BSP tightens disqualification rules for bank directors, officers

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has strengthened further the quality of governance in the financial services industry by expanding the grounds for disqualification of directors and officers of banks and financial institutions.

The regulator said the Monetary Board has approved the revised rules on disqualification of directors and officers of banks and quasi-banks.

“The new rules expanded the grounds for disqualification aimed at further strengthening the quality of governance in the financial services industry,” the central bank said.

Under the guidelines, persons who caused undue injury, material loss or damage to the bank or those who exposed the bank to higher risk or danger will be disqualified from becoming a director or officer in other BSP-supervised financial institutions.

Likewise, the central bank decided to include dismissal from any government institution, conviction for offenses under the amended charter of the Philippine Deposit Insurance Corp. (PDIC), and delinquency or unwillingness to settle obligations as among the grounds for disqualification.

“In order to promote transparency and ensure that persons concerned are accorded with due process, the revised policy sets out the disqualification procedures that will be followed,” the BSP said.

According to the central bank, the procedures provide a window for the person concerned to explain his side and present evidence to support his position.

“Once a person is disqualified, his name will be included in a watchlist database and he can no longer be connected in any BSP-supervised financial institutions unless his name is removed from the said list,” it said

The BSP said the new issuance complements the fit and proper rules for directors/trustees and officers of BSP-supervised financial institutions covered by Circulars 969 and 970 issued in August 2017.

“The said guidelines contain enhanced corporate governance standards for the board of directors and officers, and set forth their key roles and responsibilities consistent with the principle that the tone of good governance should come from the top,” it said.

Philippine conglomerates SM Investments, GT Capital Holdings and Ayala Corp. continue to dominate the local banking industry in terms of assets and deposits.

BDO Unibank Inc., owned by the Sy family, dominated the industry as its assets amounted to P2.97 trillion as of end-September, followed by Metropolitan Bank & Trust Co. of the Ty family with P1.99 trillion, state-run Land Bank of the Philippines ranked fourth with P1.96 trillion and Ayala-led Bank of the Philippine Islands (BPI) with P1.84 trillion.