Speech of Sec. Ignacio R. Bunye during the
turnover ceremony, News Briefing Room, New Executive Bldg.
Malacanang, 16 June 2008|WEBCAST|
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Press Secretary
Ignacio R. Bunye's Speech during the inauguration of the
Philippine Ports Authority, Calapan City, Mindoro, 12 June 2008
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Press Secretary Ignacio R. Bunye's
Speech during the Philippine Independence Day Celebration -
Calapan City, Mindoro, 12 June 2008
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|PART 2|
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Press Secretary and
Presidential Spokesman Ignacio R. Bunye addresses officials and employees of
the Calapan City Port in Calapan City, Oriental Mindoro Thursday (June 12,
2008) after he inaugurated the city’s newly-completed port passenger
terminal building. The P45-miilion Calapan port passenger terminal building
project, which is located in a 820-square meter, lot has a seating capacity
of 552 passengers. The project was completed last week. Also in photo
(seated from right) Calapan City Mayor Salvador Leachon, Press
Undersecretary for Broadcast Martin Crisostomo, Calapan City Port Manager
Felix Barcala, and Oriental Mindoro Governor Arnan Panaligan. (Rico Borja-OPS/NIB
Photo)
(MORE PHOTOS)
Ensuring integrity
in bank ownership transfers (For the
week ending 07 June 2009)
In last
week’s column, I discussed the initial congressional deliberation on
various bills that seek to strengthen the powers of the Bangko
Sentral ng Pilipinas.
The bills, specifically House Bills 6334, 5958 and 174, propose the
amendment of Republic Act 7653 or the New Central Bank Act of 1993.
The Bangko Sentral considers the following as priority areas: (1)
Strengthening the conduct of the BSP’s monetary policy (2) Boosting
BSP’s supervisory and regulatory capabilities, and (3) Improving
BSP’s overall capability to perform other central banking functions.
Last week I discussed proposed measures to strengthen the conduct of
monetary policy. In this column, I will tackle the recommended
changes in the BSP Charter that would boost the BSP’s supervisory
and regulatory capabilities.
At the core of these proposals are the need for the BSP to get
timely and relevant information on the banks and financial
institutions which are under supervision. It is also important to
enable the BSP to act effectively and in a timely manner to
safeguard the banks and their clients.
Need to require prior approval over the transfer of substantial
equity shares in banks
This has been one of the legislative advocacies of the Bangko
Sentral since the 13th Congress. The recent closure of some local
banks, found to have engaged in unsafe and unsound practices,
underscores its urgency.
The BSP’s role in bank ownership transfers will ensure integrity
among bank owners. A stronger BSP, with the power to approve or
disapprove the transfer of substantial ownership of banks, could
have prevented Legacy group owners from buying ailing rural banks
that were eventually used to victimize depositors.
In the case of Legacy, not only did the De Los Angeles group not
seek BSP approval of the acquisition of such banks. The acquisitions
were even kept secret!
Authority to subject bank owners to the 'fit and proper rule'
This proposal is corollary to the first. At present, only bank
officials, or members of the bank’s management are subject to the
“fit and proper rule” to ensure that they have all the
qualifications and none of the disqualifications to be in such
positions.
But even more important are the owners and substantial stockholders
as they are the ones who really shape and influence the decisions.
Power to issue quick resolution actions
This proposal provides the Bangko Sentral with an additional tool to
prevent distressed institutions from failing.
This would empower the BSP to direct a distressed bank to infuse
additional capital within 90 days and failing to do so, the BSP can
direct the distressed bank to either merge with another institution
or to accept new investors .
Under the present law, the matter of additional capital infusion is
practically left solely to the decision of the bank owners.
As experience has shown, this has led to the eventual collapse of
some distressed banks.
Ability to impose a higher capital adequacy ratio (CAR) requirement
for banks Capital adequacy ratio (CAR) is a measure of the amount of
a bank's capital expressed as a percentage of its risk weighted
credit exposures. It is used as an indicator of a bank’s ability to
absorb a reasonable amount of loss.
The Bank of International Settlements, the central bank of all
central banks all over the world, sets CAR at eight percent. The BSP,
on the other hand, requires a higher 10 percent.
However, the BSP now sees the wisdom in imposing a higher CAR
requirement for banks that take on greater financial risks. These
are usually big banks that use and promote more sophisticated
products and engage more in non-traditional banking practices.
The BSP believes that for these banks, it is not enough to merely
comply with the present standards on CAR. Extra steps should be
taken to protect and further improve prudential standards for the
banking system. (To be concluded next week)
