Banks have requested the Bangko Sentral for the extension of some relief measures undertaken since the implementation of the enhanced community quarantine middle of March.
The requests are primarily for operational relief measures, such as the non-submission of certain prudential reports and the modification of requirements for the temporary closure of bank branches.
BSP Gov. Benjamin Diokno said monetary authorities need to assess the impact of the pandemic on the banking system’s performance and the extent of the financial relief extended by the financial institutions to their clients.
“A better understanding of the true state of health of the banking system will allow us to properly evaluate whether further easing of the relief measures is warranted,” Diokno said.
He said the BSP has deployed a comprehensive questionnaire designed to facilitate the central bank’s information gathering regarding the information on the financial and operational impact of the pandemic on the banks and the specific measures individual banks plan to undertake amid the new situation.
“The results of this exercise will feed into our analysis regarding the need for future policy action on the part of the BSP,” he said.
Among the measures implemented by the BSP to address the impact of the community quarantines, which the government implemented to stem the rise in coronavirus disease 2019 cases, are the electronic submission of documents for applications for approval and/or registration of foreign currency loans, borrowings, investments; the sale of foreign exchange by authorized agent banks; the use of electronic signature or digital signatures for documents originally required to be submitted in hard copy and non-imposition of monetary penalties for delayed submitted of reports.
Amid the impact of the pandemic and the recent directors, officers, stockholders, and related interests transaction and Wirecard issues, the BSP chief said the banking industry remains strong and resilient.
He was referring to the alleged violation by some officers of an unnamed universal bank of the BSP’s DOSRI rules with regards to the approval of “over P4 billion worth of unreported and illegal DOSRI loan.”.
The other issue pertains to claims by officials of the German-based payment company Wirecard that the $2.1 billion missing from its accounts in 2019 has been put in escrow in two Asian banks. Reports said these banks are based in the Philippines.
However, both the Ayala-led Bank of the Philippine Islands and the Sy-led BdO Unibank, Inc. have denied that Wirecard is their client.
Diokno said robust governance and risk management systems, which serve as lines of defense, enable banks to promptly detect and address threats to the integrity of the financial system.
He said “expectations set out on dealings with related parties ensure that these transactions are done at arm’s-length terms”.
“The BSP’s adoption of the risk-based supervision allowed it to effectively monitor compliance with the issued standards and regulations and focus on areas that pose the most significant risk to the safety and soundness of individual banks and the banking system,” Diokno said.
He noted that banking sector reforms since 1997 “prepared the banking system for these challenging times”.
“We will continue raising risk management standards and further reinforce accountability across the organization. This includes highlighting the importance of having (a) robust hiring process and continuing know-your-employee policies and procedures,” Diokno added.