Rizal Bank's Dollar Bonds Fall Amid $81 Million Heist Hearings

  • Lender issued a public apology for personnel involvement
  • Philippine banking system has a stable outlook, S&P says

Rizal Commercial Banking Corp. dollar bonds dropped for an 11th straight day Tuesday as the Philippine Senate continued an investigation involving the lender’s links to laundering of $81 million stolen from Bangladesh central bank.  

The price of Rizal Bank’s February 2021 bond declined to 101.7 from 101.84 on Monday, prices compiled by Bloomberg show. The price has fallen from 102.85 on March 14, in the longest string of losses since the notes were issued in October.

On Tuesday, the Senate resumed hearings that had started March 15 on money laundering tied to the Bangladesh funds, after regulators said a Rizal Bank branch in the Philippines had allowed the transfer of money that’s part of reserves stolen by hackers. The Philippine central bank said it will hold accountable any bank or banker found responsible or remiss in their duties.

“The investigation is one of the factors that caused this pricing,” said Robert Ramos, the chief investment officer at Union Bank of the Philippines, which has about $844 million in assets under management.

Public Apology

Rizal Bank last week issued a public apology for the involvement of its personnel in the money laundering scheme. “The bank is also conducting its own inquiry to identify and address any weakness in its controls and operations which may have facilitated the scheme,” it said in an e-mailed statement on March 23. Maria Celia Estavillo, Rizal Bank’s head of legal and regulatory affairs, wasn’t immediately able to comment on Tuesday.

The bank also last week accepted President Lorenzo Tan’s offer to go on leave to allow him to focus on clearing his name. The stolen funds ended up in several Rizal Bank accounts before the money was allegedly laundered in casinos in one of the world’s largest cyber heists in modern history, according to lawmakers conducting the inquiry.

Other Philippine bank bonds haven’t done as badly. BDO Unibank Inc.’s February 2017 note was down to 102.125 from 102.147 Monday after rising in the previous two days. Security Bank Corp.’s February 2020 debt was down to 104.58 from 104.63 a day earlier, when it rose.

Standard & Poor’s said the outlook on the Philippine banking system is stable and well-placed to meet more stringent rules for domestic systemically important banks.

“We won’t be able to comment specifically on the investigation, but this event does not impact our stable outlook on the Philippine banking sector, which is underpinned by its sound financial fundamentals, in particular its liquidity and capitalization,” Ivan Tan, financial institutions ratings director at S&P, said by e-mail.

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