Financial regulators adopted yesterday measures to speed up consolidation processes in the banking sector in a bid to further strengthen the financial system.
The measures, contained in two memoranda of agreements that the Bangko Sentral ng Pilipinas signed with other regulatory and supervisory heads, were signed in ceremonies seen to speed up the BSP audit process in six months tops.
Under the current process, auditing financial documents of merging banks takes time and lasts longer than six months, unnecessarily stressing depositors and shareholders in its wake.
“We’re both looking at the same thing and we’re not saving time. This agreement streamlines the process and fast tracks the approval,” Deputy BSP Gov. Nestor Espenilla Jr. said of the agreement that his boss, BSP Gov. Amando Tetangco Jr. signed with Philippine Deposit Insurance Corp. (PDIC) president Jose “Jopot” Nograles.
Merging banks took considerable time to complete in the past because the process was serial and the BSP and PDIC, while pursuing the creation of a strengthened banking entity, were each hobbled by diverging concerns.
The PDIC, Espenilla said, is focused on the integrity of the deposits while the BSP is concerned about the soundness and viability of the resulting merged entity.
“This provides an indicative timeline for both agencies to complete the evaluation process on the assumption that all the required documents have been submitted.
“The harmonized parameters underscore the common philosophy underlying mergers and consolidations: that the result will be a stronger and more viable financial institution,” Espenilla said.
Both he and Tetangco also signed an agreement with the Board of Accountancy at the Professional Regulatory Commission, the Securities and Exchange Commission as well as with the Insurance Commission making possible the cross accreditation of auditors employed by the various business or banking entities in the country.
Cross accreditation means that an auditing firm already recognized by the SEC, for example, is automatically recognized by the BSP and the Insurance Commission as well.
This was agreed upon because insurance companies based on the provinces, for example, are often hard put to find BSP, SEC or IC-accredited auditors as there are only relatively few of them to go around.
The highly regulated entities often find themselves under forced violation of the rules to which they can do practically nothing to correct, Espenilla said.
With cross accreditation, there is now an adequate number of accredited auditors to go around, Expenilla said. –Ruben Hortelano, Daily Tribune
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