Amando M Tetangco, Jr: Transforming potential into reality
Speech by Mr Amando M Tetangco, Jr, Governor of the Central Bank of the Philippines
(Bangko Sentral ng Pilipinas), at the BAIPHIL's Induction of Officers and General
Membership Meeting, Manila, 15 July 2009.
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Distinguished officers and members of the Bankers Institute of the Philippines led by
Incoming President Susan Uranza and Outgoing President Lydia King, SEC Chairman Fe
Barin, MBM Ignacio Bunye, PM Cesar Virata, fellow bankers, colleagues from the BSP,
special guests, good afternoon!
On behalf of the Bangko Sentral ng Pilipinas, I congratulate BAIPHIL's new set of officers led
by President Susan Uranza. Ladies and gentlemen, let us wish them well and cheer them on
with a long round of applause!
To the Bangko Sentral ng Pilipinas, the BAIPHIL is a long-standing partner in strengthening
the Philippine banking sector by enhancing productivity through research, information
exchange and education. Indeed, through its continuous development and conduct of
appropriate training programs, BAIPHIL has been upgrading the knowledge and expertise of
banking professionals. In other words, BAIPHIL plays a major role in keeping Philippine
bankers abreast of global bank standards and practices. This is a very important function.
The banking sector is the pillar of our financial system as it remains the primary source of
funds for our business sector, drawing, in turn, from funds entrusted to it by investors,
creditors, and depositors. It is essential therefore that our bankers are able to adapt and
respond appropriately to a constantly changing and ever challenging environment.
This is particularly true today when the global financial landscape continues to be redefined
by the ongoing financial crisis and the most severe global economic downturn in decades.
New challenges have emerged, even as new opportunities surface. It is crucial, therefore,
that bankers should be ready to take on these new challenges and opportunities.
For instance, it is important to note that while other countries struggle with tight credit, our
banking sector remains liquid and able to sustain lending at double-digit growth rates.
As of May 2009, outstanding loans of commercial banks, including reverse repurchase
agreements, reached P2.1 trillion, over 10% higher than the year-ago level. This is a positive
trend that indicates continuing support from the banking sector for productive activities that
sustain economic growth.
Having said this, banks must make sure that appropriate risk management systems are in
place to guard against potential credit and liquidity risks, among others. There should be no
room for complacency insofar as risk management is concerned. I believe BAIPHIL's training
programs on risk management will go a long way in addressing this need.
Ensuring the quality of your training programs on good governance is also important, as this
counts as compliance to the BSP's mandatory requirement for bank directors and key
officers. As you are aware, weak governance and lack of transparency have been cited as
among the causes of the continuing global financial crisis and economic downturn.
There are other programs that I know BAIPHIL can take on quite effectively, which are
aligned with our special advocacies at the Bangko Sentral ng Pilipinas.
One of these is economic and financial education for Filipinos. So far, we have
institutionalized the integration into the public elementary school curriculum lessons on
saving and money management starting schoolyear 2008-2009. This joint program of the
Bangko Sentral with the Department of Education targets 12 million students, from Grade I to
Grade VI, or nearly 90% of Filipino children in the elementary schools. This number will
increase further as last month, the Coordinating Council of Private Educators Association or
COCOPEA also expressed its intent to teach saving and money management lessons to
elementary students in private schools estimated at over 1.5 million.
We are therefore planting the seeds for nurturing a new generation of Filipinos who save
regularly and manage their finances properly. They are the future of our nation. They
deserve our support.
The Bangko Sentral has also started financial education programs on saving, money
management, and investment options for overseas Filipinos and their dependents. With
BAIPHIL's support, we can cover more ground and extend our reach. This is one way we can
express our appreciation to overseas Filipinos whose remittances have kept the Philippine
economy resilient in the midst of the global recession. Their monthly remittances have
remained above $1 billion since 2006 and reached an unprecedented annual level of $16.4
billion in 2008. In 2000, remittances for the whole year were just over $6 billion. Latest data
show that for May 2009, remittances coursed through the banking system reached a record
high of $1.48 billion or a YOY growth of 3.7 percent. Total or cumulative remittances for the
first 5 months of 2009 amounted to $6.98 billion, representing a YOY increase of 2.8 percent.
Together, let us help Overseas Filipinos and their families put their money to optimal use, so
that they can allocate their cash flows not only for consumer goods and leisure but also for
smart spending and savings such as education, housing and investments. Banks should also
explore new products and services for overseas Filipinos as well as guide them on the type
of savings pattern and investments that are suitable for them.
Finally, BAIPHIL can help develop teaching modules on saving, investment, and money
management for adults and out-of-school youths in cooperation with the Bangko Sentral and
the Department of Education's Bureau of Alternative Education.
I am very pleased therefore that BAIPHIL through President Susan Uranza, signed a
Memorandum of Agreement with the Bangko Sentral last week to support our economic and
financial education program including our savings promotion campaign which we call
"Banking on Your Future." Other organizations that have signed up as our partners for this
program are the Rural Bankers Association of the Philippines, the Chamber of Thrift Banks,
the Bank Marketing Association of the Philippines and the Bankers Association of the
Philippines.
The BSP has also set up Economic and Financial Learning Centers in our regional offices
and branches where researchers can access economic and financial data generated and
monitored by the Bangko Sentral.
Indeed, the BSP in coordination with the banking sector has taken a proactive stance to
institutionalize an inclusive program for the economic and financial education of Filipinos
anchored on the theme, "Financial Education: Building Blocks for a Stronger Economy".
Ladies and gentlemen. The BSP recognizes the need to continuously raise the bar of
competency for banking professionals. At a macro level, the depth of skills of the entire
banking sector workforce will be a crucial factor in building a stronger banking system. In this
regard, I recognize that BAIPHIL has been and will continue to provide support in
strengthening the human capital base of our banks.
The BSP, for its part, will remain committed and continue to craft appropriate monetary
policies and banking reforms that will allow our economy to ride out the crisis. We will also
move forward with reforms to protect consumers and investors. These initiatives, which we
have vigorously pursued in recent years, are instrumental in instilling order and depth in the
banking system, ahead of the onset of the global financial crisis.
Nevertheless, considering all that is happening in the global arena, we are in a relatively
good place. Among others, our inflation rate in June is at its lowest in 22 years, we are
looking at a balance of payments surplus this year, and our gross international reserves are
at its highest level ever.
This is not to say that we will have smooth sailing moving forward. In this imperfect world, we
are bound to meet unexpected bumps along the way.
However, if BAIPHIL continues to be successful in fulfilling its mission to enhance
productivity through research, information exchange and education, then the banking sector
would be better equipped to hurdle the challenges that will come its way.
And given its commitment to participate actively in expanding the reach of our economic and
financial education programs, BAIPHIL should also make a big impact in promoting wealth
creation among Filipinos. Susan, your president at BAIPHIL, describes this process as
teaching Filipinos proper lifestyle management. I agree with this practical approach.
We at the Bangko Sentral are therefore looking forward to a fruitful collaboration with
BAIPHIL that will result in a continuously growing pool of trained bankers as well as
financially literate Filipinos who will help build a better and stronger Philippines.
Again, my congratulations to the distinguished ladies and gentlemen of the BAIPHIL, your
past set of officers led by Mrs. Lydia King and the freshly-inducted new officers under the
leadership of President Susan Uranza.
Mabuhay ang BAIPHIL! Mabuhay ang Pilipinas!
Maraming salamat po sa inyong lahat.