BSP to thrift banks: Adhere to 'good governance' practices

The Bangko Sentral ng Pilipinas (BSP) on Wednesday urged thrift banks to adhere to “good governance" practices as Banco Filipino Savings and Mortgage Bank has been plagued by controversies regarding its closure. In a speech delivered at the Chamber of Thrift Banks 2011 Convention, BSP Gov. Amando Tetangco Jr. said thrift banks should be guided by good governance practices “to operate in a safe and sound manner as part of [their] total customer care commitment." “Let us not forget that banking is imbued with public trust," he added. Tetangco said thrift banks should streamline their processes to become more efficient, invest more to strengthen the core competencies of bankers, and strengthen their guidelines that protect the public from potential “abuse and malfeasance." “While our banking sector remains sound and stable, we should not be complacent. The market landscape continues to shift and change… and so should we. Good governance will be the key to long-term sustainable growth," he said. Last March 17, the BSP ordered the closure of Banco Filipino and placed it under the receivership of the Philippine Deposit Insurance Corp. Bank examiners found out that the thrift bank posted losses averaging P2 billion a year from 2007 to 2009, but mounted to about a monthly loss of P277 million in the first half of 2010. Educate Filipinos with basic financial information Thrift banks should not only adhere to good governance practices but also “intensify [their] efforts to educate and empower Filipinos with basic financial information," Tetangco said. This way, Filipinos will make prudent decisions in saving and growing their money, he added. “Through responsible and responsive banking, thrift banks can make development truly inclusive," Tetangco also said. Tetangco pointed out that the major players in the thrift banking industry would continue to play a major role in the country’s economic expansion as it accounts for 10 percent of the banking sector’s deposits, loans, and capital. “I believe the Philippine thrift banking industry will continue to contribute in keeping our economy on the growth track. I say this on the basis of its track record," he said. From December 2005 and December 2010, consolidated deposits in thrift banks surged 88 percent to P491 billion while net loans jumped 87 percent to P345 billion, BSP documents showed. During the five-year period, total assets of the thrift banking industry expanded by 75 percent to record P606 billion. Its capital also increased 47 percent to an all-time high of P66.8 billion in December 2010. — JE, GMA News