Regulators have approved a new set of rules that will make it easier for them to disqualify persons from serving as bank directors and officers if they are found to have acted detrimentally toward the financial institution or its stakeholders.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said its policy-making Monetary Board recently approved the revised rules on disqualification of directors and officers of banks and quasi-banks.
“The new rules expanded the grounds for disqualification aimed at further strengthening the quality of governance in the financial services industry,” the central bank said, explaining that the policy clarified that persons who caused “undue injury, material loss or damage” to the bank or “those who exposed the bank to higher risk or danger” shall be disqualified from becoming a director or officer in other BSP-supervised financial institutions.
The Monetary Board likewise approved the inclusion of dismissal from any government institution, conviction for offenses under the amended charter of the Philippine Deposit Insurance Corp., and delinquency or unwillingness to settle obligations as among the grounds for disqualification.
In order to promote transparency and ensure that persons concerned are accorded with due process, the revised policy sets out the disqualification procedures that will be followed.
“The procedures provide a window for the person concerned to explain his side and present evidence to support his position,” the central bank said. “Once a person is disqualified, his name will be included in a watch list database and he can no longer be connected in any BSP-supervised financial institution unless his name is removed from the said list.”
The issuance complements the fit and proper rules for directors/trustees and officers of BSP-supervised financial institutions covered by Circular Nos. 969 and 970 both dated Aug. 22, 2017.
These guidelines contain enhanced corporate governance standards for the board of directors and officers, and set forth their key roles and responsibilities consistent with the principle that the tone of good governance should come from the top, the central bank said.