Tetangco may review BSP corporate governance policies

Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. raised yesterday the possibility of reviewing further the BSP’s corporate governance policies in light of recent controversies hounding the banking sector.

"I think, the regulations now are quite clear. But as we move along, if there is a need for improvement, we are open to it," Tetangco said yesterday.

Tetangco said there is a need to pursue the integral corporate governance reform agenda of the financial sector which started three years ago.

"As I have said, in my stewardship, there should be a continuity and consistency (of this reform agenda)," Tetangco added.

Declining to elaborate on the possible imposition of new and stricter corporate governance standards, Tetangco pointed out the need to continue the independent assessment of banks. "Some of our banks are already undergoing assessment from independent assessor," he said.

The BSP chief also warned that under the existing banking regulations, "there are certain requirements, and there are certain sanctions if those requirements are not met."

"We have also laid down stringent rules on administrative sanctions, unsafe and unsound practices and compliance mechanisms to ensure that directors act in the best interest of the institution, the shareholders and the stakeholders. They are duty bound to avoid corporate decisions that may rise to conflicts of interest or give undue advantage to themselves," he said.

In his speech at the 64th anniversary celebration of BAIPHIL, Tetangco said "foremost of our reform efforts is instilling a system of responsible corporate directorship. We have issued various circulars to concretize our corporate governance framework, with emphasis on the duties and responsibilities of the board of directors."

It would be recalled that the Monetary Board, the policy making body of the BSP, has disqualified Roberto R. Romulo as "independent director" of Equitable PCI Bank.

The MB found that Romulo has been chairman of the Equitable Card Network Inc. (ECNI) from 1997 to 2004 and is also concurrently chairman of the Equicom Systems Management Inc., both controlled by the Go family that also owns substantial shares at EPCIB.

As an independent director, Romulo should not be assuming any other positions in any affiliated companies of EPCIB.

Hinting the monetary authorities’ stance on the issue of independent directors, Tetangco noted, in his speech, that "in a further move to raise oversight standards and curb potential insider abuse, banks have also been required to have at least two independent directors. They are expected to provide the necessary check and balance mechanisms in order to arrive at responsible corporate decisions for the benefit of the minority shareholders, we intend to enforce this to the best of our ability."

Tetangco said the monetary authorities, since last year, have also required the board of directors to also create a corporate governance committee apart from the audit and risk management committees to assist the board in adhering to corporate governance principles.