With at least two cases of banks questionably supporting the activities of their investment houses, the Bangko Sentral ng Pilipinas (BSP) is pushing for the consolidation of the supervision and examination of a bank and its affiliates to be able to detect any cross-transactions.
BSP Gov. Rafael Buenaventura said the consolidation of the supervision of banks and its affiliates will be provided for under the revised General Banking Act which is expected to be signed into law soon.
The consolidation is part of the measures that the BSP hopes to implement to check and prevent questionable investment practices such as those committed by Wincorp and ASB Realty.
Although there are some differences in the case of Wincorp from that of Urbancorp Investment Corp., the use of their banking arm is a violation.
In the case of Wincorp, the former Westmont Bank had reportedly been used to pay and collect investments for Wincorp. Westmont, as a bank, should only accept deposits and should not solicit investments for its investment house.
Some investors of Wincorp claim that they were misled into investing in Wincorp in the belief that Westmont would be liable for such investment.
ASB Realty is suspected of having used its affiliate bank -- the Bank of Southeast Asia -- in getting some investments. Such suspicion, however, remains to be proven.
In the case of Urbancorp Investments, Urban Bank may have helped its investment house contain its liquidity problem which eventually led to the bank's own downfall.
In the case of Wincorp and ASB Realty, the two entities appear to have violated the 19-lender rule which limits the number of unregistered investors that an investment house may have.
Records show that a pool of small investors numbering in the hundreds were involved.
Buenaventura said he is in favor of proposals for a review of the 19-lender rule with the end in view of requiring more disclosures.
What is happening, Buenaventura said, is that investors are lured to invest without realizing that their investment is not fully secured or that the soliciting entity, if coursed through a bank, is not the liability of the soliciting bank.