CORPORATE GOVERNANCE MANUAL

The President is assisted by the following management committees, among others:

• The Management Committee (ManCom) oversees the day-to-day supervision of the business and is chaired/led by the President/CEO and is composed of the Bank’s most senior line management officers.
   
• The Assets and Liability Committee (ALCO) ensures that the Bank and its business units maintain adequate liquidity, capital, and funding to meet all business requirements at all times. ALCO is tasked to effectively manage capital with strict adherence to the risk disciplines set by the Board. ALCO is chaired/led by the President/COO and is composed of senior line management officers.
   
• The Administrative Investigation Committee (AIC) investigates offenses involving deliberate disobedience, fraud, dishonesty, unethical behaviour, and other offenses that carry the sanction of suspension to dismissal.
   
• The Bank Anti-Money Laundering Evaluation Committee (BAMLEC) primarily oversees the implementation of the Bank’s AMLA Program across the organization. BAMLEC deliberates, evaluates, and determines eligibility of transactions reported as suspicious transactions  prior to its submission to the Anti-Money Laundering Council (AMLC). BAMLEC, likewise, reports to CGCOC.

There are four support units of the oversight committees of the Board which are independent from the business activities of the Bank, to wit:

• The Risk Management Department (RMD) led by the Chief Risk Officer oversees the risk management function in the Bank. RMD assesses risks (identification of potential risks and evaluation of the potential impact of risks) and designs a risk mitigation plan (eliminate or mitigate the impact of the risk events) concerning trading, position-taking, lending, borrowing and other transactional and operational activities of the Bank. RMD reports directly to RMOC.
   
• The Internal Audit Department (IAD) led by Chief Audit Executive examines and reviews regularly the extent and quality of the Bank’s adherence to internal control policies and procedures including application and effectiveness of risk management procedures and assessment methodologies and management, financial information, and compliance systems. IAD likewise provides an independent appraisal of functional units, system and procedures of safeguarding assets and assessment of capital (in relation to the estimate of organizational risks). IAD reports directly to AuditCom.
   
• The Compliance Department led by the Chief Compliance Officer identifies/monitors all relevant laws and regulations or jurisdictions and ensures the Bank’s compliance in the said laws and regulations. Likewise, it is charged to ensure that all new or amended compliance policies are communicated and understood by all concerned banking units. The Compliance Department reports directly to the CGCOC.
   
• The Corporate Governance Officer assists the Corporate Governance & Compliance Oversight Committee on matters related to corporate governance. He/She shall oversee, promote, and ensure that accountability, fairness, and transparency in the Bank’s relationship with the Board, stockholders, customers, management, employees, regulators, and the government are effectively implemented.

The Board composition ensures that its members are diverse yet efficient, rendering a healthy balance of mutually complementary traits, along with independence of character. The Board ‘s primary duty is to provide the Bank’s overall leadership, strategic oversight, and control environment to achieve its ultimate goal of maximizing long-term value for shareholders while considering sustainability for its stakeholders and adhering to the principles of good governance and accountability.

Board succession is ensured through the Nominations Committee, which is tasked to conduct pre-screening through assessment against policies and regulatory requirements. Upon the conclusion of the vetting process, a final list is prepared wherein nominee details required by law are made available to the appropriate government agency-in-charge.

The Bank’s Corporate Governance Manual enumerates the duties and functions of the Board as a whole. It determines the company’s purpose, vision, mission and strategies while ensuring that the Bank complies with relevant laws, regulations and codes of business best practices. Further, the Board ensures that a system of checks and balances is in place so that risks are identified, prevented or mitigated. The Board is also expected to set the tone from the top in terms of shaping the company culture.

The Board Chairperson works closely with the President and Chief Operating Officer. This complementary relationship provides appropriate balance of power, increased accountability, and independent decision making by the Board while management having the responsibility to execute strategic plans of the Bank.

The charter of the Board of Directors articulates the governance and oversight responsibilities exercised by the directors and their roles and functions in the Bank. It includes provisions on Board composition, Board committees, and Board governance, subject to provisions of the corporation’s Articles of Incorporation, By-laws, and applicable laws. The PVB charter is not intended to limit, enlarge, or change in any way the responsibilities of the Board, as determined by such articles, by-laws, and applicable laws. The Board charter of the Bank is incorporated in its Manual of Corporate Governance, which is reviewed annually.

As of December 2018, the Board is composed of nine members, including five independent directors (ID), and four executive directors. Profiles of the members of the Board are provided in this Annual Report.

The members of the Board comply with the fit and proper rule of the Bangko Sentral ng Pilipinas (BSP), as well as the qualification and disqualification parameters set forth by the Securities and Exchange Commission (SEC). Board members hold office for one year or until their successors are elected and qualified in accordance with the Bank’s By-Laws. The Bank has adopted fit and proper standards on directors and key personnel, taking into consideration their integrity/probity, technical expertise, physical/mental fitness, competence, relevant education/financial literacy, diligence, and knowledge/experience/training.  The qualifications of those nominated to the Board, as well as those nominated for positions requiring appointment by the Board, are reviewed and evaluated by Corporate Governance and Compliance Oversight Committee (CGCOC)/Nomination Committee (NOMCOM).

In March and December 2018, the Board accepted the resignations of Messrs. Laurito E. Serrano and  Nonilo C. Cruz. In July and September 2018, Mr. Jose A. Nunez Jr. and Cesar A. Rubio were elected as new directors, respectively. In December 2018, Mr. Alfonso B. Cruz Jr. passed away.

Board Composition

The Board assessment process is undertaken to measure Board efficiency through a balanced and objective platform against the goals set at the beginning of the year, roles and responsibilities as mandated by the various regulatory agencies, as well as the Bank’s own Corporate Governance Manual.  Further, the assessment provides the Board valuable information that can be used as guiding tools in succession planning and objective setting as well as analysis of strengths and weaknesses, enabling the Board to act and address concerns.

In 2018, the self-assessment exercise was conducted in three areas:

a)   The Individual Directors’ Assessment;

b)   The Board Assessment and;

c)   The Board Committee’s Assessment

Performance assessment is conducted annually with the result summary, as prepared by the Corporate Governance Officer (CGO), presented to the Board and the various Committees for their consideration and discussion.

All first-time Directors are required to attend a special seminar on corporate governance for board of directors. The orientation for first-time Directors begins immediately after they are selected and before their first Board meeting. They are furnished with a copy of the general responsibility and specific duties and responsibilities of the Board and of a Director. Directors are required to certify under oath that they have received copies and fully understand and accept the general responsibility and specific duties. The certification is also submitted to the BSP, together with a certification that he or she has all the prescribed qualifications and none of the disqualifications after their election. 

The Bank also has a policy on continuing education for Directors. In maintaining their professional proficiency, the Directors are encouraged to continuously enhance their skills, knowledge and understanding of the activities that the Bank is engaged in or intends to pursue, as well as the developments in the banking industry, including regulatory changes through continuing education or training.

To assist the Board in competently acting upon its responsibilities, it established 11 committees, namely:

1. Executive Committee (EXECOM)
2. Corporate Governance & Compliance Oversight Committee (CGCOC) /Related Party Transactions (RPT) Committee
3. Nomination Committee (NOMCOM)
4. Remuneration Committee (REMCOM)
5. Audit Committee (AUDITCOM)
6. Risk Management Oversight Committee (RMOC)
7. Trust Committee (TRUSTCOM)
8. Credit Committee (CRECOM)
9. Human Resources Committee (HRCOM)
10. IT Steering Committee (ITSC); and
11. Asset Disposal Committee (ADCOM) 

The authority, duties and responsibilities, as well as the frequency of the Board committee meetings are stated in their respective charters. Meetings are generally held on a monthly basis and may include special board committee meetings when necessary. The Board committee secretariats are responsible for ensuring that the regular agenda of the meetings and resource persons are informed and provided with committee materials prior to meetings. The committee secretariat prepares the minutes of the committee meetings for endorsement and confirmation of the PVB Board and records the attendance of the committee members.

The Independent Directors are appointed Chairpersons of the oversight control committees, namely the Corporate Governance & Compliance Oversight Committee, Risk Management Oversight Committee, and Audit Committee.

Executive Committee

The Executive Committee (ExCom), a subset of the Board, functions as the Board’s operating committee, and approves/oversees the Bank’s risk management on a more detailed basis. ExCom members are all Directors, including the Chairman and Vice Chairman of the Board. Some of ExCom’s duties and responsibilities include: providing insights to the Board’s Chairman, initiating investigative studies in any business area, developing new ventures, new/additional facilities, and suggesting new organizational, administrative, financial, and operational procedures of the Bank. The Committee held ten meetings from January to December 2018, during which it reviewed and endorsed numerous transactions to the Board. 

*Resigned effective December 1, 2018

**Appointed effective December 2018

***Appointed effective October 2018

Corporate Governance and Compliance Oversight Committee 

The Corporate Governance and Compliance Oversight Committee (CGCOC) ensures the Board’s effectiveness and due observance of the corporate governance principles and guidelines,  as well as good corporate governance and compliance across the organization. CGCOC oversees the periodic performance evaluation of the Board, Board Committees, individual Directors, and Executive Management. The Committee held 14 meetings from January to December 2018.

*Member until February 2018

**Member starting July 2018

***Member starting September 2018

Audit Committee 

The Audit Committee (AuditCom) provides oversight of the Bank’s financial reporting and control and internal/external audit functions. The AuditCom reviews and approves (for the ratification of the Board) reports submitted by the internal and external auditors, reviews the internal control policies and procedures of the Bank, and oversees their proper implementation. The Committee held 16 meetings from January to December 2018.

*Member until April 2018

** Member starting October 2018

***Member starting May 2018

Risk Management Oversight Committee 

The Risk Management Oversight Committee (RMOC) develops and reviews the Bank’s risk management programs, policies and procedures, as well as oversees the implementation of the risk management plan to ensure that the Bank’s risk exposures are properly identified, assessed/measured, monitored, reported, and controlled. RMOC reports to the Board the state of the Bank’s risk and profile. The Committee held 14 meetings from January to December 2018.

*Member until April 2018

**Member starting April 2018

***Member until November 2018

****RMOC Chairman starting July 2018

Credit Committee 

The Credit Committee (CreCom) has the authority to review and recommend to the Board the approval of all credit and credit-related proposals, programs, policies and procedures. This function also includes regular receipt from Management of information on credit-related risk exposures and risk management activities. The Committee held 24 meetings from January to December 2018.

*Member until February 2018

**Member starting April 2018

***Member starting November 2018 

Trust Committee 

The Trust Committee (TrustCom) oversees the administration of the Bank’s trust, investment activities, and other fiduciary business through the determination, formulation, implementation, and periodic review of the general policies and guidelines which will govern the Bank’s trust and related business. The Committee held eight meetings from January to December 2018. 

*Independent Professional

**Member starting April 2018

***Member until November 2018

****Member starting July 2018

Human Resources Committee 

The Human Resources Committee (HRCom) reviews the recommendation for the recruitment of officers and staff, promotions, compensation, salary increases and major human resource policies, prior to the approval of the Board, consistent with the Bank’s culture, strategy, and business environment. The Committee held 10 meetings from January to December 2018. 

*Member until April 2018

**Member starting April 2018

IT Steering Committee

The IT Steering Committee (ITSC) oversees the formulation of basic policies, objectives, and programs in relation to the Information Technology (IT) requirements of the Bank. ITSC reviews, approves, and proposes to the Board the long-term business plans for the Bank’s IT development, including changes in IT procedures, and proposals for IT policies and expanded services. The top three activities of the ITSC are: IT project prioritization, approval of IT projects, and IT strategic planning. The Committee held 10 meetings from January to December 2018. 

*Member until August 2018

**Members until August 2018

***Became ITSC Chairman in September 2018

Related Party Transaction Committee 

The Related Party Transaction Committee (RPT Com) assists the Board in its oversight of the conduct of all Related Party Transactions (RPTs) to protect the interest of the Bank and its stakeholders. It ensures proper disclosure of all approved RPTs in accordance with all applicable regulatory requirements. The Committee held 14 meetings from January to December 2018.

*Member until February 2018

**Member starting June 2018

***Member starting August 2018

***Member starting September 2018

Asset Disposal Committee

The Asset Disposal Committee (ADCom) oversees the administration of the Bank’s asset disposal which includes real estate and other properties, in accordance with the business direction of the Bank. ADCom provides insights, information, and updates to the Board concerning the short-range, long-range, and specific emergency planning and implementation/management on asset recovery and disposal. The Committee held fourteen (14) meetings from January 2018 to December 2018.

*Resigned effective December 1, 2018

**Member starting April 2018

***Member starting November 2018 

Nomination Committee

The Nomination Committee (NomCom) reviews and evaluates the qualifications of all persons nominated to the Board. It takes into consideration the regulatory requirements, future development of the Bank, various rules on independence of the Board and sufficient time to undertake the role. The Committee held two meetings from January to December 2018.

Remuneration Committee

The Remuneration Committee (RemCom) sets bank policy and provides strategic direction in the study and determination of the most fair and effective means and modes of compensation and remuneration of its Board of Directors and Senior Officers (Vice President and above). RemCom is tasked to assist the Board of Directors by recommending and overseeing the implementation of a program of salaries and benefits for Directors and Senior Officers that would attract and retain the calibre and quality of talent needed to sustain and grow its operations. The Committee held two meetings from January to December 2018.

The Board meets regularly for the effective discharge of its obligations. Regular board meetings are convened monthly held every 2nd Tuesday of the month. Special meetings may be called for as needed. In 2018, the average meeting attendance of the Board was at 89%. The Office of the Board Secretary plays an important role in supporting the Board in the discharge of its responsibilities, prepares the agenda, and sends out notices and materials.

*Resigned effective December 2018 

**Resigned effective March 2018

***Appointed/elected effective July 2018

****Appointed/elected September 2018