Corporate Governance Manual

AUTENTICO. CODILLA. MANTE. MOREJON. ORONGAN. TAN

OBJECTIVES
 Discuss about the company’s board governance.
 Give an overview about the company’s business
ethics.
 Explain the company’s ways on managing risks.
 Discuss about the company’s internal control.
PHILIPPINE NATIONAL BANK is one of the country’s leading
private universal banks in terms of assets.
* Php 61B

PNB’s principal commercial banking activities include

deposit-taking, lending, trade financing, foreign exchange
dealings, bills discounting, fund transfers/remittance
servicing, asset management, treasury operations,
comprehensive trust services, retail banking and a host of
other financial solutions.
 acknowledges that corporate governance is a dynamic concept
 the system of stewardship and control to guide organizations in fulfilling their long-
term economic, moral, legal and social obligations towards their stakeholders
 provides direction for the promotion of a strong corporate governance culture
and recognizes current best practice
 strives to raise corporate governance standards to a level that is at par with
global standards and ultimately contribute to the development of Philippine
capital markets.
 BOARD GOVERNANCE
1. Board of Directors
2. Directors 7. The Chief Compliance
3. Board-Level Committees Officer (CCO)
4. Officers 8. The External Auditor
5. The President 9. The Internal Auditor
6. The Corporate Secretary 10.The Chief Risk Officer
(CRO)
11.The Trust Officer
 BOARD GOVERNANCE
The Board of Directors, Management
and Staff of the Philippine National
Bank Group commit themselves to
adhere to the highest principles of
good corporate governance as
embodied in the Bank’s amended
Articles of Incorporation, amended
By-Laws, Code of Conduct and this
Revised Corporate Governance
Manual.
The Bank subscribes to the philosophy of:
• integrity, accountability and transparency in its manner
of doing business;
• dealing fairly with its clients, investors, stockholders, the
communities affected by its environmental/social activities
and various public;
• professionalism among its Board of Directors, executives
and employees in managing the Bank, its subsidiaries and
affiliates;
• and respect for the laws and regulations of the countries
affecting its businesses.
 ETHICS
THE BANK SHALL CONSISTENTLY ADOPT THE POLICIES AND PROCEDURES OF THE FOLLOWING:

• Code of conduct manual

• Corporate Governance Manual
• Personal Investment Policy
• Policy on soliciting and/or receiving gifts
• Whistleblower policy
 ETHICS
Code of Conduct Manual
- Constituted to prescribe a moral code for PNB employees which would not only instill discipline
among them but would yield higher productivity at the workplace and enhance and safeguard the
corporate image of the bank.
Corporate Governance Manual
- The bank adheres to the highest principle of good corporate governance as provided for in its
Amended By-Laws and embodied in the corporate governance manual.
Personal Investment Policy
- Set forth prudent standards of behavior for all employees when conducting their personal
investment transactions
Policy of Soliciting and/or Receiving Gifts
- The bank recognizes that maintaining good relationships with clients often require the exchange
of gifts as tokens of appreciation. However, employees are expected to observe discretion and
prudence in receiving gifts or donation. Soliciting gifts/donations/sponsorship whether in cash or
in kind from clients, suppliers, and other business-related parties is strictly prohibited.
 ETHICS

Whistleblower Policy
- it is the policy of the bank to encourage employees to report internally any suspected or actual
commission of theft/fraud, corrupt practices such as, but not limited to, bribery, fraud, extortion,
collusion, conflict of interest and money laundering, violation of ethical law, rule or regulation
and/or any misconduct by its directors, officers or staff in accordance with the PNB Whistleblower
Policy. The policy protects the employee/whistleblower against retaliation, discrimination,
harassment or adverse personnel action, for reporting in good faith a suspected or violation
 ETHICS

The above mentioned code and policies aim to

instill among the Bank directors and its
employees a commitment and dedication to the
virtues of honesty and integrity, with a high sense
of prudence, responsibility and efficiency in the
conduct of their duties.
 ETHICS
CORPORATE SOCIAL RESPONSIBILITY

The Bank intends to be:

For PNB, social responsibility is a

 a good and responsible corporate citizen
commitment that:
contributing to the country’s sustainable
begins with the exercise of sound and fair
development
corporate practices
 respects the interests and promotes the
is shared by every employee of the bank.
wellbeing of its various stakeholders
 creates value in everything it does
 RISK MANAGEMENT AD
INTERNAL CONTROL

To address risks that the corporation may face, the board established
the following:
• Board Risk Oversight Committee
• Board Oversight RPT Committee
• Board IT Governance Committee
 Board Risk Oversight Committee

The PNB Board Risk Oversight Committee is created by the PNB Board of
Directors to:
 assist the board to oversee the risk profile
 approves the risk management framework of PNB and its related allied subsidiaries and
affiliates
 to set risk appetite, approve frameworks, policies and processes for managing risk,
 accept risks beyond the approval discretion provided to management.

The members shall possess a range of expertise as well as adequate knowledge of the bank's risk exposures.
 Board Risk Oversight Committee
1. Identify and evaluate exposures - ROC shall assess the probability of each risk becoming reality and
shall estimate its possible effect and cost. Priority areas of concern are those risks that are most likely
to occur (high probability) and are costly when they happen (high severity);
2. Develop Risk Management Strategies – ROC shall develop a written plan defining the strategies for
managing and controlling the major risks. IT shall identify practical strategies to reduce the chance of
harm and failure or minimize losses if the risk becomes real;
3. Oversee the implementation of the risk management plan – ROC shall conduct regular discussions
on the bank’s risk current exposures based on regular management reports and assess how the
concerned units of offices reduced these risks; and
4. Review and revise the plan as needed – ROC shall evaluate the risk management plan to ensure its
continued relevancy, comprehensiveness, and effectiveness. It shall revisit strategies, look for
emerging or changing exposures, and stay abreast of developments that affect the likelihood or harm
or loss.
5. To determine the Bank’s risk appetite and set limits on risk taking activities of the Bank
 Board Oversight RPT Committee
• is created, governed by a charter, to assist the Board in performing its oversight functions in monitoring and
managing potential conflicts of interest of shareholders, board members, management, and other
stakeholders.

a) Review and approve policy guidelines and implementing procedures in handling RPTs by ensuring effective
compliance with existing laws, rules and regulations, accounting standards and global best practices.
b) Evaluate on an ongoing basis existing relations between and among businesses and counterparties to ensure
that all related parties are continuously identified; RPTs are monitored; and subsequent changes in relationships
with counterparties (from non-related to related and vice versa) are captured.
c) Evaluate all material RPTs to ensure that these are conducted in the normal course of business; not undertaken
on more favorable economic terms to such related parties than similar transactions with non-related parties
under similar circumstances, and that no corporate or business resources of the bank are misappropriated or
misapplied; and to determine any potential reputational risk issues that may arise as a result of or in connection
with the transactions.
 Board Oversight RPT Committee

d) Report to the Board on a regular basis the status and aggregate exposures
to each related party as well as the total amount of exposures to all related
parties.
e) Oversee the periodic independent review or audit of transactions with
related parties, including write-off of exposures.
f) Oversee the implementation of the system for identifying, monitoring,
measuring, controlling, and reporting RPTs, including the periodic review of
RPT policies and procedures.
g) Ensure that appropriate disclosure is made, and/or information is provided
to regulating and supervising authorities relating to the Bank’s RPT exposures,
and policies on conflicts of interest or potential conflicts of interest.
 Board IT Governance Committee

is created to assist the Board in performing its oversight functions in reviewing, approving
and monitoring the IT Risk Management Framework and IT Strategic Plan of the PNB
Group.

 Has oversight of the IT Risk Management System.

 Review and endorse for approval of the Board the Enterprise IT Strategic Plans of the Parent Bank, its subsidiaries
and affiliates.
 Evaluate and endorse for approval of the Board the IT Organizational Structure of the PNB Parent Bank and related
entities belonging to the PNB Group - foreign branches, domestic and foreign subsidiaries and affiliates.
 Review and endorse for approval of the Board the IT Risk Assessment of the PNB Group and its member entities.
 Board IT Governance Committee
Review and endorse for approval of the Board the IT Policies and ensuring
adherence to existing laws, rules and regulations, and global best practices;
Review and inform the Board in a timely manner critical IT Projects and
approve necessary IT budgets (within Php5.0M limit) to support business
plans and priorities.
Oversee that IT Project proposals are consistent with the overall IT Strategic
Plans.
Monitor the IT Group performance, IT Projects and in-sourcing and out-
sourcing activities of IT functions and services provided to related entities.
Review and monitor significant IT concerns and corrective actions arising
from regulatory examinations, internal audits and external reviews.