Banks’ sound governance key to financial stability, says BSP

PHILIPPINE BANKS’ efforts to uphold good governance standards while adhering to central bank regulations are crucial in keeping the local financial system stable, especially amid emerging risks, the Bangko Sentral ng Pilipinas (BSP) said.

Speaking at the inaugural Corporate Governance (CG) Summit on Monday, BSP Governor Eli M. Remolona, Jr. said banks help ensure the stability of the entire financial system by complying with regulations on capital, liquidity and transparency.

“In good governance, you have made sure that board oversight, internal controls, and transparency in accounting all work to support the regulatory framework,” Mr. Remolona told banks during the summit held at the BSP’s head office in Manila. “It is in times like this that we begin to appreciate such good governance.”

“Our regulations on capital, liquidity, and transparency are there not just to protect you as individual banks. Indeed, they are really about maintaining the stability of the whole financial system,” he added.

The Financial Stability Coordination Council, chaired by the BSP, earlier said risks to the Philippine financial system are emerging as the spillovers of the Middle East war imperil the country’s corporate and household debt levels.

However, the central bank reaffirmed that the industry remains resilient as banks and other financial institutions continue to hold high capital buffers and liquidity.

Finance Secretary Frederick D. Go said during the same summit that good governance among corporates, particularly banks, also helps safeguard Filipino depositors amid the rapidly evolving financial landscape and the ongoing crisis threatening the sector.

“(S)trong governance anchors institutional resilience, protects public trust, and supports sustainable growth, ensuring Filipino depositors and consumers remain protected as banks navigate rapid transformation and emerging risks,” the Department of Finance said in a statement quoting Mr. Go.

The pilot summit was attended by Monetary Board members, BSP officials, local bank directors, and international banking and cybersecurity leaders from the Bank for International Settlements and Monetary Authority of Singapore, among others.

The central bank said the gathering aimed to strengthen Philippine banks’ governance standards through discussions on board oversight, risk governance, accountability, digital trust, information technology and cybersecurity governance, as well as fraud prevention.

“The BSP envisions the CG Summit as a continuing platform for fostering dialogue, sharing best practices, and strengthening collaboration between regulators and the banking industry,” it added. — Katherine K. Chan