English
Philippines: BSP updates governance standards for banks, non-banks
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has issued the revised governance standards for banks and non-banks, particularly on the election of directors and independent directors.
BSP Governor Benjamin Diokno said the Monetary Board has issued Resolution 1484 approving the amendments to the relevant provisions of the Manual of Regulations for Banks (MORB) and the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) on the guidelines on corporate governance and compliance framework.
Under the new guidelines, the regulator allows non-Filipino citizens to become members of the board of directors to the extent of the foreign participation in the equity of the BSP-supervised financial institution.
Diokno stated, under Circular 1129, that a director must be fit and proper for the position of a director based on integrity/probity; physical/mental fitness; relevant education/financial literacy/training; possession of competencies relevant to the job, such as knowledge and experience, skills, diligence and independence of mind; sufficiency of time to fully carry out responsibilities; and concurrent positions in the same bank and interlocking positions in other entities that may pose conflict of interest.
On the other hand, former chief justices and associate justices of the Supreme Court, distinguished Filipino and foreign nationals who served as senior officials in central banks and financial regulatory agencies, as well as Filipinos with recognized stature, influence and reputation in the banking community, including directors of publicly listed companies whose business practices stand to good governance, are exempted from the said requirements.
The revised guidelines state that an independent director of a BSP-supervised financial institution can only serve a maximum cumulative term of nine years, and eight years for cooperative banks, after which they are perpetually barred from serving as independent director in the same institution, but may continue to serve as regular director.
The BSP also said members of the board of directors should not be appointed as corporate secretary or chief compliance officer.
Under the new guidelines, the regulator stated that the positions of chairperson and chief executive officer should not be held by one person. A lead independent director shall be appointed in exceptional cases already approved by the Monetary Board.
It said the chairperson must not have served as CEO of the bank within the past three years, except in cases wherein former CEOs shall be allowed to immediately assume the position of the board if it is consistent with the provisions of its succession plan or if there are no majority supervisory concerns in the quality of governance, risk management systems as well as internal controls and compliance system.
The BSP also reiterated that officers of banks and financial institutions should be fit and proper for the position.
For interlocking positions, the BSP said the board of directors of banks should approve the interlocking position held by directors and officers. Banks were given until end- June next year to address issues noted in the assessment of interlocking positions in the election of directors and appointment of officers.
Source: https://www.philstar.com/business/2021/11/17/2141769/bsp-updates-governance-standards-banks-non-banks