Succession issue in BSP

If President Duterte can have his way, he wants Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. to serve for another six years when his second term expires in July 2017.

As the country’s chief monetary regulator, Tetangco has kept the domestic inflation rate at manageable levels and stabilized the banking system despite various global financial problems.

Under the law, the BSP governor can be reappointed only once. But should Tetangco agree to stay on, the President’s allies in Congress can lift that restriction by simply amending the law.

The President’s desire to keep Tetangco in his post is understandable. Considering the uncertainty that has spooked the world’s economies since Donald Trump’s election as next US president and the changing dynamics in the Asian region, the administration needs Tetangco’s expertise to help maintain the stability of the national economy.

There is no question about Tetangco’s competence as “overlord” of the domestic banking industry. The awards for excellence that he has received from his peers in the international banking community attest to that.

Indeed, his appointment for a third term makes good business and political sense, especially for an administration whose leader has admitted his inexperience in fiscal or economic matters.

But doing that would project an image of indispensability on Tetangco, which is anathema or a big no-no in business and government. The mantra “no man is indispensable” remains valid and subsisting.

The reappointment would give the impression that none of the three BSP deputy governors—Diwa Guinigundo, Vicente Aquino and Nestor Espenilla Jr.—who have served with distinction under him and whom he has mentored for decades can step up to the plate come July 2017.

These officials cut their professional teeth at BSP and were with Tetangco when he ably steered the monetary wheels that helped the country meet the challenges of several financial crises.

In other words, they know the country’s monetary picture and can hit the ground running from Day One if appointed governor without having to undergo extensive briefing.

The succession issue brings to mind the Manual of Corporate Governance that BSP requires (under pain of severe sanctions) all banking and financial institutions to adopt and implement.

An essential element of these rules is “contingency planning” or putting in place the proper measures that will ensure continuity of service in case of organizational changes (both expected and unexpected), natural calamities and other contingencies.

If the regulatees (the banks) are obliged to provide for a mechanism for the smooth transfer of responsibilities, it is reasonable to expect the regulator to have a similar system in place within its organization. What is sauce for the goose should be sauce for the gander.

By a long shot, in case none of the BSP deputy governors possess the political capital (or backing) needed to replace Tetangco, there are hundreds of well trained and experienced Filipino bank executives, here and abroad, who can be considered for appointment.

Given the opportunity, these bankers will gladly give up the perks and privileges of their companies to serve as the country’s chief monetary regulator. For bankers and financial executives, the position of BSP governor is considered the epitome of professional success.

They can bring new ideas to BSP that are borne out of their experience as private bankers who interact directly with depositors, investors, debtors and other financial institutions.

Many of the outstanding heads of the central banks of other countries were, prior to their appointment, executives of private banks or otherwise learned the ropes of the trade in the private sector.

If, for any reason, the restriction on third appointment is not lifted by Congress, or Tetangco develops cold feet in accepting another appointment, the President should be reminded that the position of BSP governor is too important to be entrusted to somebody whose principal qualification for the job is his being a former classmate or dormitory roommate, or as payback for a political debt.