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Good Governance Gains New Champions

(Article published in the July 29, 2002 issue of TODAY, Business Section)

That Securities and Exchange Commission (SEC) chairman Lilia R. Bautista, recently speaking before the Philippine Institute of Certified Public Accountants (PICPA), made a pitch for good corporate governance and advocated "complementary reforms to keep management in check and ensure that corporate insiders toe the line" was not unexpected. That Bangko Sentral ng Pilipinas (BSP) Governor Rafael B. Buenaventura last week also spoke of the need for good governance among the institutions in the banking industry, was just as expected.

After all, chairman Bautista and Governor Buenaventura are the Peter and Paul of the new creed conceived in the 1997 crisis and nurtured by the Enron and WorldCom scandals. Recent legislation –the Revised Securites Regulation Code (Republic Act 8799) and the General Banking Law of 2000 (Republic Act 8791) had converted their respective agencies from mere watchdogs into reform catalysts, mandated to pro-actively move the sectors under their oversight towards better practices and higher standards. Presently, after their already countless hours of evangelizing in various fora, their cause is gaining not just disciples but also apostles, prepared, to leave their bancas, or at least take some time off their banks, and spread the good word which, hopefully, would move their hearers to good deeds.


Their latest recruit is the Bankers Institute of the Philippines (BAIPhil) which held last July 24, 2002 its general membership meeting and induction of officers for new fiscal year 2002-2003. BAIPhil is a 60-year-old organization, which unlike the Trust Institute Foundation of the Philippines, has both individuals and institutions of banking as members. Also, unlike the Bankers Association of the Philippines and the Chamber of Thrift Banks, trade organizations which limit themselves to those of their own kind, BAIPhil is open to and has member banks, 58 in all, of all kinds,.

The members include universal banks, such as the domestic Metropolitan Bank and Trust Co. and Banco de Oro Universal Bank on the one hand, and the foreign branches of Standard Chartered Bank and Hong Kong and Shanghai Bank, on the other; commercial banks, like the China Trust (Phils) Commercial Bank Corporation; thrift banks, e.g. Planters Development Bank, Philam Savings Bank; and even rural banks, such as the Maycauayan Rural Bank, Inc. Also BAIPhil members are the government banks, Development Bank of the Philippines and the Land Bank of the Philippines.

Since its founding in 1941, it has remained, despite is several name changes from the original "National Institute of Bank Auditors and Comptrollers", to the "Association of Bank Audit, Controls and Operations" in 1962, then to "Bank Administration Institute [Philippine Chapter]", reflecting its affiliation with the Bank Administration Institute – USA, until July 2001, when it was renamed "Bankers Institute of the Philippines", the venue for training and learning on the latest in banking’s best practice and recent technology.

For 60 years, it was instrumental in providing those in the banking industry with adequate knowledge and skill to adapt to significant developments affecting their business, such as the entry of the now ubiquitous automated teller machines (ATMs), the shift from manual check clearing to the MIRC system (the Philippine Clearing House Corp. (PCHC), by the way, is an institutional member), and the implementation of the electronic clearing system.

This year’s activities of the BAIPhil will rally around the banner theme "Championing Corporate Governance in Banking". Leading the charge are the newly inducted members of the board and officers: Isabelita M. Papa, senior vice president-branch manager of Bank of America, N.A., president; Carmelita R. Araneta, senior vice president of Metrobank, first vice president; Evelyn D. Vinluan, FVP of PBCom, second vice president; Amelita S. Amparado, AVP of China Bank, secretary; and Grace G. Dela Cruz, VP of Philippine Savings Bank, treasurer.

BSP managing director Ricardo P. Lirio, PCHC assistant vice president Emmanuel E. Barcena, Bank of Commerce executive vice president Josefina E. Cruz, Citibank assistant vice president Evangeline S. Nevado, Allied Banking vice president Fabian A. Pagaduan, Phil. Business Bank senior vice president Alice P. Rodil and Ibank first vice president Evelyn Q. Santos make up the rest of the Board.

The holding of seminars on good corporate governance of banks, all year long and beyond, for the board of directors of banks will be the centerpiece project of these year’s officers and directors. The official mandate came early last week from the Monetary Board in the form of the accreditation of BAIPhil as one of the providers of the special training sessions which the BSP required, under Circular 296 series of 2001, all incumbent bank directors as well as directors who will be subsequently elected to undergo.

Acquiring the accreditation was not easy. BAIPhil had to prepare a comprehensive course outline, compile reading materials and write case studies for discussion, line up a roster of resource speakers, mostly bankers, who were all experts in their assigned topics. The project director is my former student, now lawyer Virgie Castillo, and she will be provided staff assistance headed by Paul C. Tuliao, BAIPhil manager. Several banks, I understand, have already signed up for the seminars which will be conducted in the local centers, for like missionaries, BAIPhil intends to bring the seminars to the bank directors and not just passively wait for the bank directors to come to the seminar.

Likely to follow the lead of BAIPhil is the younger Trust Institute Foundation of the Philippines. Outstanding alumnus and guest speaker at its 25th anniversary celebrations on July 19, Defense Secretary Angelo T. Reyes called on the institute to hone its curriculum and intensify its efforts in espousing education, information and value formation, specially among trust practitioners. He rued the sense of self-doubt and uncertainty that threaten to dampen the spirits of those who in their younger and more determined days were very firm in their convictions and steadfast in their belief that they had a significant role to play, and a difference to make, in the life of their country.

I am certain that the good alumnus’ exhortations did not fall in deaf ears. Above the din of the singing and the dancing, his audience brought home his simple message of faith, not a creed but a confidence that they are specially charged with a duty to build a society, in his word, "at peace and harmony with itself, a society confident of its future". Long before Enron, long before the Asian crisis, the trust industry was already steeped in the principles and practice of good governance. In due time, hopefully soon and in sinc with the efforts of BAIPhil and others, the Trust Institute of the Philippines will join the forces engaged in the good corporate governance crusade.