BSP zeroes in on ‘integrity’ factor
THE BANGKO Sentral ng Pilipinas has issued guidelines on how members of a banks’ board of directors should behave and what their qualifications should be.
The regulator explained that good corporate governance in the banking sector must remain stable to better protect the depositing public.
Under Circular 749 issued by the central bank last week, banks should maintain their reputation by taking on board individuals of unquestionable integrity.
“The position of a corporate director is a position of trust... Stakeholders have the right to expect that the institution is being run in a prudent and sound manner,” the central bank said in the circular.
Although “integrity” may be subjective, the guidelines are meant to discourage banks from hiring unfit individuals, specially those who had figured in scandals or crimes, BSP officials said
The BSP also said in the circular that a bank’s board should release clear management policies to ensure that the institution would not be placed at risk, particularly when significant investments or other forms of exposure to DOSRI (directors, officers, stockholders, and related interests) are involved.
Also, bank boards are urged to create audit, risk-oversight, good governance committees to ensure it maintains sound management and investment practices.
The audit committee will be responsible for imposing policies on financial reporting, and for ensuring the bank observes transparency in all its dealings, avoiding activities that may lead to conflicts of interest.
The risk-oversight committee will implement policies to ensure that the bank observes regulations on capitalization.