BSP gets tough on erring banks

Published January 1, 2020, 12:00 AM

by manilabulletin_admin


The Bangko Sentral ng Pilipinas (BSP) is implementing tougher and tighter regulations on corporate governance especially the guidelines for the disqualification of erring bank and quasi-bank directors and officers and their inclusion in the BSP’s “watchlist” file.

MB file photo.
MB file photo.

The BSP on Wednesday said the Monetary Board has approved new rules revising the disqualification of directors and officers of banks and quasi-banks, effectively expanding the grounds for disqualification. This is part of the BSP’s “fit and proper” rules for directors/trustees and officers of all BSP-supervised financial institutions (BSFIs).

Based on the revised policy, persons or directors and officers found to have caused “undue injury, material loss or damage to the bank or those who exposed the bank to higher risk or danger” will be disqualified from becoming a director or officer in other BSFIs.

“The Monetary Board likewise approved the inclusion of dismissal from any government institution, conviction for offenses under the amended charter of the Philippine Deposit Insurance Corp., and delinquency or unwillingness to settle obligations as among the grounds for disqualification,” said the BSP.

The revised policy updated the due process that an erring director or officer would have to be subjected to and the procedures now have a window for the concerned person to present evidence when giving his or her side.

“Once a person is disqualified, his (or her) name will be included in a watchlist database and he can no longer be connected in any BSFIs unless his (or her) name is removed from the said list,” said the BSP.

Since 2013, the BSP has constantly reviewing and updating its watchlist and derogatory information file (DIF).

The DIF is the BSP’s “black book” of erring bankers to update categories in lieu of new policies on corporate governance.

The BSP has been enhancing the clean up procedures by establishing new criteria for placement in the DIF.

The BSP also reviewed how it acquires information for the DIF, which are usually sourced from disclosures or official reports from banks, as well as BSP onsite examination findings.

The DIF, as implemented by the BSP, is a permanent reference file that is internal to the BSP. As the name implies, it contains the list of individuals cited with adverse derogatory information but not yet disqualified from holding a director or officer position in any financial institution supervised by the BSP.