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BSP eases rules on banks’ back-up center operations |
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(January 19, 2004 - Monday, The Philippine Star)
By Des Ferriols The Bangko Sentral ng Pilipinas (BSP) has agreed to ease its requirement for banks to set up contingency plans and back-up operation centers to ensure the continuity of business during emergency situations that could interrupt banking operations in their primary locations. |
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After the siege at Oakwood in Makati last year, the BSP has been urging banks to set up contingency plans including the creation of back-up centers at least 20 kilometers from their existing headquarters.
In July 2003 when Oakwood was seized by an armed military group, the BSP had considered suspending banking operations the following week due to fears that banking security might have been compromised. It was later revealed that there were three back-up sites operated by three major banks in the Oakwood facility itself, prompting the BSP to require banks to locate their alternative sites far from their headquarters. According to the BSP, banks had complained that the 20-kilometer radius would take most of them outside Metro Manila when there are equally acceptable locations far enough from their headquarters but still within the minimum distance. BSP Deputy Governor Alberto Reyes said the Monetary Board has agreed to waive the distance requirement but the BSP would still evaluate the back-up plan of banks to ensure that they are effective and acceptable. "We allowed banks to have the flexibility to decide where they will locate these back-up locations provided there would be efficient and effective communication systems that would ensure continuity of service," Reyes said. Reyes said the BSP would also no longer require prior approval of the BSP but the MB would be given 30 days to evaluate the plans. According to Reyes, the back-up facilities should also have separate telecommunications and power supply roots so that banks could operate even if their primary bases are compromised. The BSP said most of the major banks had contingency plans but the Monetary Board is not satisfied and wants a more detailed and concrete compliance from the entire commercial banking sector. According to BSP Governor Rafael Buenaventura, the BSP’s supervision and examination division has initiated a review of the banking system’s back-up capabilities to ensure uninterrupted banking services even during serious crises. Buenaventura said banks are already required to set up back-up systems and they have reported full compliance with the requirement even before the events of July 27. "If the events in July lasted longer than it did, it would have made it necessary for us to suspend trading," Buenaventura said. "People would have been afraid to come to work if the siege lasted longer or had become more violent and we would not have been able to open trading." According to Reyes, most banks have back-up systems but he said the BSP wanted to ensure that they were physically separate and away from their base of operations. Some banks, according to the BSP, set up systems in Ortigas and Binondo, away from the increasingly high-risk Makati area. home | latest news |
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