The Bank has governance policies and mechanisms in place to help fulfill its responsibilities to its stakeholders. They are subject to periodic review in order to ensure that they remain consistent with applicable regulations and industry best practice.
Manual on Good Corporate Governance
The Bank’s CG Manual embodies leading principles and practices on good corporate governance. It lays down, among others, the qualifications and disqualifications of the members of the Board as well as their duties and responsibilities. It further provides for the qualifications of key officers that assist the Board in performing its governance functions, i.e. the Chairman of the Board, the management, corporate secretary, compliance officer, external auditor and internal auditor. The CG Manual is also a compilation of policies on the compliance system and disclosure and transparency aimed at upholding the rights of the Bank’s stakeholders. Most importantly, it underscores the Bank’s recognition and continuous promotion of the rights of its stockholders.
The Bank’s CG Manual is subject to periodic review by the Board, as initiated by its Corporate Governance Committee, based on updates in regulatory and industry best practices.
Among the policies contained in the CG Manual are the following:
Policy on Conflict of Interest
As part of its on-going efforts to uphold equitable treatment of its shareholders and stakeholders, the Bank intensified its policies on conflict of interest and related party transactions which have long been in existence in the Bank’s Code of Conduct. The Revised Manual provides that a conflict of interest exists when the personal, business or other related interest of a director, officer or employee adversely interfere in any way, or could reasonably be perceived to adversely interfere, with that of the Bank. It also provides for the duties of Directors, officers and employees to immediately disclose any involvement in material conflict of interest and not to participate in the decision-making process relating to the transaction.
Related Party Transactions
It is the policy of the Bank to ensure that related party transactions are all entered into at arm’s length standard. These transactions are made and entered into substantially on the same terms and conditions as transactions with other individuals and businesses of comparable risks. Hence, they likewise go through the same process applicable to ordinary or unrelated party transactions as set forth in the Bank’s Purchasing Guidelines. The Bank has in place a Procedural Guidelines for Monitoring Related Party Transactions approved by the Board of Directors.
Insider Trading Policy
The Bank’s Trading Guidelines and Blackout Policy (Trading Guidelines) was approved by the Board of Directors on March 26, 2010. This aims to apprise and to ensure compliance by all “Covered Persons” of the Bank with their obligations under the Securities Regulation Code and other securities rules and regulations relating to the trading or dealing of the Bank’s shares. Covered Persons refer to directors, principal officers, and all other employees of the Bank who are made aware of undisclosed material non-public information, including their immediate families living in the same household.
The officers being referred to in the UBP Trading Guidelines are those holding the positions of AVP & up. Other employees falling within the definition of covered persons are those who, because of their functions, are made aware of undisclosed/non-public material information.
Part III of the Bank’s Trading Guidelines provides:
1. Any covered person who possesses any material non-public information may not trade in UBP securities from the time he or she acquired such material non-public information and until two (2) full trading days after such information has been made public.
2. A trading blackout shall be imposed beginning ten (10) trading days before, and until two (2) full trading days after the release of the quarterly earnings of UBP
Whistle Blowing Policy
The Code of Conduct provides a policy on the responsibility of employees for reporting actual or possible violation of a law, regulation, the Bank’s Code or any policy. Duty is also imposed upon those who are aware of any condition that creates undue material risk to the Bank to promptly report the same to his or her supervisor. Alternatively, he or she may report the infractions to the next higher in management, Operations Controller, Internal Audit Division and Human Resources Services Group. It also provides a policy for the protection of employees who report infractions or risks.
Also embodied in the Code is the Bank’s policy that no employee will be retaliated against as a result of having made the report. Questions concerning protection for such an employee should be addressed to the appropriate Compliance Officer or the Human Resources Director.
See Section 1.1.4 of the Code of Conduct for the full text of the policy.
Alternative Dispute Resolution System
The Bank subscribes to the view that “an important determinant of the degree to which shareholder rights are protected is whether effective methods exist to obtain redress for grievances at a reasonable cost and without excessive delay.”1 It is the Bank’s policy to continue building harmonious relationship with its stockholders and other parties with whom it may have obligations or contract with. It thus adheres to appropriate alternative dispute resolution system for early settlement of conflicts with its stockholders and other parties, as found in its Revised Manual.
The Bank’s Compensation and Remuneration Sub-Committee of the Corporate Governance Committee assists the Board by recommending and overseeing the implementation of programs for the remuneration of the members of the Board of Directors and Senior Management. Directors receive per diems for attendance in meetings of the Board and its committees in accordance with the Bank’s By-Laws but do not receive compensation for services rendered.
The Bank’s key executives and officers receive salaries, bonuses and other standard bank benefits and fringe benefit loan program, as approved by the BSP, in accordance with the performance management philosophy of the Bank based on meritocracy or pay for performance.
The Bank has in place a Board-approved Compliance Program that adheres to external rules and regulations especially those issued by the BSP, SEC, PSE, Philippine Deposit Insurance Corporation (PDIC), Anti-Money Laundering Council (AMLC), and other regulatory agencies. The Compliance and Corporate Governance Office, the Office of the Corporate Secretary, and the Bank’s various units, are responsible for ensuring compliance with regulatory enactments, statutes or circulars, and other requirements of these regulatory agencies. The Bank’s revised Compliance Program is designed to ensure adherence not only to all laws, regulations and circulars relevant to its business, but also to the Bank’s internal policies, including its Code of Conduct, as well as to industry accepted best practices.
Anti-Money Laundering Efforts
The Bank has its own programs and procedures to support the anti-money laundering efforts of the BSP, AMLC, and other regulatory agencies of the government. Union Bank of the Philippines complies with the Anti-Money Laundering Act of 2001 (Republic Act No. 9160, as amended), its Implementing Rules and Regulations regulatory issuances of the BSP such as Circular No. 706 (Updated AML Rules and Regulations) to the fullest extent. The Bank adheres to the KYC rules and customer due diligence requirements of the law and regulations from the start of bank-client relationship until its termination. All of these are provided in its Money Laundering and Terrorist Financing Prevention Program (MLPP). The MLPP is regularly updated with the last update in 2014.
In late 2014, the Bank likewise purchased a new AML System to improve its monitoring and reporting tools. As part of its regular AML monitoring, the Bank likewise updates its internal database from updates provided by the AMLC, Financial Action Task Force (FATF), Office of the Foreign Assets Control (OFAC) of the US Department of the Treasury, United Nations Sanctions List and other agencies or organizations duly competent and/or recognized to in their respective.
Further, the Bank takes note of bulletins and watch lists of individuals and entities engaged in illegal activities or terrorist related activities as circularized by the BSP. AMLC, and other international entities or organizations such as the Financial Action Task Force (FATF), Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury, United Nations Sanctions List, and other such agencies or organizations duly competent and/or recognized to create public watch lists. The Bank’s Anti-Money Laundering Committee exercises oversight functions on the Bank’s compliance with Anti-Money Laundering laws and regulations as issued by the BSP, AMLC and other regulatory bodies and agencies.
The Bank provides anti-money laundering orientation and refresher programs by providing every officer and personnel easy intranet access to its anti-money laundering electronic learning system (AML eLearning). The AML eLearning system gives a user-friendly, interactive approach in proving each employee of the Bank information and education on the anti-money laundering efforts not only of the Government, but also of the Bank. The employee is further gauged on his or her knowledge by providing
a graded test after the program. In addition, the Bank started providing formal AML trainings to selected employees as part of its overall program to further strengthen its anti-money laundering stance.