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BSP reviews ‘fit and proper’ rules |
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The Manila Bulletin 04/11/2005
The Bangko Sentral ng Pilipinas will review and possibly tighten its "fit and proper" rules to improve the quality of bank management and to weed out unqualified directors or officers in a financial institution. BSP Deputy Governor Alberto V. Reyes in a briefing on banking supervision over the weekend said that there is an urgent need to re-assess rules on qualifying bank directors or officers to better protect depositors. "Our rules (fit and proper) are not very clear and there are loopholes in the law (General Banking Law)," said Reyes. The BSP is currently reviewing central bank practices in other countries on how to disqualify unfit directors or officers of a bank. "If we closely review and screen bank officials, we will disqualify many," the BSP senior official added. At the moment the BSP’s fit and proper rules are patterned after that of the Bank of England. But unlike in Great Britain, where the central bank is generally left alone, the BSP is prone to legal scrutiny and regulators do not have enough legal protection. One of the recommendations the BSP is looking at is a requirement that a bank president, executive vice presidents and directors should have banking work experience before being assigned his/her post. Infact during the term of Governor Gabriel Singson, there was already a proposal to require banks to hire directors with banking experience only but the suggestion was thumbed down due to legal repurcussions. Based on Section 16 of the General Banking Law, to maintain the quality of bank management and afford better protection to depositors and the public in general the Monetary Board will "prescribe, pass upon and review the qualifications and disqualifications of individuals elected or appointed bank directors or officers and disqualify those found unfit." "After due notice to the board of directors of the bank, the Monetary Board may disqualify, suspend or remove any bank director or officer who commits or omits an act which render him unfit for the position," the BSP law said. The BSP added that in determining whether an individual is fit and proper to hold the position of a director or officer of a bank, regard "will be given to his integrity, experience, education, training, and competence." (LCC) |
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