Audit and Compliance Committee (AC Com)

Duties and Functions

The Audit and Compliance Committee’s primary purpose is to provide assistance to the LANDBANK Board of Directors in fulfilling its oversight responsibilities specifically: 

1. For Internal Audit and Internal Control:

a. To oversee Senior Management in establishing and maintaining an adequate, effective and efficient internal control framework; it shall ensure that systems and processes are designed to provide assurance in areas including reporting, monitoring compliance with laws, regulations and internal policies, efficiency and effectiveness of operations, and safeguarding of assets

b. To oversee the internal audit function

2. For Compliance:
   • To oversee the implementation of the Bank’s Compliance Program
   • To ensure that oversight on the Bank’s Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) compliance management is adequate.

The following are the accomplishments of the Audit and Compliance Committee regarding the functional supervision

1. Internal Audit

• Approved the revisions in the AC Com and IAG Charter
• Approved the 2020 IAG Plans and Programs and the revised targets
• Approved various internal audit policies/action plans/audit tools, such as (1) Review of Accounts with Freeze Order, Negative Media Report and SEC Advisories, (2) Policy on Audit Issues, (3) Policy in Holding Final Exit Conference, (4) revised Policy in the Selection of Type of Audit and the Rating for Limited and Focused Audits, and (5) Audit Policy on Remote Viewing of CCTV Footages and its amendments
• Confirmed the IAG’s Management-approved budget for CY 2020
• Noted IAG’s Declaration of Organizational Independence and various periodic reports , such as: (1) 2019 Overall Internal Audit Opinion, (2) Accomplishment Reports, (3) results of Audit Client Satisfaction Survey, (4) major findings for the month, (5) long outstanding findings, (6) outstanding major findings, (7) major/common/recurring findings, (8) outstanding audit issues, (9) Reports on Accounts with Freeze Order, (10) Report on the Validation of Accounts subject of SEC Advisories and Negative Media Reports, (11) annual confirmation of balances for private deposit accounts, and (12) various special/fact-finding reports
• Noted the presentation of action plans of units that failed the Risk-Based Internal Audit
• Noted the presentation of Internal Control-related Initiatives of Branch Banking Sector and Treasury and Investment Banking Sector
• Noted the Minutes of Meetings and Accomplishment Reports of Accountability Assessment Committee
• Noted the AC Com reports, such as: (1) Accomplishment Report, and (2) Results of Performance Rating for PY 2019

2. Compliance Function

• Approved CMG’s Compliance Testing Plan for 2020, revised AML Compliance Testing Program, and LBP Compliance Manual
• Approved and endorsed to the Board the Centralized Compliance Management Framework
• Noted CMG’s Plans and Programs for 2020 and Accomplishment Reports for 2019
• Confirmed CMG’s 2020 Management-approved budget
• Noted CMG’s participation in the Accounts Review Committee and compliance oversight function on subsidiaries
• Noted various management and compliance reports, such as: (1) results of independent and periodic compliance testing, (2) Reports on Crimes and Losses, (3) Reports on Fines and Penalties, (4) regulations issued and results of pre-testing, (5) regulatory ratios, and (6) Negative Media Reports – Investment Scam and Fraud Cases
• Noted CMG’s Status Updates on LBP Letter of Commitment to BSP and Directives in the 2018 BSP Report of Examination (ROE) on AML/CFT
• Noted CMG’s presentation on LBP’s Response and succeeding status updates to BSP ROE as of September 30, 2019 and LBP Letter Reply on AML Exceptions noted in the BSP ROEs for CYs 2017 and 2018
• Noted CMG’s updates on compliance with Freeze Orders - Identification and Freezing of Related Accounts/Materially Linked Accounts
• Noted the Minutes of Meeting of the AML Committee

The AC Com members have undergone briefing/orientation as part of their continuing education on the following topics:

• Legal Opinion on Data Privacy for Loans
• Policy on Granting Clean/Unsecured Loan
• Circulars and Standards for Internal Audit
• Centralized Compliance Management Framework
• Proceedings in processing grievances on insurance against GSIS

This committee is composed of:

The Committee meets at least once a month and held a total of 13 meetings in 2020.

Risk Oversight Committee (Risk Com)

Duties and Functions:

1. The Board-level Risk Oversight Committee (RiskCom) is primarily responsible for the LANDBANK’s Risk Management (RM) framework, policies and guidelines and ensures the alignment of RM objectives with the Bank’s overall business strategies and performance goals.
2. The RiskCom oversees the RM program of the Bank ensuring that RM systems are in place, limits and tolerances are observed, system of limits remain effective and immediate corrective actions are taken whenever there are breaches.

The RISKCOM is composed of the following:

The RISKCOM meets at least monthly and held a total of 13 meetings in 2020 including one Joint Management Committee (MANCOM) and RISKCOM meeting for the approval of 2020 LANDBANK ICAAP Document and Recovery Plan.

The Committee approved, noted or confirmed 310 regular risk reports and 27 special reports comprising of frameworks, plans, programs, policies and procedures and 28 ad hoc reports were deliberated to assess and mitigate various risk such as credit risk, treasury risk, (e.g., market, interest rate and liquidity), operational risk, legal risk, people risk, information security and technology risk, etc.

Major LANDBANK initiatives and new/enhanced guidelines approved by the RiskCom are as follows:

The overall 2020 performance rating of the RiskCom is 97.50% or Superior based on the parameters: Function and Responsibilities, Structure, Process and Performance.

Trust Committee (Trust Com)

The Trust Committee is primarily responsible for overseeing the fiduciary activities of the bank and directly reports to the Board of Directors (BOD). In discharging its function, it shall:

Duties and Functions:

1. Ensure that policies and procedures are in place from account opening to account administration and management up to account termination, in conformity with applicable laws, rules and regulations and prudent practices;
2. Ensure that policies and procedures that translate the BOD’s objectives and risk tolerance into prudent operating standards are in place and continue to be relevant, comprehensive and effective;
3. Monitor the implementation of stringent controls for the prudent management of fiduciary assets and its appropriate administration; maintaining adequate books, records and files for each account;
4. Oversee the proper implementation of the risk management framework, compliance program and internal controls to ensure that accounts are managed accordingly in different cycle of the market;
5.  Adopt an appropriate organizational structure and staffing complement that will enable the Trust business unit to efficiently carry out its function with utmost diligence and skill and ensure proper and continuous training for its Trust officers and personnel considering growing sophistication and complexity in trust business and changes in the financial market environment.
6. Oversee and evaluate the performance of the Trust Officer and of the Trust operations with regard to business objectives and strategies, compliance and risk monitoring and management, requiring periodic reports on the different areas of responsibility;
7. Require the review of trust and other fiduciary accounts at least once every three (3) years or as needed depending on the nature of the account, to determine the advisability of retaining or disposing of the trust or fiduciary assets and whether the account is being managed in accordance with the instrument creating the trust or other fiduciary relationship.  For this purpose, the Trust Committee shall meet whenever necessary and keep minutes of its actions and make periodic reports thereon to the BOD;
8. Review reports submitted by internal and external auditors and regulatory agencies, and deliberate on major exceptions or non-compliance with existing laws, rules and regulations, policies and procedures and act on appropriate recommendations;
9. Ensure that the TBG is taking appropriate measures to address all regulatory requirements under applicable laws, rules and regulations and that plans and actions are taken to correct reported conditions and accomplish satisfactory disposition of findings;
10. Review and approve the plans and program of activities of the Trust Banking Group; and
11. Regularly report to the BOD on matters arising from fiduciary activities.

This Committee is composed of:

The Committee meets at least six (6) times annually and held a total of 6 meetings in 2020.

The Committee was able to issue fifty-six (56) resolutions approving/confirming important transactions and actions of the Trust Banking Group.

Corporate Governance Committee (CG Com)

Duties and Functions

The Corporate Governance Committee shall have the following duties and functions:

1. 1. 1. 1. Reviews and recommend the organizational structure of the Bank and its units;
2. 1. 1. 2. Reviews and evaluate the qualification standards for all positions in the Bank;
3. 1. 1. 3. Reviews and recommend the selection/promotion of the officers as endorsed by the Selection Board II;
4. 1. 1. 4. Ensures the Board’s effectiveness and due observance of corporate governance principles and guidelines;
5. 1. 1. 5. Oversees the periodic performance evaluation of the Board and its committees and executive management;
6. 1. 1. 6. Conducts an annual self-evaluation of its performance;
7. 1. 1. 7.  Decides whether or not a director is able to and has been adequately carrying out his/her duties as director bearing in mind the director’s contribution and performance (e.g. competence, candor, attendance, preparedness and participation);
8. 1. 1. 8. Adopts, propose and recommend to the Board such internal guidelines to address the competing time commitments that are faced when directors and other Bank officers serve on multiple boards;
9. 1. 1. 9. Studies and recommend to the Board such policies regarding the continuing education of the Directors, assignment to Board Committees, succession plan for the senior officers and their remuneration commensurate with corporate and individual performance;
10. 1. 1. 10. Decides the manner by which the Board’s performance may be evaluated and propose an objective performance criteria to be approved by the Board;
11. 1. 1. 11. Studies and recommend policies to ensure appropriate and effective management through organizational and procedural controls and independent audit mechanisms;
12. 1. 1. 12. Promotes transparency and operational responsibility and accountability in a manner consistent with the Bank’s vision, mission, strategic intent and operating values.

The Committee is composed of:

The Committee meets at least quarterly or as often as it is considered necessary and appropriate. In 2020, it held a total of eleven (11) meetings and adopted eighty four (84) resolutions.

Agri-Agra Social Concerns Committee (AASCC)

Duties and Functions:

1. Recommends actions on complex land transfer claim issues
2. Recommends or resolve matters relevant to agri-agra policies of LBP
3. Monitors the implementation of agri-agra programs of LBP
4. Serves as clearing house for agri-agra programs of LBP that need approval of the LBP Board of Directors
5. Attends to other functions as may be assigned by the LBP Board of Directors

This Committee is composed of:

The Committee meets at least once a month and held a total of five (5) meetings in 2020.

Related Party Transactions Committee (RPT Com)

Duties and Functions:

1. Evaluates on an ongoing basis existing relations between and among business and counterparties to ensure that all related parties are continuously identified, RPTs are monitored, and subsequent changes in relationship with counterparties (from non-related to related and vice versa) are captured. Related parties, RPTs, and changes in relationships shall be reflected in the relevant reports to the Board and regulators/supervisors.
2. Evaluates all material RPTs to ensure that these are not undertaken on more favorable economic terms to such related parties than similar transactions with non-related parties under similar circumstances.
3. Reports quarterly to the Board of Directors the status and aggregate exposures to each related party as well as the total amount of exposures to all related parties.
4. Ensures that related parties transactions, including write-off of exposures, are subject to periodic independent review or audit process; and
5. Oversees the implementation of the system for identifying, monitoring, measuring, controlling, and reporting RPTs, including the periodic review of RPT policies and procedures.

This committee is composed of:

The Committee meets at least quarterly and held a total of seven meetings in 2020.

The RPT Com vetted and deliberated two loan accounts, six procurement transactions and two other transactions.

The LANDBANK Board approved and confirmed the following:

1. Approved four reports on Material RPTs;
2. Confirmed four reports on Non-Material RPTs; and

Confirmed four reports on status and aggregate exposures on related parties.

No Changes in the Membership of the LBP Board of Directors for CY 2020