Businesses back BSP on Banco Filipino closure

The country's three biggest business groups support the Bangko Sentral ng Pilipinas (BSP) decision to close Banco Filipino Savings and Mortgage Bank last month for "mismanagement." The Financial Executives Institute of the Philippines (FINEX), the Makati Business Club (MBC), and the Management Association of the Philippines (MAP) issued a joint statement of support over the weekend. “We, the FINEX, MBC, and MAP express full support to the BSP for its supervisory actions on Banco Filipino," the statement read. The groups explained that BSP ordered the closure of Banco Filipino on grounds sanctioned by law and is consistent with its mandate as regulator of banks. “The presence of regulator is meant to prevent loss of confidence in the banking system that can put the proper functioning of the economy at risk," the groups said. They added that the exit mechanism for banks is one of the tools provided by law to the banking regulator to weed out of the industry problem banks challenged by poor governance and financials. “As part of its regulatory and supervisory functions, BSP has to implement and enforce such exit mechanism for banks to foster the smooth and orderly functioning of the banking system redounding to the benefit of the economy," they said. The groups warned that failure to enforce this exit mechanism would expose the banking system to greater risk of loss to bank creditors and loss of confidence in the banking system in general. FINEX, MBC, and MAP pointed out that the central bank has long demonstrated its professionalism and commitment in the delivery of the services pursuant to its role in the maintenance of a stable financial system. “The banking regulator should be allowed to do its work and provided clear legal protection from harassment. If the regulator is left to fend for itself or is prevented from promptly dispensing its responsibilities, it results is a chilling effect that exposes wide open the financial system and the tax-paying public," they said. Backgrounder on BSP-Banco Filipino row The BSP’s Monetary Board ordered the closure of Banco Filipino and placed it under the receivership of state-run Philippine Deposit Insurance Corp. (PDIC) last March 17 after failing to open its branches for three straight days. This was the second time Banco Filipino was ordered closed by the regulator after it was padlocked in 1985 by the old central bank only to reopen in 1994. Banco Filipino has already asked the Court of Appeal (CA) to reverse the recent closure order. Late last week, BSP and Banco Filipino traded criminal charges against each other before the Department of Justice (DOJ) over the closure of the beleaguered thrift bank. The BSP filed several criminal charges for falsification, grant of illegal loans, and major violations of banking laws, rules and regulations against Banco Filipino chairman and president Teodoro Arcenas Jr., vice chairman Albert Aguirre, executive vice chairman Maxy Abad, executive vice president Catherine Aguirre-Hernadez, and senior vice president Roberta Afable. Also named in the charge sheet were Banco Filipino directors Perfecto Yasay Jr., Orlando Samson, Adelaida Adduru-Bowman, Francisco Rivera and Ramon Montano. On the other hand, Banco Filipino also filed a complaint against the BSP officials led by Gov. Amando Tetangco Jr. for violating Republic Act 3019 or the Anti-Graft and Corrupt Practices Act. Aside from Tetangco, others named respondents of the 29-page complaint-affidavit were BSP deputy governors Nestor Espenilla Jr. and Juan de Zuniga Jr., and Monetary Board members Juanita Amatong, Alfredo Antonio, Ignacio Bunye, and Peter Favila. The complainants criticized the BSP for its alleged lack of support to reorganize and rehabilitate the beleaguered bank. They alleged that the Monetary Board — BSP's policy-making body — pressured Banco Filipino into paying its emergency loans. – MRT/VS, GMA News