BSP, PDIC boost partnership
THE BANGKO Sentral ng Pilipinas (BSP) and the Philippine Deposit
Insurance Corp. (PDIC) have enhanced their partnership to better
regulate and ensure the stability of the banking industry.
Representatives of both regulators on Tuesday amended their "joint
working arrangements" to cope with the changes in banks' operations.
"This amended memorandum of agreement (MOA) reflects our continued
cooperation to ensure that our joint working arrangements are responsive
to the operating environment," said BSP Governor Amando M. Tetangco, Jr
in his speech during the signing of the amended agreement.
The agreement, created in 2005, formalized a framework between the BSP
and the PDIC for joint or independent on-site bank examinations.
It also covered the sharing and exchange of relevant reports between the
two regulators.
Some of the key amendments to the MOA include the expansion of the scope
of PDIC's bank examinations and the enhancement of the regulators'
information-sharing activities.
"In the previous MOA, PDIC could only conduct bank examination on banks
with a CAMELS rating of 1 and 2. This time, they can already examine
banks with a CAMELS 3 rating, but they should justify to the BSP why
they would like to examine a particular bank with a CAMELS 3 rating,"
Mr. Tetangco said.
The CAMELS rating measures capital, asset quality, management, earnings,
liquidity and sensitivity to market risk -- the broad criteria used by
the BSP to check financial health. The scores range from 1 to 5, with 5
being the highest.
Mr. Tetangco said, "While the original MOA has served us well, [the new
one] will align better [the PDIC and BSP's] supervisory procedures,
practices and requirements."
He explained that the new agreement should "harmonize" both
institutions' procedures to prevent the overlapping of functions and
efforts.
"This is consistent with the thrust of the BSP and the PDIC to promote
and strengthen practices in supervised banks and ensure the stability of
the banking system at all times," he said. -- Ann Rozainne R. Gregorio
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