Eyeing a stronger financial sector
ANGARA TO SPONSOR THE AMENDMENTS TO THE NEW CENTRAL BANK

Senator Edgardo J. Angara renews his call for a stronger Banko Sentral ng Pilipinas (BSP) today as he delivers his sponsorship speech suggesting BSP should adapt various international best practices in banking supervision to better protect the interest of the depositors and to avoid losses of the public funds and ensure that the BSP would be ready to face the challenges ahead.

"In the 16 years since the BSP Charter was passed, financial markets have evolved rapidly as we saw the emergence of new products, each time more complicated and more globalized. Within that period, the financial and banking environments have changed dramatically with conglomeration, liberalization and globalization as the trend," said Angara who chairs the Senate Committee on Finance.

Sen. Angara proposes to expand the BSP mandate, strengthen the BSP supervisory powers, and build a stronger and more responsive BSP.

In detail, First, on the expansion of its mandate:

• The BSP shall be tasked to maintain financial stability and to oversee the payment and settlement systems.

• The BSP's power over certain non-bank financial institutions which are not under the supervision of other government agencies, such as credit card companies, should be defined. This will ensure that emerging financial players will not be left unregulated due to mere absence of a legal framework.

Second, the BSP shall be made more effective in its supervision of banks. The proposed amendments under this category are as follows:

• Transfer of bank ownership shall now require BSP approval and incoming owners shall be pre-screened by the BSP.

• Crucial orders issued by the BSP shall become indefeasible by TROs issued by lower courts.

• The BSP will be given sufficient power to expeditiously rehabilitate, reorganize or restructure distressed banks. It shall have the authority to direct merger, consolidation or acceptance of third party investments in case of banks who fail to address capitalization problems.

• Criminal and administrative sanctions for violations of the banking laws and regulations shall be increased.

Third, Sen. Angara encourages BSP to become stronger and more responsive to the changing environment.

• The BSP personnel's morale will be enhanced by insulating them from harassment suits. The "extraordinary diligence" requirement shall be lifted placing the BSP personnel on the same boat with other public employees who are made liable for bad faith, malice, gross negligence or gross misconduct.

• The BSP shall be authorized to grant separation benefits to its employees who may be adversely affected by its reorganizations.

"Through the amendments the Central Bank can use transparency mechanisms that can give it more teeth to supervise formal and informal remittance firms," laments Angara.

"This bill is aimed at providing better protection to the public, particularly the depositors and creditors of BSP's supervised institutions," added Angara.