BSP Issues Revised Governance Standards for Philippine Banks

The Bangko Sentral ng Pilipinas (BSP) has issued revised guidelines on corporate governance and compliance framework, which aim to strengthen the regulations governing banks and non-bank financial institutions in the Philippines.

Key Highlights

• The Monetary Board has approved Resolution 1484, amending the relevant provisions of the Manual of Regulations for Banks (MORB) and the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI).
• Non-Filipino citizens are now allowed to become members of the board of directors, subject to certain conditions.
• Stricter requirements have been introduced for director appointments, including a fit-and-proper test based on criteria such as integrity, education, and experience.

New Requirements

• Directors must be fit and proper based on criteria such as:
  • Integrity
  • Physical and mental fitness
  • Relevant education and experience
  • Sufficient time to carry out responsibilities
• Exceptions are made for former chief justices and associate justices of the Supreme Court, as well as distinguished Filipino and foreign nationals with recognized stature in the banking community.
• Independent directors are subject to a maximum cumulative term of nine years, after which they are barred from serving in the same institution.

Prohibitions

• Members of the board of directors are prohibited from being appointed as corporate secretary or chief compliance officer.
• The positions of chairperson and chief executive officer should not be held by one person.
• Officers of banks and financial institutions must be fit and proper for their positions.

Compliance Deadline

• Banks have until end-June next year to address issues noted in the assessment of interlocking positions in the election of directors and appointment of officers.

The new guidelines are aimed at strengthening corporate governance and compliance framework in the Philippine banking industry.