BSP, PDIC strengthen collaboration
The Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) agreed to update and revise its existing information exchange cooperation for a more effective monitoring of the country’s financial stability and detection of any threats.
BSP Governor Eli M. Remolona Jr. said Wednesday, Feb. 21, that the central bank and its co-regulator PDIC no longer implement what he called “a very prescriptive examination and supervision style” but has shifted to a riskbased and more principlesbased supervision.
“We do not tell banks specifically what to do. We tell banks to take risks seriously, and that is the reason for all these regulatory standards,” he said.
PDIC President and CEO Roberto B. Tan, former National Treasurer and finance undersecretary, emphasized the importance of maintaining transparent communication between the BSP and the deposit insurer at all times.
More transparency “provides opportunities for a comprehensive understanding of potential risks, enabling us to draw up preemptive measures, detect challenges early, and promptly intervene to immediately address problems among banks to make it responsive to the changing times,” he said.
The enhanced collaboration will also enable both institutions to “protect the depositing public, especially from frauds and scams that have become even more elaborate and complex,” added Tan.
The revised and updated memorandum agreement (MOA) was signed last Feb. 8, 2024 at the BSP headquarters in Manila.
During the event, Remolona said the MOA is timely especially since both the BSP and PDIC’S regulatory framework and supervisory environment have undergone crucial changes over the years, from prescriptive examination to risk-based supervision.
The BSP chief said that in ensuring financial stability, the PDIC role is critical as a deposit insurer to manage deposit runs which he said is “the biggest risk for banks.”
Remolona called on both BSP and PDIC to keep the MOA “updated, relevant and operational” to protect financial system stability.
The revised MOA amends the previous Nov. 12, 2002 agreement as well as the supplemental MOA in 2004.
According to the BSP, since all MOA documents have been updated, it will operate as an Omnibus Agreement covering all information, data, and reports shared between the BSP and the PDIC as per their respective mandates.
Some key features of the updated MOA include: seamless information sharing through digital platforms and rationalized processes; leveraging the BSP Electronic Information System for the timely, secure, and efficient sharing of reports, data, and information between the two agencies; and the periodic review and update of the MOA to consider evolving supervisory requirements.
“Banks’ prudential reporting requirements will also be streamlined, with banks no longer required to submit some prudential reports separately to the PDIC,” said the BSP.
As the state deposit insurer, the PDIC protects depositors by providing deposit insurance up to the maximum deposit insurance coverage of P500,000 per depositor, per bank.