BSP tells thrift banks to shape up, level up to protect public

The Bangko Sentral ng Pilipinas (BSP) yesterday told major players in the thrift banking industry to shape up and level up to safeguard the deposits and investments of the banking public.

In his keynote address during the 2012 Convention of the Chamber of Thrift Banks, BSP Governor Amando Tetangco Jr. said banks should not be complacent and should always be accountable to their clients.

“Indeed, there should be no room for complacency in banks and bankers. Filipinos trust you with their money. You are accountable to them. Shape up, level up, and never betray their trust,” Tetangco stressed.

He pointed out that bank failures always have adverse consequences whether to the depositors who have invested their faith and funds in the bank, the bank employees who lose their jobs, and the community that depends on the economic activities funded by the savings.

“If you are faithful to your clients, they will be faithful to you. Then you can grow together as partners,” he said

He explained that the BSP has approved several reforms under Circulars 747 and 749 covering compliance program and corpo- rate governance.

“We want banks to put in place a compliance system that is best suited to their needs. While the circular establishes the senior role of the Chief Compliance Officer, it is the compliance system that is truly the central feature of the policy direction,” he said.

He added that the new rules on corporate governance would help manage the potential conflicts of interest that would invariably arise.

“The Board of Directors, board-level committees as well as senior management all have distinct roles to play in managing the conflicts of interest between handling public funds and deploying the same at a margin,” Tetangco said.

Independent directors, he explained are increasingly critical components of a check and balance system that could oversee any breaches in agreed protocols and maintain an appropriate system of compensation and rewards.

The BSP chief said the bank regulator would continue to pursue a reform agenda including continuing capital-buildup so that banks are prepared for the challenges that lie ahead.

The BSP continues to impose capital requirement higher than the threshold imposed by the Bank for International Settlements (BIS) under the Basel 2 for thrift banks and Basel 2.5 and 3 for universal and commercial banks.

“Indeed, banks must not only redirect the flow of depositors’ savings into investments and loans, they must also manage the risks that arise as a consequence. Whether your focus is consumer or corporate finance,” he said.

Latest data from the state-run Philippine Deposit Insurance Corp. (PDIC) showed that total peso and foreign-currency denominated deposits in banks climbed 4.9 percent to P5.37 trillion last year from P5.12 trillion in 2010 as more Filipinos continued to save in the formal banking sector.

Universal and commercial banks posted a 5.4 percent rise in total deposits to P5.75 trillion last year from a year ago level of 4.51 percent and accounted for 88.4 percent of the total bank deposits in the country. Deposits in rural banks increased by 1.5 percent to P125 billion while that of thrift banks inched up by 1.2 percent to P496.6 billion.