Bangko Sentral pushes charter changes

Tax exemption, immunity from suits, capital hike



The central bank has called for changes in its charter—ranging from exemptions from all forms of taxes to a fourfold increase in its capitalization—to improve its ability to ensure the stability of the Philippine economy and that of the financial system.

The Bangko Sentral ng Pilipinas (BSP) has outlined a fresh set of proposed amendments to its 30-year-old charter that was recently submitted to both houses of Congress.

Apart from provisions that aim to improve the BSP’s own financial situation, the BSP also asked for the restoration of some powers that the institution lost when it was reorganized to replace the old Central Bank of the Philippines in 1993.

These include the immunity from suits for all BSP personnel acting in good faith and exemption from restrictions under deposit secrecy laws.

“The BSP’s version of the amendments has been adopted by the [Aquino] administration as a priority bill,” BSP Deputy Governor Vicente Aquino told reporters on Saturday.

Aquino said Sen. Serge Osmeña, chair of the Senate committee on banks, has agreed to be the bill’s principal sponsor and author. Similarly, Rep. Sonny Collantes, chair of the committee on banks and financial intermediaries, has agreed to do the same at the House of Representatives.

Copies of the new set of amendments to the BSP charter, which was approved by the BSP’s Monetary Board earlier this month, was also sent to the Presidential Legislative Liason’s Office (PLLO) and the Legislative-Executive Development Advisory Council (Ledac), Aquino said.

Three other congressmen, namely Sergio Apostol, Karlo Nograles and Marcelino Teodoro, have also agreed to consolidate the separate bills on BSP charter amendments with the BSP’ version.

One of the key provisions—out of 19 amendments in 30 sections sought by the BSP—includes the proposal to increase the BSP’s capitalization by P150 billion, payable in three years if the bill is passed into law. This will be on top of the BSP’s existing maximum allowed capitalization of P50 billion, of which P40 billion is paid up.

“The increase will enhance the BSP’s administrative and fiscal autonomy. During the conduct of its monetary policy, the BSP confronts financial risks and costs that result from policy decisions of the Monetary Board,” Aquino said.

The fear, he said, was that the BSP would share the fate of the old central bank: Bankruptcy. The BSP incurred a net loss of P95.38 billion in 2012, nearly triple the P33.69 billion recorded the previous year. In 2010, the central bank registered a net loss of P59.04 billion.

This came as the BSP spent more money to buy dollars from the market to combat spikes in the peso’s value, among other reasons.

Aquino said exemptions from taxes would also help the BSP save money that it needed to regulate banks and keep prices stable.

In the area of bank regulations, immunity from lawsuits for personnel would allow the BSP to perform its function as regulator of local banks and other financial institutions without fear of being harassed.

“We would not be distracted by harassment suits and the like so they can focus on the discharge of the BSP’s mandate,” Aquino said.

“The absence of this [immunity] have emboldened [the accused banks] to hit back at those BSP officials who were just performing their duties in good faith,” he added.

Meanwhile, exemptions from deposit secrecy laws would also allow the BSP to check if banks are compliant with anti-money laundering laws.

While it leaves investigations on individuals suspected of money laundering to the Anti-Money Laundering Council (AMLC), the BSP penalizes banks that do not comply with reporting rules.

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  • Cool_Sniper

    Congress should scrutinize and require BSP to explain the allocation of the increase of capitalization to P150B. There should be no allocation to increase in salaries of BSP officials and employees, who are, for example, already receive P80,000 grocery allowance. The immunity from suit should be excluded. Such immunity, if approved, will open the floodgates of abuse by BSP officials. In the past for instance, Banco Filipino was abused by BSP officials.

  • http://localhost/ Abu Ken

    Hindi yata dapat amendment ang gawin
    Palitan yung mga kurakot na nakaupo sa BSP
    Nanghihingi ng dagdag na kurakot

    • Philippines2050

      kung iniisip mo na kurakot nasa loob ng BSP panu mo nasiguro na hindi kurakot mga management ng bangko mo? Alam mo ba kung nasaan dinadala ng mga yan deposits ng mga consumers? Ilang bangko na pinasara ng BSP at ilang depositors na rin ninakawan. Wala ka naman talaga mapagtitiwalaan 100% at wala naman dapat ilihim kung walang ginagawang katiwalian at sana lang hindi ka isa sa mga magoyo nila. Enron. Lehman Brothers. Federal Reserve. Sa bandang huli BSP rin naman sisihin kapag hindi nila ginawa trabaho nila. Private banking system when left in its own volition leads to financial meltdown. History will just keep on repeating itself

      • http://localhost/ Abu Ken

        Ang bangko po takot sa BSP gawa ng AMLA
        Pero yung mga tao sa BSP mo san sila takot?

      • eight_log

        BSP is supposed to be the regulators of banks ….ang nangyayari ay ang mga tauhan ng BSP ang nareregulate ng mga banko … kaya hindi napapatupad ang mga regulations … nagbubulagbulagan lang sila kaya tuloy namimissmanage ang maraming banko at nagsasara!!!!

  • disqus_vU1klyrdjb

    Perhaps if the BSP stopped using fiat currency and eliminated their fractional reserve system, this country might have a more valuable currency. However, they still depend on the lender of last resort (the taxpayer) to bail out the country when needed… Or in the case of the Philippines, the bank still needs the taxpayer after the politicians steal all the tax money.

    • Philippines2050

      mag barter ka mag-isa mo.

      • disqus_vU1klyrdjb

        Or peg their currency to something tangible and finite… As it is now it’s value is a fancy piece of paper backed by the confidence of the people. It is barter in its own way as a commonly accepted portable currency perceived to have value.

  • eight_log

    “… immunity from suits for all BSP personnel acting in good faith …” Of course …
    The BSP personnel and management need protection for the corrupt practices that they perpetuate, the erroneous monetary policies that they make, their failure to regulate banks etc etc in the name of “good faith” …. hahahaha!!!!

    “…exemption from restrictions under deposit secrecy laws….” This the only thing I like …. now if one has friend inside BSP one can pry open anybody’s bank deposits … is that it?

    • anne_203

      “…exemption from restrictions under deposit secrecy laws….” This the only thing I like …. now if one has friend inside BSP one can pry open anybody’s bank deposits … is that it? — no, it just means the BSP itself is having a difficult time around this law. My understanding of this news article means that even they cannot compel banks to reveal the full details of their depositors accounts if there is any suspicious activity noted. They would need a court order to be able to do their jobs of tracing suspicious activity. In the case of Napoles, this was only granted recently. But 10 years have already passed since the first crime of plunder has committed. The AMLA unit of the BSP needs more teeth but it cannot have this if they are also under threat of lawsuits from persons of interest.

      • eight_log

        Ahhh .. so that is the problem! AMLA needs more teeth or perhaps a clearer law, a law not full of holes like a Swiss cheese so that your top-of-the-crop accountants and lawyers can interpret it in only one way not in any other way anyone would like it interpreted.

        Make good laws to have people working with the correct interpretation of it rather than having them working in good faith. “GOOD FAITH” is the mother of all corruption and excuse for ignorance!!!

      • anne_203

        This bank secrecy law was created by Ferdinand Marcos based on what I remember from the Corona trial.

  • raffido

    “The absence of this [immunity] have emboldened [the accused banks] to
    hit back at those BSP officials who were just performing their duties in
    good faith,”

    Well, no one is above the law. BSP should not be immune to lawsuits. Also, magkakaroon sila ng lakas mangutong sa mga small time banks. Bakit nga naman, di naman sila pued kasuhan. What is this? Moving backwards?

    • anne_203

      No, this is not moving backwards. There is the anti-money laundering team who needs this kind of protection as they go after “big fish” who have the means to sue. But just to inform inquirer readers, BSP also employs bank examiners who are usually very qualified and bright young CPAs who audit banks on a regular basis to ensure that they were meeting BSP policies especially on risk. If these bank examiners have some negative findings about a certain bank, BSP can impose penalties or make recommendations on how to improve their financial standing. But some banks do not follow these recommendations and they can fail. And out of ego perhaps of some owners, it will be easy for them to sue rank and file government employees of BSP who are just doing their jobs. And given the slowness of government justice in this country? They can take their sweet time in suing because of their own personal resources.

  • joboni96

    abolish the bangko sentral

    kampon ng dayuhang kapitalista at
    naglulustay ng pera ng pilipino

    • boboposter

      Abolish mo mukha mo!

      • joboni96

        mga boobo muna

  • Grey Eminence

    Yeah, lets give all Aquinos immunity from prosecution…

    Of course the entie BSP is entitled to immunity and give them more cash to play as well. No need to tell anybody what you do with the money.

    Naah, I think better do Special Audit first and limit the immunity for the suits from the other banks, not from public…

    • anne_203

      The BSP cannot afford to be political because it needs to provide stability to the overall economy. It means immunity from lawsuits so that they can get tough on people to enforce some kind of market discipline because as 2008 showed the world, large banks can fail (Lehman Brothers, Bear Stearns). Here, we had our own Import Export Bank.

      Also the BSP lost money in FOREX because it was preventing the peso from dramatic increases that would hurt our exporters and also OFW families. It means it had to buy more dollars at a loss. The impact of a higher peso is more wide reaching than you might think. For instance, it means less food on the table for say a maid working in Singapore sending home, what, $100 – $150 dollars every month (?) ….not sure of the rates. That maybe someone’s shopping money but for many Filipino families, that is what they need to survive.

      • disqus_vU1klyrdjb

        The BSP can afford to be political when it prints its money out of thin air. It is a bad copy of the USA’s Federal Reserve system.

      • anne_203

        We have to live in the real world unfortunately and play by global rules. Some of the alternatives to printed money are gold and barter. I think I’ll choose legal tender on any day unless a zombie/contagion apocalypse happens.

      • disqus_vU1klyrdjb

        We can still live in the real world and not have to play by the rules of central bankers who choose to use fractional reserve banking. If the PHP was pegged to something valuable like the gold holdings of the Philippines, and not fractional reserve based, it might work.

        However, the current legal tender’s value is pretty manipulated by external circumstances.

      • anne_203

        Good luck with that.

      • disqus_vU1klyrdjb

        I agree, most people don’t understand how money works, so if someone tells them central banks using fractional reserve currency is a complete scam — they still wouldn’t understand. If it were explained carefully how banks steal from you in the hidden tax called inflation (or through interest), there may be very angry people in the streets

      • eight_log

        Since when did BSP provide stability to the overall economy??? What I am seeing is that the economy is much more stable when the BSP is not doing anything!!!

        By the way, BSP must be more creative in finding ways to stabilize the peso … hindi lang yung puro palugi nalang sa kakabbili ng $$$$. Doing that mas lalong binabaon ng BSP ang bansa sa utang. Yung ipinalugi nila sa FOREX exchange kung ipinatayo nila ng factories or gamit pang agrticultura masnaisolate nila ang Pinsa sa external factors..

        Ang habol lang yata ninyo ay yung mabigyan ng award si Tititanco mapara makatulong sa economiya ng mga mayayamang bansa kapalit sa pagbagsak namana ng ecomoniya natin!!!!

      • anne_203

        The BSP has an SDA facility where banks can deposit large sums of their customers deposits (like Time Deposits) to remove excess liquidity in the market. By doing this, the BSP is trying to limit inflation which affects all of us–including the poor who have no deposits.
        The BSP also plays the role of checking on the financial stability of commercial banks and rural banks (example: are they overleveraged? what is the status of their non-performing loans?) because at the end of the day, every depositor is only guaranteed upto 250,000 of PDIC insurance. A bank failure has serious repercussions. Good that export-import bank is not as large so there was no large scale panic but imagine that happening to other banks.
        It is not the BSP’s role to encourage business investments in factories to employ Filipinos. It is also not the BSP’s role to improve tax collection and find loopholes in our system where there is wastage of our taxes either going to personal pockets or bridges to nowhere. That is the job of the executive government, who in turn are elected into power either by our own willful votes, our ignorance, or for those who have nothing–are elected out of hunger
        Last I recall, I think we are still paying down debt for the Bataan Nuclear Power Plant.

      • eight_log

        “The BSP also plays the role of checking on the financial stability of commercial banks and rural banks (example: are they overleveraged? what is the status of their non-performing loans?”

        Sana kung ginagawa ng BSP yang trabaho nila na bantayan ang mga banko at hindi na lang puro in good faith ay hindi basta basta nagsasara ang maraming banko dahil na lugi!!!

        SDA is just another instrument by the BSP to cater for the rich to the detriment of the poor. That it is to control inflation is pure baloney! Inflation is a resultant of the desire of companies to show growth and more often than not they increase the price of goods and services bringing about an increase in their stock price to make the investors happy!!!! These all bring about the inclusive growth of the cost of living … they call INFLATION!!!!

        As to paying the Bataan Nuclear Power Plant … blame that to the nuclear experts who stopped the completion and therefore the operation of the plant. I just hope Meralco is not adding that to our electricity bills!!!!

      • disqus_vU1klyrdjb

        The value of the peso is manipulated. The country has to be concerned with corporate flight should the peso become to valuable. Have you ever seen the PHP drop below 40php to 1 USD for very long? No. And it will not.

        The Federal Reserve’s job in the USA is to protect the value of the dollar. It has lost around 99% value (and being taken off the gold/silver standard) since the Feds inception in 1913. The BSP is a bad copy of the Fed, but the people don’t really understand how it works.

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