BSP tightens rules on bank ownership

The Bangko Sentral ng Pilipinas (BSP) has strengthened its rules that enable it to exercise the power of review over the trading of voting shares in banks. The BSP said the new and stricter procedures are meant to “ensure that only persons of unquestionable integrity, probity, sound judgment and financial capability, among others, can become significant stockholders who may exercise material influence on the operations of banks." The procedures arose from the BSP’s experiences with the failed Legacy Group of banks and pre-need firms. From now on, firms and individuals will follow strict procedures on prior BSP approval of banks’ voting shares. The rules were also expanded to cover issued and unissued voting shares, including subscription to new shares or conversion of preferred shares or debt instruments into voting shares. The BSP gave a 60-day deadline, starting from transaction date, for the parties to submit the request for prior approval from the BSP Monetary Board. That request must come with the supporting documents about the persons and firms that acquire the voting shares. Corporate secretaries of banks are required to put on hold the registration of the traded voting shares until the BSP gives its approval. — ELR/VS, GMA News