The Bangko Sentral ng Pilipinas has issued new corporate governance rules that will promote the independence of banks’ boards from management.
In a statement Tuesday, the BSP said the Monetary Board, its highest policymaking body, recently approved “enhanced requirements on the membership composition of the board,” which it said was “anchored on the fundamental principle that the tone of good governance should come from the top.”
“This is aimed at ensuring that the board of directors is comprised of a collective mix of individuals who possess the expertise and competence to effectively manage the financial institution,” the BSP said.
“The amendments also aim to promote an environment that fosters critical exchange of views and exercise of objective judgment,” it added.
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In particular, the new BSP guidelines required that the positions of chairperson of the board and chief executive officer of banks must not be held by only one person in order to “promote independence of the board from management and to support an environment where the board can sufficiently challenge the actions of those involved in operations.”
But in exceptional cases wherein the Monetary Board approved a single person as chair and CEO, there must be another lead independent director to be appointed by the bank, the BSP said.
