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MB wants to tighten rules for bank directors |
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By : Arnold S. Tenorio
The Manila Times, Monday, 12 April 2004 THE Monetary Board wants to tighten its rules on interlocking directorates. Bangko Sentral Deputy Gov. Alberto V. Reyes told reporters that the Board wants to "revisit the rules" in order to avoid conflicts of interest. An interlocking directorate pertains to a situation wherein bank directors also serve on the board of the mother company or of an affiliate or subsidiary. In the United States where interlocking directorates are forbidden among competitors, consumer activists blame some instances of corporate malfeasance on companies with common board memberships. In the Philippines, the central bank allows interlocking directorates so long as a bank certifies that there is no conflict of interest. Reyes said the problem however is that what constitutes a conflict of interest is debatable. "If a director of a bank is also a director of an affiliate is there really no conflict of interest? We have to find some actual situations," he said. The BSP official admitted that banks resort to interlocking directorates in order to scrimp on expenses, as bank directors are usually paid generous representation and other allowances. Earlier, monetary authorities ordered banks to drop from their rolls key officials who occupy similar posts in other financial institutions. In a move meant to prevent conflict of interest situations, the Monetary Board decided to prohibit a bank president, chief executive officer, chief financial officer, or chief operating officer from occupying any of the same four top posts in another financial institution in a concurrent capacity. The Board gave banks a year within which to comply with the new rule. |
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