may have significant impact on the Bank’s operations, earnings or capital;
    b) Ensure that adequate policies and risk controls are established and documented to achieve the project objectives.
  3. The TSC, in its review of IT plans and projects, shall ensure that adequate resources are made available for proper plan implementation and project completion. For this purpose, the TSC shall also review the IT Human Resource Management Plan (ITHRMP) as prepared by Human Resources (HR) unit to verify the availability of required IT personnel in terms of competence and number, and that action will be taken where there are identified gaps.
  4. The TSC shall review the sufficiency and effectiveness of the IT Policies and Standards Manual (ITPSM) as formulated by TMS in consultation with the Business and Controls units, including approval of updates, revisions or amendments, for endorsement to the BOD. The ITPSM shall be applicable bank-wide, cover all major areas of IT operations/processes within the Bank and reviewed annually.
  5. The responsibility of TSC to oversee the establishment of a formal IT Risk Management System will include the review of the IT Risk Management guidelines, Information Security Plan and IT Audit Plan as developed by the Operations Risk Management (ORM), Information Security Office (ISO) and Internal Audit units respectively.

RISK IDENTIFICATION AND ASSESSMENT

  1. TSC shall be responsible for understanding the risks associated with the existing and planned IT operations, and determining the risk tolerance of the Bank. This is necessary to manage risks and guarantee the confidentiality, integrity and availability of IT resources and information.
  2. The TSC shall see to the conduct of an IT Operations Risk Assessment by the Bank units concerned and require the submission of the results and the corresponding mitigation action plans for each identified risk for its review.

IT CONTROLS IMPLEMENTATION

  1. The TSC shall ensure that risk concerns are being addressed in an effective and timely manner by regularly monitoring and reviewing the implementation status of the risk mitigation plans.
  2. In addition, the TSC shall require the development and implementation of a formal Information Security Plan (ISP) by the Information Security Office (ISO) to ensure that controls are in place to eliminate risks associated with use of technology.
  3. The TSC shall review, approve or reject proposals to develop or acquire application system, operating systems, and other technology tools to ensure compatibility with existing systems and alignment with ITSP. For the same reason, the IT Infrastructure Plan that forms the base of the Bank’s IT systems shall likewise be reviewed by the TSC.
  4. The TSC shall review, approve or reject proposals for IT outsourcing projects / activities. Such review will include verification of compliance with approved policies and consistency with the IT risk profile of the Bank.
  5. The TSC shall ensure effective oversight over the risks associated with e-Banking services that are being offered to clients and that these services are consistent and clearly integrated within the bank’s strategic goals.

RISK MONITORING

  1. The TSC shall ensure the proper and timely implementation of the ITSP and major IT projects it has approved through a review of regular progress reports by Bank units and project proponents.
  2. In like manner, the TSC shall monitor and review performance relative to the Service Level Agreements set to ensure that Bank IT users are being satisfactorily served by IT service providers. In line with this, results of systems testing and application UATs of major projects shall also be reported to and reviewed by the TSC.
  3. TSC shall monitor compliance with IT Policies and information security controls through a review of deviations , audit exceptions and information security incidents reports to be regularly submitted by the Bank units concerned, and most especially, by the ISO and Internal Audit. This will include results of Third Party IT Audits where required.
  4. The TSC shall periodically update the BOD regarding IT performance variances/deviations from the Bank’s policies and standards, if any.

REPORTING RESPONSIBILITY

The Committee shall submit reports to the Board of Directors.

COMPOSITION

The Committee shall be composed of two board directors (at least one of which must be a non-executive director) , the Chief Information Officer, and senior heads of business units of the Bank. The board may designate other members.

The following units shall participate in the committee in an advisory capacity to assist in the oversight, review and decision-making functions of the committee : 1) Controllership ; 2) Information Security Office; 3) Human Resource ; 4) Compliance and Corporate Governance ; 5) Internal Audit Division; 6) Information Technology Risk/ Enterprise Risk Management.

QUORUM REQUIREMENT

A quorum of at least fifty-one percent (51%) of members is required for the committee to conduct business.

FREQUENCY OF MEETING

The Committee shall meet at least once every month. Committee members are expected to attend every meeting and shall nominate their respective alternates in case attendance is not possible.

COMMITTEE SECRETARIAT

The Office of the Corporate shall provide secretariat services.

 


AUDIT COMMITTEE CHARTER

INTRODUCTION

The Audit Committee is a committee of the Board of Directors (“BOD”) that plays a key role in corporate governance. It serves as a principal agent of the BOD in ensuring independence of the Bank’s external auditors and the internal audit function, the integrity of management, and the adequacy of disclosures and reporting to stockholders.

The Audit Committee also oversees the Bank’s financial reporting process in behalf of BOD. It assists the BOD in fulfilling its fiduciary responsibilities as to accounting policies, reporting practices and the sufficiency of auditing relative thereto, and regulatory compliance

POWERS, DUTIES AND RESPONSIBILITIES

  1. Endorse for approval of the Board of Directors the internal audit charter and subsequent revisions on a periodic basis and ensure that activities and processes are appropriate to achieve its responsibilities.
  2. Ensure that the charter, role and activities of the internal audit are clearly understood and responsive to the needs of the audit committee and the board.
  3. Review hiring decisions, including appointment, compensation, evaluation, retention, and dismissal of the Internal Audit Division Head.
  4. Review appointment of independent external auditor who shall report directly to the Audit Committee
  5. Assess the results of auditors’ evaluation of the adequacy and effectiveness of risk management, control and governance processes which shall include significant risk exposures and control issues, corporate governance issues and other matters needed or requested by the board and senior management.
  6. Pre-approve all internal and external audit plans, scope and frequency on an annual basis.
  7. Review and approve Internal Audit Manual on policies and procedures which shall be used by the Internal Audit Division.
  8. Review and approve rating system, including amendments, to be used by Internal Audit as basis to assess the performance of the units audited.

    FINANCIAL STATEMENTS
  9. Review accounting and financial reporting to ensure adherence to International Accounting Standards (IAS).
  10. Review with management and the external auditors the results of the audit, including any difficulties encountered.
  11. Through the Internal Audit Division, monitors and evaluates the adequacy and effectiveness of the Bank's internal control framework, integrity of financial reporting, and security of physical information assets.
  12. Through the Controllership Group, reviews and approves the quarterly and annual financial statements before submission to the Board and before filing with regulators, with particular focus on the following matters:
    - Any change/s in accounting policies and practices
    - Areas where a significant amount of judgment has been exercised
    - Significant adjustments resulting from the audit
    - Going concern assumptions
    - Compliance with accounting standards
    - Compliance with tax, legal and regulatory requirements"
  13. Review the annual financial statements and consider whether they are complete, consistent with information known to committee members, and reflect appropriate accounting principles.
  14. Review other sections of the annual report and related regulatory filings before release and consider the accuracy and completeness of the information.
  15. Reviews with management and the external auditors all matters required to be communicated to the committee under generally accepted auditing Standards.
  16. Ensures understanding on how management develops interim financial information. and the nature and extent of internal and external auditor involvement.
  17. Ensure that review is done on interim financial reports with management and the external auditors before filing with regulators, and consider whether they are complete and consistent with the information known to committee members.
  18. Ensure actions and measures undertaken in case finding of error or fraud in financial reporting
  19. Review of unusual or complex transactions including related party transactions
  20. Evaluates the impact of new accounting standards and interpretations as raised by the external auditor, Chief Finance Officer or Controllership Group
  21. Reviews and approves management representation letter for endorsement to the board and before submission to the external auditor
  22. Communicating with legal counsel covering litigation, claims, contingencies and other significant legal issues that impact financial statements
  23. Assessment of correspondence between the company and regulators regarding financial statement filing and disclosures.

    INTERNAL AUDIT
  24. Establishes and identifies the reporting line of the Internal Audit Division Head, which is directly to the Audit Committee, to enable him/her to properly fulfill his duties and responsibilities
  25. Reviews with management and the Internal Audit Division Head, and approves the charter, plans, activities, staffing, and organizational structure of the internal audit function. The Audit Committee should also ensure that the audit plan is aligned with overall plan strategy and budget of the bank and is based on robust risk assessment.
  26. Ensure there are no unjustified restrictions or limitations in the conduct of IAD engagements whereby open communication is maintained between IAD and senior management, the Audit Committee, external auditors, and the supervisory authority, and there is unrestricted access to all records, properties and personnel.
  27. Reviews and concurs in the appointment, replacement, or dismissal of the Internal Audit Division Head and deputy head.
  28. Monitors and reviews the effectiveness of the internal audit function, including compliance with The Institute of Internal Auditors’ International Standards for the Professional Practice of Internal Auditing. Likewise, ensures the commission of an assessment team outside the Bank to conduct an independent quality assurance review of the internal audit function at least every five (5) years.
  29. On a regular basis, meets separately with the Board and the Internal Audit Division Head to discuss any matter that the committee or IAD believes should be discussed privately without the presence of the CEO or other management team members.
  30. Ensure that review by management, internal and external auditors of the effectiveness and efficiency of the Bank’s internal control system, including information technology security and control, financial, operational and compliance controls and risk management is conducted regularly.
  31. Review internal audit reports and corresponding recommendations to address the weaknesses noted on the areas/ units audited, discussing the same with the Internal Audit Division Head and reporting significant matters to the board of directors.
  32. Evaluate internal control issues raised by external auditors
  33. Monitors implementation of timely and effective corrective actions taken by management on the audit recommendations made to address the weaknesses, non-compliance with policies and laws and regulations and other issues identified by auditors.
  34. Ensures that Internal Audit Division will report major audit results on a periodic basis to senior management
  35. Obtain management’s assurance on the state of internal controls
  36. Evaluates management’s identification of fraud risks and implementation of anti-fraud measures, and oversees controls to prevent or detect management fraud such as the whistle blower program.
  37. Deliberate on findings and weaknesses in controls and reporting process
  38. Check if the Bank prepared and implemented a Business Continuity Plan
  39. Determine if risk awareness is promoted in the organization
  40. Evaluate if the Bank complies with the code of conduct for management
  41. Recommends for approval of the BOD the annual remuneration of the head of the internal audit function and the deputy head. It should be structured in such a way that these do not create conflicts of interest or compromise independence and objectivity.
  42. Appoint, reappoint or remove the head of the internal audit function and deputy head
  43. Ensure that Internal Auditors undergo continuous training whether locally or internationally for competency profile.

    EXTERNAL AUDIT
  44. Reviews and approves the external auditors’ proposed scope, approach, and fees prior to audit commencement, including coordination of audit effort with internal audit, and ensure that the scope and frequency of audit is appropriate to the risk exposures.
  45. Reviews the performance, suitability, effectiveness and fees of the external auditors duly accredited by the SEC and endorse for final approval to the Board on the appointment or discharge of the external auditors who shall report directly to the audit committee and not to management.
  46. Reviews and confirms the integrity and independence of the external auditors by obtaining statements from the auditors on relationships between the auditors and the Bank, including non-audit services, and discussing the relationships with the auditors.
  47. Assess non-audit services of the external auditor and periodically review the non-audit fees to ensure that non-audit work will conflict with his duties and will not pose a threat to his independence.
  48. Evaluate management’s competence regarding financial reporting responsibilities including aggressiveness and reasonableness of decisions
  49. Evaluates internal control issues raised by external auditors.
  50. Evaluate compliance of external auditors with auditing standards
  51. Determine completeness and timeliness of communication of management with external auditor as to critical policies, alternative treatments, observations on internal controls, audit adjustments, independence, limitations on the audit work set by the management, and other material issues that affect the audit and financial reporting
  52. On a regular basis, meets separately with the external auditors to discuss any matter that the committee or auditors believe should be discussed privately without the presence of the CEO or other management team members.

    OUTSOURCED INTERNAL AUDIT ACTIVITIES
  53. Select and oversee the performance of the internal audit service provider
  54. Ensure the independence of the internal audit service provider
  55. Ensure that the internal audit service provider comply with sound internal auditing standards and other supplemental standards issued by regulatory authorities/government agencies, as well as with relevant code of ethics
  56. Ensures that the internal audit service provider has adequate human resources with sufficient qualifications and skills necessary to accomplish the internal audit activities.

REPORTING RESPONSIBILITY

  • Regularly reports to the board of directors about committee activities in relation to its responsibilities and how they were discharged, issues, and related recommendations.
  • Report to the BOD the annual performance appraisal of the head of the internal audit function.
  • Report to the BOD on the status of accomplishments of the outsourced internal audit activities, including significant findings noted during the conduct of the internal audit.
  • Provide an open avenue of communication between internal audit, the external auditors, and the board of directors.
  • Report annually to the Board, describing the committee’s composition, responsibilities and how they were discharged, and any other information required by rule.
  • Review any other reports the Bank issues that relate to committee responsibilities.

OTHER RESPONSIBILITIES:

  • Perform other activities related to this charter as requested by the board of directors.
  • Institute and oversee special investigations as needed.
  • Review and assess the adequacy of the committee charter periodically, requesting board approval for proposed changes, and ensure appropriate disclosure as may be required by law or regulation.
  • Confirm annually that all responsibilities outlined in this charter have been carried out.
  • Evaluate the committee’s and individual members’ performance on a regular basis.

COMPOSITION

The Audit Committee shall be composed of at least three (3) members of the Board, at least two (2) of whom shall be independent directors including the Chairman. Each member shall be appointed by the Board of Directors and at least two (2) members including the Chairman are preferably with accounting, auditing or related financial management expertise or experience.

Each member will be appointed by the Board of Directors based on nominations made by or through the Nomination Committee. In the event that a place in the committee is vacated, the standard nomination process will be followed. Alternate members will sit in the committee until such time that a replacement has been appointed by the Board.
Membership term shall be reviewed regularly. There should be at least one (1) from Senior Management participates in the meeting regularly.

QUORUM REQUIREMENT

There shall be a quorum and business shall proceed, when a majority or when the attendance of a minimum of three (3) members is met.

FREQUENCY OF MEETING

The Audit Committee shall meet periodically and make such recommendations as it deems necessary or appropriate. The Audit Committee will hold private meetings with auditors during executive sessions. Meeting agendas will be prepared and provided in advance to members, along with appropriate briefing materials.

The Audit Committee may conduct meetings only when a majority of the Committee members are present. Minutes will be prepared.

The Audit Committee may request non-members to join the meetings when deemed necessary to address the Committee’s objectives or to withdraw for all or any part of any meeting.

TRAINING AND EDUCATION

Internal Audit Division shall periodically perform a training needs analysis for Audit Committee members to determine training requirements needed in the performance of their function.

SELF- ASSESSMENT

The Audit Committee self-assessment will be conducted in compliance to the Revised Code of Corporate Governance of 2009 and as provided in SEC Memorandum Circular No. 4 or the Guidelines for the Assessment of the Performance of Audit Committees of Companies Listed on the Exchange. The Audit Charter will serve as the baseline for the assessment of the Audit committee’s performance.

The self-assessment will be conducted annually by the Audit Committee through the Internal Audit Division and validated by the bank’s compliance officer.

The assessor will use the self-assessment worksheet as prescribed by the Guidelines for the Assessment of the Performance of Audit Committees of Companies Listed on the Exchange. Attached as Annex A is a copy of the assessment sheet to be used by UnionBank Internal Audit Division.

The aforementioned worksheet contains and an evaluation of the following responsibility areas as described under the Code:

  • Setting of the Committee Structure and Operations
  • Oversight on Financial Reporting and Disclosures
  • Oversight on Risk Management and Internal Controls
  • Oversight on Internal Audit
  • Oversight on External Audit

The assessor must indentify whether or not the dimensions under each of the responsibility areas mentioned above are found in the Audit Charter.

For those that are found in the charter, the assessor must indicate if these are being implemented and cite supporting documents. Supporting documents include manuals, reports, minutes of meetings and other similar forms of documentation.

Once the assessor completes the worksheet, he/she will count the number of affirmative responses (Yes) to the items that are included in the charter and the items that are being implemented.

No. of Items Included in the Charter
Raw Score Corresponding Rating
53 - 44 5
43 - 34 4
33 - 24 3
23 - 14 2
13 - 1 1

 

No. of Items being implemented
Raw Score Corresponding Rating
53 - 44 5
43 - 34 4
33 - 24 3
23 - 14 2
13 - 1 1
0 0

The assessor will then total the corresponding ratings to get the total ratings which will have the following qualitative interpretation.

Total Rating Interpretation
10 Excellent
8 - 9 Very Satisfactory
5 - 7 Satisfactory
1 - 4 Poor

The self-assessment includes a list of actionable items that need to be implemented or followed-up.

Review of Audit Committee Self-Assessment

A feedback mechanism is set in place to receive feedback from management, internal audit, compliance and other relevant stakeholders to improve the performance of the Audit Committee.

The said mechanism will operate as follows:

  • The initial assessment will be conducted by the Internal Audit Division and will be validated by the compliance officer.
  • After validation, the assessment will be presented to the Audit Committee for their review and additional input.
  • During the aforementioned committee meeting, relevant stakeholders including but not limited to the bank’s management, legal, compliance and controllership may give their comments or recommendations. These will be included in the minutes for the said committee meeting.

All assessments will be kept on file and may be examined by the SEC as needed.

 


NOMINATIONS COMMITTEE CHARTER

INTRODUCTION

The Nominations Committee (NOMCOM) of the bank is a board committee whose principal responsibility is to promulgate the guidelines or criteria to govern the conduct of nomination of board directors.

POWERS, DUTIES AND RESPONSIBILITIES

  1. Pre-screen the qualifications and prepare the final list of all candidates for the Board of Directors and the key officers of the Bank;
  2. Put in place screening policies and parameters to enable it to effectively review the qualifications of the nominees for Independent Directors;
  3. Prepare a final list of candidates which shall contain all the information about all the nominees for independent directors as required by law and shall be made available to the appropriate government agency in-charge of monitoring compliance and to all stockholders through the filing and distribution of the Information Statement in accordance with the law, or in such other reports the Bank is required to submit to the appropriate government agency;
  4. Identify and indicate the name of the person or the group of persons who recommend the nomination of the Independent Director in such report including any relationship with the nominee;
  5. Ensure that only nominees whose names appear on the final list of candidates shall be eligible for election as Independent Directors;
  6. Ensure no other nominees shall be entertained or allowed on the floor during the Annual Stockholders’ Meeting.

REPORTING RESPONSIBILITY

The Committee shall directly report to the Board of Directors of the bank.

COMPOSITION

  1. The Nominations Committee shall be composed of at least three (3) voting members of the Board of Directors, one (1) of whom is an Independent Director and one (1) non-voting member who is the Human Resources Director.
  2. The members shall be composed of regular and alternate members
  3. The Committee shall have a Chairman who will preside over all meetings.
  4. Vacancy in the committee shall be filled up by the Board of Directors.

QUORUM REQUIREMENT

In all committee meetings, four (4) members must be present to constitute a quorum.

FREQUENCY OF MEETING

The Committee shall meet once a year in the month of March for each year.

RESOLUTION

Affirmative votes of at least four (4) members in attendance at the meeting.

COMMITTEE SECRETARIAT

The Office of the Corporate shall provide secretariat services comprising of receiving all materials for action by the Committee, ensure that all materials are received by the members at least one (1) business day prior to the meeting, preparation of the minutes of the meeting and custody of the minutes and materials presented to the Committee for action.

 

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Governance Reports

Annual Corporate Governance Report (ACGR)

Corporate Governance Report

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Board Governance

View our board members here

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Manual on Corporate Governance

View our manual here

Read manual
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Awards & Citations

View UnionBank’s awards and citations here

View awards
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1 Make sure that the website address appearing on your browser is Union Bank of the Philippines and has a padlock symbol (🔒) beside it. If you see something different or there is no address appearing, please do not proceed and report to us immediately.

2 You can only type in your password or PIN using the virtual keyboard.

3 Keepyour device virus-free. Make sure you have an updatedanti-virus software.

4 To secure your account, we strongly advise you to avoid downloading your banking documents using a public computer




For more information, please visit theSafe Surfing Guidelinespage or call our 24-hour Customer Support at (02)8418600.
1 Make sure that the website address appearing on your browser starts with https://ebanking.unionbankph.com and a padlock symbol (🔒) beside it.If you see something different or there is no address appearing, please do not proceed and report to us immediately.

2 You can only type in your password or PIN using the virtual keyboard.

3 Keepyour device virus-free. Make sure you have an updatedanti-virus software.

4 To secure your account, we strongly advise you to avoid downloading your banking documents using a public computer




For more information, please visit theSafe Surfing Guidelinespage or call our 24-hour Customer Support at (02)8418600.
1 Make sure that the website address appearing on your browser is Union Bank of the Philippines and has a padlock symbol (🔒) beside it. If you see something different or there is no address appearing, please do not proceed and report to us immediately.

2 You can only type in your password or PIN using the virtual keyboard.

3 Keepyour device virus-free. Make sure you have an updatedanti-virus software.

4 To secure your account, we strongly advise you to avoid downloading your banking documents using a public computer




For more information, please visit theSafe Surfing Guidelinespage or call our 24-hour Customer Support at (02)8418600.
1 Make sure that the website address appearing on your browser starts with https://ebanking.unionbankph.com and a padlock symbol (🔒) beside it.If you see something different or there is no address appearing, please do not proceed and report to us immediately.

2 Keepyour device virus-free. Make sure you have an updatedanti-virus software.

3 To secure your account, we strongly advise you to avoid downloading your banking documents using a public computer




For more information, please visit theSafe Surfing Guidelinespage or call our 24-hour Customer Support at (02)8418600.
1 Make sure that the website address appearing on your browser is Union Bank of the Philippines and has a padlock symbol (🔒) beside it. If you see something different or there is no address appearing, please do not proceed and report to us immediately.

2 Keepyour device virus-free. Make sure you have an updatedanti-virus software.

3 To secure your account, we strongly advise you to avoid downloading your banking documents using a public computer




For more information, please visit theSafe Surfing Guidelinespage or call our 24-hour Customer Support at (02)8418600.
1 Make sure that the website address appearing on your browser starts with https://ebanking.unionbankph.com and a padlock symbol (🔒) beside it.If you see something different or there is no address appearing, please do not proceed and report to us immediately.

2 Keepyour device virus-free. Make sure you have an updatedanti-virus software.

3 To secure your account, we strongly advise you to avoid downloading your banking documents using a public computer




For more information, please visit theSafe Surfing Guidelinespage or call our 24-hour Customer Support at (02)8418600.
1 Make sure that the website address appearing on your browser is Union Bank of the Philippines and has a padlock symbol (🔒) beside it. If you see something different or there is no address appearing, please do not proceed and report to us immediately.

2 Keepyour device virus-free. Make sure you have an updatedanti-virus software.

3 To secure your account, we strongly advise you to avoid downloading your banking documents using a public computer




For more information, please visit theSafe Surfing Guidelinespage or call our 24-hour Customer Support at (02)8418600.