|
|
Slide No.
|
|
1.
BPIs CG PRACTICES
Let me start by saying that at BPI, when we speak
of “corporate governance”, we go beyond the formal rules that sets out the
Board’s oversight and its policy setting responsibilities. For us, it is all
about imbibing and nurturing a culture of integrity, fairness,
accountability and transparency cascaded from the Board, its management,
and to all our employees. It sets the standards on how we as a Bank,
deal with various interests of, and relationships with all our stakeholders.
|
2
|
|
In line with this, the Board ensures, first and
foremost, that BPI’s corporate governance practices are consistent with the
BSP, SEC and PSE guidance in strengthening Corporate Governance as a
financial institution with fiduciary responsibilities and as a publicly
listed company, including the best practices espoused by the ASEAN CG
Scorecard. And in October 2016, BPI was recognized as one of the awardees of
the inaugural Institutional Investors’ Award for Corporate Governance.
The award is given by Institutional Investors to listed companies based
largely on their ASEAN CG Scorecard rating.
|
4
|
|
a.
Board of Directors
We recognize that good corporate governance is
ultimately, the responsibility of the Board. It is thus incumbent upon us
directors, to step up and recognize our accountability to our shareholders
and stakeholders. As is often rightly said, “Companies do not fail,
boards do", an observation I may have first heard from Chair Herbosa.
|
5
|
|
Board Composition. What drives the structure of
our Board of Directors? We look at factors that influence stewardship such as
board composition. We ensure that the Board is composed of directors
who individually and collectively have knowledge, expertise and
experience relevant to our industry and can drive our strategy moving
forward. For this reason, board membership is also reinvigorated regularly.
We saw the election of new directors in the past years, most recently in
2017.
Our board is made up of fifteen directors, of
which fourteen are Non-Executive Directors who are not part of the day-to-day
management of the Bank. Our only Executive Director is the President
and Chief Executive Officer. With a board composed almost entirely of
Non-Executive Directors, there is better assurance that interests of all
shareholders are protected and that no director or small group of directors,
can dominate the decision-making process.
|
6
|
|
Independence. The presence of Independent
Directors on the Board, helps ensure the exercise of impartial judgment on
corporate affairs and proper oversight of managerial performance, related
party transactions and potential conflicts of interest.
Today, in our 2017 Board, seven (7) out of 15
directors are classified as independent, exceeding the minimum regulatory
requirement to have at least 20% of board membership and the recommendation
for publicly-listed companies to have at least 33% but not less than three
independent directors on its board.
The
independence of our Board and its adherence to the principle of fair dealing
is clearly manifested in the conduct of our business relationships with our
many depositors and retail customers as well as our corporate
customers.
We bank
all of the country’s major conglomerates and while Ayala is the bank’s single
largest shareholder, they are not our largest client. There are a number of
conglomerates with whom we have more substantial dealings.
|
7
|
|
Diversity. The Nomination Committee likewise
ensures that there is diversity in the board—in terms of gender, age,
cultural background, education, professional experience, skills, knowledge,
length of service.
Our 2017 board is made up of three former
bank presidents, a former member of the Monetary Board, a former Assistant
Governor of the BSP, the representative of the Roman Catholic Archdiocese of
Manila, a top regional officer of a global IT company, a retired founder/CEO
of a top securities brokerage firm, and a former Finance
Undersecretary, to name a few. Our directors hold academic degrees
from here and abroad, and specialized training straddling various fields --
finance, accounting, economics, law, business management, international
relations, political science, engineering and yes, banking.
Equally important in our diversity policy is the
representation of women. To date, we have four women directors, comprising
27% of our board membership, the highest among our peer banks, if I recall
right. In fact, in 2016, we had 5 women directors. Gender diversity is even
more pronounced in the Bank’s management where currently, we have 3,000 plus
women officers, make up an impressive 67% of the total number of bank
officers.
|
8
|
|
Board Committees. To heighten the efficiency of
board operations, the Bank also established committees that assist in
exercising board authority for oversight of internal control, risk
management, and performance monitoring of the Bank. The committees afford the
Board organized and focused means for the directors to achieve specific goals
and address issues. The Board currently has eight (8) committees. These
are: the Executive, Audit, Risk Management Corporate Governance, Related Party
Transactions, Nomination, Personnel and Compensation, and Retirement/Pension
Committees.
We take risk management and internal audit and
control very seriously. Indeed as Governor Tetangco said in his keynote
remarks, risk management is at the heart of corporate governance of a
bank. Both our risk management committee and our audit committee are
chaired by independent directors who have had distinguished banking careers
culminating in being CEO’s in their respective banks.
The Board and its committees are regularly and
actively involved in providing strategic guidance, risk appetite and risk
metrics, capital adequacy reviews as well as oversight over pressing
and urgent “issues of the day”, e.g., anti-money laundering, cyber risk,
consumer protection, etc.
In all cases, the oversight by the Board go well
beyond the letter of the regulations in order to uphold depositors' and other
stakeholders’ interests, and protect the Bank’s reputation.
Just to cite an example: our zero-tolerance
policy for fraud and financial crime, whether external or in-house. Recently,
we have worked with government agencies in the prosecution of criminals
involved in cybercrime such as ATM skimming and card fraud. And have invested
much resources not only in their prevention, but in persecuting fraud of all
types. We do this beyond the value of the losses of the bank from specific
instances, as a matter of principle and for deterrence.
Another example of this high level of diligence
and risk management mindset that has saved the bank from losses,
where others have been blindsided. It is a matter of record at
the BSP that in the global financial crisis a decade ago,
BPI was the only big local bank that had zero holdings of
international subprime securities. A quote from that period from a key
board director on a proposal to purchase Lehman securities -- " I don't
care if it is triple A rated, if we don't understand it, we are not buying
it."
|
9
|
|
Induction and Director Education. The Board,
through the Corporate Governance Committee, works to create numerous
opportunities for directors to update and refresh their knowledge and enable
them to fulfill their roles as members of the Board and its Committees.
These opportunities include internal meetings
with senior executives and operational or functional heads and dedicated
briefings on specific areas of responsibility within the business group.
We consider the annual training mandated by
the the SEC as genuine learning opportunities to deepen knowledge on various
aspects of corporate governance such enterprise risk management and global
best practices. These are conducted together with other companies of the
Ayala group to promote constructive exchange across industries, and taps
local and international experts in the relevant field.
|
10
|
|
Performance Evaluation. The Bank also measures
the performance of the Board on the basis of what it delivers and how it
delivers, how it meets its responsibilities to all BPI stakeholders, and how
it addresses issues that impact the Board’s ability to effectively fulfill
its fiduciary duties. Under the guidance of the Corporate Governance
Committee, the Board conducts the annual self- assessment to ascertain the alignment
of leadership fundamentals and issues, and validate the Board’s appreciation
of its roles and responsibilities in the context of the operations of BPI and
its subsidiaries and affiliates.
Our self-assessment uses a 360-degree feedback
report, which is a widely advocated, standard evaluation method of
self-assessment and feedback review. These are survey forms where we rate our
past year performance at four levels: (1) the Board as a body; (2) as
Committees, and; (3) as individual directors. The fourth (4) is an assessment
of the President and CEO, by the Board. Key evaluation criteria used are
based on the respective Board or Committee Charter and duties and
responsibilities of directors and of the President and CEO
|
11
|
|
Succession
Planning and Talent Management. Our Board understands that the Bank
must continually evolve, adapt, and even restructure the business to remain
ahead of such strategic, market, technology and regulatory shifts. And so,
the Board, through its Personnel and Compensation Committee (Percom), manages
the talent pipeline and assembles the required personnel with competence and
qualifications capable of navigating such changes.
Taking
guidance from the Percom, the Bank instituted a program by which promotions
to the SVP and VP ranks are vetted by a collective vote of a senior
management committee whose membership varies from year-to-year.
|
12
|
|
Group
Oversight. Relatedly, considering the Bank’s role in the BPI group as parent
and publicly listed company, the Board of directors also ensures that BPI
management maintains an effective, high-level risk management and oversight
process across other companies in the group.
We balance our
oversight responsibility with the independence required by our subsidiaries
in managing their specific businesses. This is most evident in the spin-off
of our asset management business to the stand-alone Trust company in February
this year. While it is a wholly-owned subsidiary, we place greatest
importance on the conduct of its fiduciary responsibilities and the
maintenance of its arms-length dealings with the Bank.
|
13
|
|
b.
Code of Business Conduct and Ethics.
The
Bank’s has a Code of Conduct and its standards of behavior are derived from
the BPI Credo and Core Values. These are aligned with key global
initiatives that promote responsible business practices. We have detailed
rules on conflict of interest, insider trading whistleblower policy, and
related party transactions.
As
mentioned earlier, while this codes are important, what is critical are
internalizing these as values and culture. And the example
set by the Board and management.
A few words on
Related Party Transactions. BPI has a Related Party Transactions Policy which
guards against internal conflicts of interest between the company and/or its
group and their directors, officers and significant shareholders and ensures
that transactions are made in the normal course of banking activities with
terms and conditions that are generally comparable to those offered to
non-related parties or to similar transactions in the market.
The Bank has
established in April 2014 the board-level Related Party Transactions
Committee to provide guidance and vet related party transactions of
significant amounts. BPI was one of the first banks that created an RPT
committee to ensure compliance with the related party circular of the BSP
prior to its release in 2015.
Finally, let
me talk briefly about Sustainable Energy Finance, the other topic for this
afternoon's mini forum sponsored by the IFC. BPI through the sustainable
energy finance program ( a partnership with IFC) is a pioneer mover in this
space. BPI SEF started in 2008 and has been a leader in SEF with the largest
market share. We have funded 260 projects in energy efficiency, renewable
energy and climate resilience reaching an accumulated portfolio of P 35
billion to date.
|
14
|
|
CLOSING STATEMENT
I view my
presence here today as the BSP’s recognition of BPI’s efforts in promoting
effective corporate governance. The high quality of management and staff and
the corporate governance culture that has been nurtured through the years in
BPI make it easy for the Board, including this independent director, to
perform its oversight responsibilities.
Finally,
allow me to thank the BSP and SEC for all the work and effort done to
build world-class financial institutions capable of meeting the challenges
posed by the other FI’s in the region. We at BPI will continue our governance
commitment for the long haul, and strive to be a leading provider of
financial services and a most trusted advisor to our clients, colleagues,
business partners and other stakeholders.
(And
yes, as observed by the previous speaker from IFC, good corporate governance
also provide bottom line yields. For BPI, it has contributed to a price to
book valuation and an ROE that has consistently led the industry.)
Thank you and good day!
|
|
|
No comments:
Post a Comment