Issuing a memorandum circular, the BSP said the requirement only reiterates an earlier directive that requires banks to establish a back-up location far enough from their primary locations, complete with back-up facilities in both telecommunications and power.
BSP Acting Governor Alberto V. Reyes told reporters that banks are required to ensure that their alternative base of operations are at least 20 kilometers away from their primary base.
According to Reyes, the back-up facilities should also have a separate telecommunications and power supply so that banks could operate even if their primary bases were compromised.
He said banks have been given 30 days to submit their business continuity plans that would detail these back-up facilities.
In the wake of the 21-hour siege in Makati last July, the BSP had launched a review of the banking system’s capability to continue operating even during times of extreme crisis.
The BSP said most of the major banks had contingency plans, but the Monetary Board was not satisfied and wanted a more detailed and concrete compliance from the entire commercial banking sector.
According to BSP Governor Rafael Buenaventura, the BSP’s supervision and examination division has initiated a review of the banking system’s back-up capabilities to ensure uninterrupted banking services even during serious crises.
Buenaventura said banks were already required to set up back-up systems and they have reported full compliance with the requirement even before the events of July 27.
"If the events in July lasted longer than it did, it would have made it necessary for us to suspend trading," Buenaventura said. "People would have been afraid to come to work if the siege lasted longer or had become more violent and we would not have been able to open trading."
According to Reyes, most banks have back-up systems but said the BSP wanted to ensure that they were physically separate and away from their base of operations.
"Most of these banks are headquartered in Makati," he said. "If they are going to put up back-up systems, we want them to locate elsewhere. They can’t put it, say, in another floor of the same building. That would be useless. The MB required at least 20 kilometers away from their primary base of operations."
Some banks, according to the BSP, set up systems in Ortigas and Binondo, away from the increasingly high-risk Makati area.