BSP tightens rules on disqualification, watchlisting of bank execs

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has revised its rules intended to strengthen the disqualification and watchlisting of directors and officers of banks and other financial institutions.

BSP Governor Benjamin Diokno said the regulator recognizes that the fitness and propriety of the board of directors and management significantly influence and shape the quality of corporate governance in a financial institution.

Diokno issued Circular 1076 amending certain sections and provisions of the Manual Regulations for Banks and Manual of Regulations for Non-Bank Financial Institutions.

“Following the standards set forth on the qualifications and responsibilities of the board and management, this section provides the rules governing the watchlisting and disqualification of persons from becoming directors or officers of banks,” he stated in the circular.

He added the policy aims to further promote the integrity of the financial system and better protect the interest of the public.

Based on the refined guidelines, persons who have been convicted by final judgment of a court or other tribunal for violations of the securities and banking laws, offenses involving dishonesty or breach of trust such as estafa, embezzlement, extortion, forgery, malversation, swindling, theft, robbery, falsification, bribery, violation of the Anti-Graft and Corrupt Practices Act and Anti-Money Laundering Act as well as prohibited acts under the Code of Conduct and Ethical Standards for Public Officials and Employees are permanently disqualified from becoming directors or officers of banks.

Others barred from becoming bank directors or officers include those who have been convicted by final judgment of cases filed for offenses under the Philippine Deposit Insurance Corp. (PDIC) as well as those who were sentenced to imprisonment of more than six years for offenses involving moral turpitude.

Likewise, persons who have been judicially declared with finality as insolvent, spendthrift or incapacitated to contract as well as those found to be culpable for the bank’s closure as determined by the Monetary Board.

The BSP added persons found to be administratively liable for violations of laws, rules and regulations implemented by the central bank, where a penalty of removal from office is imposed, and which resolution of the Monetary Board has become final and executory, are permanently disqualified from office.

The regulator also listed the violations for those who would be temporarily disqualified as well as persons prohibited to become officers particularly spouses or relatives within the second degree of consanguinity or affinity of holding officership positions.