SMC files suit vs Urban Bank

San Miguel Corp. (SMC) filed yesterday a formal complaint with the Bangko Sentral ng Pilipinas (BSP) against Urban Bank in protest of the bank holiday declared by Urban Bank starting April 25. The bank holiday resulted in the bouncing of nine Urban Bank manager's checks issued to various SMC subsidiaries amounting to P176.9 million.

In the complaint letter, SMC urged the BSP to take immediate steps to secure the records of the bank and, importantly, to form a committee which will include representation from SMC to investigate the matter.

"Notwithstanding the fact that the SMC Retirement and Death Benefit Plan is a substantial stockholder and has two representatives in the bank's board, Urban Bank, particularly the officers, did not seasonably and fully disclose to us the facts which led to the declaration of the bank holiday," said Francisco C. Eizmendi Jr., SMC president and chief operating officer and also a director of Urban Bank in the letter.

SMC senior vice president and general counsel Francis H. Jardeleza, meanwhile, issued a demand letter to Urban Bank for the bank to make good the checks it issued to the various SMC subsidiaries within five days from receipt of the letter of face litigation.

Eizmendi and SMC chief finance officer Albert M. de Larrazabal, also a director of the bank, likewise demanded to inspect bank records of all business transactions and minutes of meetings of the bank's board and its committees with regard to fact sand events which led to the declaration of the bank holiday.

"We are thoroughly examining this entire issue. We will of course do all that is necessary to protect our company's interests," Eizmendi said. San Miguel's exposure in Urban Bank amounts to approximately P1.3 billion.

"While this amount is obviously huge, we categorically assure our employees, business partners and stockholders that SMC's financial strength is not affected in any way whatsoever," said Eduardo Cojuangco Jr., SMC chairman and chief executive officer.