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BSP probes trust accounts of banks |
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(16 December 2004, Thursday - Manila Standard)
By Eileen A. Mencias The Bangko Sentral ng Pilipinas is probing the trust accounts of banks, specifically those related to preneed firms. BSP deputy governor Alberto Reyes said the central bank wants to investigate if these are invested according to the guidelines of the Securities and Exchange Commission. Complaints on preneed companies such as the College Assurance Plan (CAP) had been mounting, especially when some of its checks issued to pay for the tuition of its education plan holders bounced last November. The SEC has specific guidelines on how the money of preneed firms must be invested to ensure that it is able to pay its obligations when they mature. “The primary concern is liquidity,” Reyes said. Preneed firms need a certain amount of cash at a given time and they must have a schedule of the payments to determine how much cash they will disburse. An investor is planning to infuse additional capital into CAP but the capital will be in the form of real estate, which will be useless to educational plan holders who need to pay the schools with cash. “If it is land, how can they pay their immediate requirements?” Reyes said. The SEC has specific guidelines on the investments of preneed firms, including limits on how much can be invested in real estate and other assets that are not easily liquidated. “There is only one set of guidelines (for preneed firms) and that is set by the SEC,” Reyes said. The SEC, however, does not have control or authority to look into the books of banks, but the BSP does. The two agencies have been coordinating to improve the scrutiny on banks and preneed companies. The BSP will submit its findings to the SEC for action. However, if some banks are found to be violating the rules, they will face sanctions from both the BSP and the SEC, Reyes said. |
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