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BSP tightens ‘fit and proper’ rule for bank directors, officers |
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By Des Ferriols
The Philippine Star 01/30/2006 The Bangko Sentral ng Pilipinas (BSP) has approved a further tightening of its "fit and proper" rule for directors and officials of banks and other financial institutions. The Monetary Board last week approved the new set of guidelines that expanded the grounds for disqualification of bank directors and officers by adding more crimes and offenses not previously included in the existing guidelines. According to BSP Governor Amando M. Tetangco Jr., the "fit and proper" rules were intended to ensure that officials in charge of banks and other financial institutions possessed the required integrity and competence for prudent and sound management. "Thus, this will afford better protection to depositors and the public," Tetangco said. "The basic principle is that banking is a public trust." Under the revised guidelines, the BSP said it could disqualify persons with findings of conviction, culpability or administrative liability as may be determined by the court, the Monetary Board, regulatory body or other government agencies. The BSP said its ruling would depend on whether the judgment on such cases was final and executory, still pending appeal or if the sanction imposed was merely suspension or payment of monetary penalty. In the past, the MB only disqualified persons that have been convicted by final judgment for offenses involving dishonesty or bridge of trust such as embezzlement, malversation and extortion. Under the new guidelines, however, the MB said it would also disqualify those convicted with final judgment for bribery, falsification as well as violations of the Anti-Graft and Corrupt Practices Act. "On the other hand, persons who refuse to disclose any material information to the BSP when required may be temporarily disqualified," the new rules said. Bank directors and officers who have been temporarily disqualified for certain irregularities or on the basis of derogatory information could still be given a chance to clear themselves. However, these persons, the BSP said, would have to show good and justifiable reasons. If not, they would have to wait for a period of five years from the time the basis of the derogatory record was initiated. "Moreover, directors and officers are required to submit a verified statement that they have all the qualifications and none of the disqualification," the BSP said. The BSP started tightening its fit and proper rules in 2002 and two years later began prohibiting top officials from holding concurrent positions in different bank entities. The positions affected would be limited to the top four positions of bank president, chief executive officer, chief operations officer and chief finance officer. The BSP has been tying up loose-ends in the directorship and officership of banks to prevent conflicts of interest that could open loopholes for unsafe and unsound bank practices. The BSP has already eased its rules on independent directorship of banks, allowing independent directors to hold position in two or more banks provided they meet the qualifications. The Monetary Board of the BSP approved the easing of its rules and regulations on independent directors, saying that there was a dearth of individuals that could qualify as independent directors of various banks. Under the BSP rules, banks are required to appoint at least two independent members of its board of directors to safeguard the interests of bank depositors who are not represented in the policy-making body. |
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