PDIC allowed to audit banks

May 4, 2009 1:39 am 

MANILA, May 3 — The Philippine Deposit Insurance Corp. (PDIC)can now conduct an independent audit on all type of banks in the country.

But Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said such “independence” still requires prior monetary board approval before PDIC personnel may audit any bank anywhere in the country.

“The PDIC may now have more leeway in examining the book of accounts of banks but they still have to seek prior monetary board approval for this,” Tetangco said just before the long Labor Day weekend.

PDIC president Jose Nograles is readying some guidelines in exercising the firm's expanded authority over banks, particularly those paralyzed with “threatened or impending” collapse.

The new PDIC charter took care to emphasize that banks so categorized as threatened or impending collapse must already be closed because they had failed to measure up to the more scientific prompt corrective action (PCA), for instance.

The PCA concept recognizes that a bank’s capital is already short, that it needs to implement a business improvement plan and that it must also strengthen its corporate governance.

It works on the underlying principle in which both the bank and the regulators work hand-in- hand, without waiting for the worst to happen and when both can still solve the problem.

A failure of the PCA indicates that the bank is not working hard enough to solve its problems.

Tetangco said the central bank laying the ground workk to reacquire its lost authority to look into bank deposits as it conducts the annual audit of bank books.

The new BSP charter denies them that privilege, although Tetangco said it should have the power to examine bank deposits as this was done “in the course of the annual audit of bank books.” (PNA)

RMA/Jun Vallecera/rsm

Comments

Comments are closed.