Debate heats up over proposed BSP powers
(First of a series)
Financial community leaders have expressed alarm over a proposed law that would treble the powers of the Bangko Sentral ng Pilipinas and give regulators investigative powers over all other entities in a bank’s web of stakeholders, including corporations previously outside the ambit of the central bank.
House Bill 3112 also proposes to exempt central bank officials from the Deposit Secrecy Law, allowing them to pry into individual bank accounts, despite current legal mechanisms and safeguards available through the Anti-Money Laundering Council.
In an interview with the Inquirer, former Philippine Deposit Insurance Corp. chief and banking consultant Ernest Leung said it was unclear to him why the BSP would need to access to dealings between banks and the parties that owned them.
“One main central bank supervisory role is to protect the money of the depositing public,” he said, explaining that regulators might be overreaching in their bid to scrutinize transactions between banks and their owners, on top of related lending restrictions already in place under existing laws.
“I can understand the BSP’s desire to regulate entities (related to banks) laterally and downward, but not upward,” said Leung who also served as the country’s secretary of finance in the 1990s.“If, for example, (business tycoon Manuel) Pangilinan owns a bank, what is the concern of bank regulators with him?”
These concerns were echoed by the Chamber of Thrift Banks which also raised concerns about the proposal in the bill to exempt central bank examiners from the Deposit Secrecy Law.
CTB executive director Suzanne Felix said in an interview that her group was also concerned about the proposal in the bill that would allow the BSP to look into other companies in a corporate group to which a bank belongs.
“We also have some concerns about the deposit secrecy aspect,” she said. “Under this proposal, the BSP can inquire into deposits for examination purposes. We cited that as a concern because it’s an exception to the deposit secrecy law.”
“Since it’s an exception, what we want is some kind of IRR. The ground rules have to be established. Amendments to the secrecy law may be required.”
She pointed out that “targeted and directed inquiries” into bank accounts were not allowed under the present legal framework—a safeguard put into place by lawmakers to protect depositors against politically-motivated inquiries, as well as to protect their financial details from exploitation by criminal elements.
Indeed, the BSP has long contended that it had inadequate tools to regulate the financial markets and protect the Philippine economy from crises.
To remedy this, the BSP is asking Congress to grant its officials and employees the long-coveted “immunity from suit” status for actions done in the performance of their duties. The bill also seeks to remove the requirement for these officials to “exercise extraordinary diligence” in their work.
The bill gives the BSP the authority to require any person or entity to surrender financial data and information through a subpoena, punishable by contempt if one fails to comply.
It would also empower the BSP to obtain information on transactions between a bank and its parent company, subsidiary or affiliate—a power previously reserved for the Securities and Exchange Commission.
In addition to exemption from the deposit secrecy laws, regulators will also have the power to approve or disapprove transfers of ownership of at least 10 percent of a bank’s shares, whether done in one tranche or several tranches.
“We understand where the BSP is coming from,” said Felix, even as she noted that CTB’s worries were shared by larger banks under the Bankers Association of the Philippines. “But we’re not the only ones concerned. Other people are, too.”
(To be continued)
