BSP to verify confirmation of bank directors, officers

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) will verify the confirmation of elected and appointed directors, trustees and officers of banks and other financial institutions.

In a draft circular, the BSP said the Monetary Board needs to confirm the election or appointment of the president or its equivalent rank of universal and commercial banks, including their subsidiaries, quasi-banks, trust corporations, non-bank financial institutions (NBFIs) with trust authority as well as stand-alone banks with total assets of P10 billion.

The policy-making body of the BSP currently confirms the election and appointment of directors and chief executive officers of big banks, as well as other financial institutions with assets and assets under management of at least P10 billion.

On the other hand, the Financial Supervision Sector (FSS) committee of the BSP confirms the election and appointment of director, CEO and president or its equivalent rank of other stand-alone banks, quasi-banks, and NBFIs with total assets and assets under management of less than P10 billion.

Likewise, the committee needs to confirm the appointment of heads of comptrollership or finance, lending, treasury, and bank branching directly reporting to the president or CEO with a rank of senior vice president and up of big banks.

Furthermore, the FSS committee needs to confirm the appointment of heads of control functions and internal audit, risk management and compliance, regardless of rank of all banks and other financial institutions.

The BSP said the appointment of other officers shall not be subject to central bank confirmation.

It also said BSP-supervised financial institutions need to submit a bio-data with ID picture of their directors and officers who are subject to confirmation upon every election, re-election, appointment, and promotion within 20 days from the date of the meeting of the Board of Directors.

For senior vice president and up positions that no longer require BSP confirmation, banks and financial institutions should continue to submit to the BSP the bio-data and ID pictures within 20 days from the date of appointment.

The BSP is also now requiring a secretary’s certificate attesting for a director or an officer holding concurrent positions in government or government-owned and controlled corporations (GOCCs) allowing him or her to become a director of the BSFI.

Likewise, a secretary’s certificate is needed that the corresponding Alien Employment Permit issued by the Department of Labor and Employment (DOLE) was secured for foreigners appointed as officers.

As of May, BSP Governor Benjamin Diokno earlier said the regulator blacklisted 7,500 dismissed officers and employees of banks as it continues to tighten the industry’s hiring protocols and control measures by weeding out unprincipled personnel who may cause reputational risk to a bank and to the financial system.

“Based on our total records, we have around 7,500 names and (the) most common reason is dismissal for cause,” Diokno said.

The BSP chief said robust know-your-employee (KYE) procedures foster a stable banking system through good corporate governance and strict human resources-related practices, as well as tighter controls related to confirmation of accounts.

Diokno also said the central bank subscribes to the principle that the tone of good corporate governance should come from the top.

“This ensures that the core values of the organization, particularly, integrity, ethical business conduct, and professionalism are cascaded and embraced across the organization,” Diokno said.

Aside from preventing losses due to fraud or irregularities arising from weak operational risk management, Diokno explained the principle is aimed at fostering the confidence of the public in the country’s financial institutions and banking system.