Amando M Tetangco, Jr: Breakthroughs and break through
Speech by Mr Amando M Tetangco, Jr, Governor of the Central Bank of the Philippines
(Bangko Sentral ng Pilipinas), at the "Bank Marketing Summit" & Induction of BMAP of
Officers, Manila, 29 January 2008.
* * *
The officers and members of the Bank Marketing Association of the Philippines (BMAP),
colleagues in the banking industry, special guests. Good morning!
I am pleased that BMAP has chosen a challenging and exciting theme for this year's Bank
Marketing Summit: Breakthroughs & Break Through.
To me, this signifies a strong commitment to raise the bar of service to bank clients; to set
the pace for responsive and responsible marketing; to be more innovative and efficient in the
way you communicate and LISTEN to your clients; and to incorporate social responsibility
objectives in your marketing programs.
You must realize that I have high expectations insofar as the BMAP is concerned. I will
explain why.
Ladies and gentlemen of the BMAP. 2007 represents a significant turning point for our
economy, with our economic fundamentals described as the best in two decades. In fact, our
economy as measured by GDP is the best we had in three decades! Inflation has been
maintained at a low level; so have interest rates. At the same time, the banking sector had
one of its best years in 2007. That we achieved this in the face of many challenges...
including record high oil prices makes this economic breakthrough truly exceptional.
Of course this did not happen overnight. I will not go into details because as responsible
bankers I am sure you keep abreast of economic developments. I will therefore focus on the
breakthroughs we have achieved in the banking sector.
The Bangko Sentral in close coordination with banks and other institutions continued to work
on key reforms to ensure adherence to the tenets of good governance for fairness,
accountability and transparency; we continued to align our practices with global standards,
including international accounting and financial reporting; we started implementing Basel II
prescriptions for risk-based capitalization; and we continued to expand the reach of our
banking system to make it accessible and meaningful to the unbanked.
The Bangko Sentral has also relaxed the rules governing derivatives activities of banks. The
aim is to provide a framework where banks and trust entities could expand opportunities for
financial risk management and investment diversification through prudent use of derivatives.
This is consistent with the BSP's continuing thrust to give banks greater flexibility to respond
to changing market opportunities and allow them to take risks so long as they demonstrate
the ability to manage and price for those risks.
As members of a key organization in the banking community, your work as marketing
professionals as front liners is vital to the continuity of our financial reform agenda. It is
important to remember this.
For even as we achieved a significant breakthrough in our economy, with Moody's validating
this with an upgrade in our outlook from stable to positive, there will always be challenges we
have to deal with. The global economy for instance continues to be adversely affected by the
lingering effects of the sub-prime mortgage crisis and an economic slowdown in the US, the
world's biggest economy.
This year, therefore, we expect BMAP to be more deeply involved in building on these
reforms to further enhance the risk management process, corporate governance, disclosure
standards, and capital adequacy.
One of our continuing priorities is to broaden access of SMEs and the microfinance sector to
credit. BSP's recent reform initiatives toward this end include liberalized branching;
expansion of FCDU and trust license to include qualified rural banks; and the re-opening of
quasi-banking license.
We also continue to work on a sound market infrastructure to ensure secure and timely
completion of transactions, thereby minimizing systemic risk and enhancing the integrity of
financial transactions. This is being implemented through the promotion of progressive
policies on e-commerce and payments system innovation.
You can expect that our policy thrusts will remain geared toward acceptable risk
management practices that enable financial industry participants to better assess and
manage risks without unduly hampering the ability to innovate.
The BSP will also continue to take a proactive role in accelerating development of the
domestic capital market. While we have made significant strides in speeding up the reform
process, there is still a lot of work to do. The biggest challenge right now is to make the
domestic capital market a truly potent alternative source of funding and outlet for investments
for corporates and other entities. The synergy between the banking system and a vibrant
capital market should create much more opportunities for service and product innovation.
Another crucial challenge that we face, and for which I earnestly request your support, is to
help ensure that we improve our economy by actually promoting and extending credit!
This is the way, I believe, that the PROBLEM of PLENTY - strong dollar inflows, for instance
- which you have time and again heard me say would no longer be a problem of plenty, but
be a POT of PLENTY for the MANY.
In other words, ladies and gentlemen of the BMAP, there is so much going on in the banking
sector and you are in a position to help your respective banks and our economy benefit from
it.
Nevertheless, I must remind you that even as you get involved in the sometimes complex
details of these reforms you must not forget your customers. I mean, the basic requirements
of your customers.
I remember that I have asked BMAP before to take the lead in informing their ATM
customers of their service fees. Sure, there has been compliance, but I wish there would be
more active and visible compliance.
My other request is for BMAP to initiate the posting of the contact details of their high level
officers who can receive customer feedback that are often overlooked at the branch level. I
hope to see more bank premises with this simple guide. As it is, the Bangko Sentral
continues to receive complaints about bank services. This tells us that some of your
customers are not getting the attention they need and they do not know the bank officers
they can call or e-mail.
Again, this is a challenge that I am sure BMAP can manage quite effectively.
Finally, I invite all of you to participate actively in our financial education program. Our
financial education program targets our key stakeholders, including overseas Filipinos and
their dependents, students, and the general public.
I know that BMAP officers have been meeting with our Corporate Affairs Office on how they
can support this important advocacy. In particular, a joint program of the Bangko Sentral and
the Department of Education calls for the incorporation of lessons in saving and money
management for all elementary students - from Grade I to Grade VI - starting this June, for
school year 2008-2009. I call on all of you, therefore, to help make this a success.
You can do this by helping print the materials we have developed to ensure its widespread
dissemination. You can also help by developing parallel campaigns that will develop the habit
of saving and investing.
For your information, we have about 14 million students in the elementary levels, 12.8 million
of whom are in public schools. This is a big and solid critical mass! This also represents a big
base of potential customers for your banks.
Equally important, if we are successful, we shall be on the right path to nurturing a new
generation of Filipinos who are adept in managing their own resources and in strengthening
the country's financial system. Let us cooperate therefore in implementing this breakthrough
program.
Indeed, it should be another busy year for all of us. I therefore call on the officers and
members of BMAP to assist the Bangko Sentral in ensuring the successful implementation of
these reforms and advocacies. We will again count on your support and commitment to
these programs.
Together, let us forge an even stronger partnership as we continue to foster stability in the
financial system and secure more sustainable and higher growth path for our economy.
Finally, I thank your outgoing officers - led by Bobby Banaag - for a job well done and
congratulate the new set of BMAP officers - headed by Mike Villareal - on the successive
breakthroughs they will set during their term.
Mabuhay ang BMAP! Mabuhay ang Pilipinas!
Maraming salamat sa inyong lahat!