BSP urged to adapt global best practices

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) needs to adapt various international best practices in banking supervision to better protect the interest of depositors, a senior legislator said over the weekend.

“Experience in the past highlighted the inability of the Bangko Sentral ng Pilipinas to deal effectively and expeditiously with problem banks. The authority of the BSP over problem banks, in general, is limited to the grant of emergency advances in case of illiquidity, or closure in case of insolvency. Prompt corrective actions cannot be implemented due to the absence of clear and strong legal basis,” said Angara.

He said through the amendments of its charter, the BSP can use “transparency mechanism” to supervise formal and informal remittance firms.

“This, in turn, shall also protect overseas Filipinos from problematic practices in money transfer,” said Angara, who filed proposals seeking to amend the BSP charter.

The proposal allows BSP to adopt various international best practices in banking supervision to strengthen the regulatory and supervisory powers of the BSP over banks and other financial institutions.

Measures include giving the BSP the authority to approve transfers or acquisitions of shares in a supervised institution, to prescribe guidelines for the examination of supervised authorities, and to direct existing stockholders to infuse additional capital or in case of their inability or refusal.

It also seeks to prescribe additional and transparent grounds for bank closure announcement of unilateral closure, suspension of payment of deposit substitutes, or inability to pay liabilities as they become due.

Furthermore, Angara’s proposal seeks to indemnify BSP personnel for cost and expenses incurred by them in connection with any civil, administrative or criminal action, suit or proceedings.

“This proposal is aimed at providing better protection to the public, particularly the depositors and creditors of BSP’s supervised institutions,” Angara said. –Iris C. Gonzales (The Philippine Star)