governance in banks and other financial institutions remains an integral aspect of our continuing agenda to promote a sound and stable banking system. this will be highlighted further as we begin to fully implement the revised risk - based capital adequacy framework under basel ii this year. the new basel ii - based framework will not only focus on the computation of the appropriate level of capital given a certain level of exposure, but will also underscore the need for more market disclosures by banks on their risk exposures and risk management practices. the required disclosures to the public of bank capital structure and risk exposures are aimed at promoting greater market discipline in line with the so - called pillar 3 of the basel ii recommendations. these reform initiatives should go a long way in establishing a sound governance regime at the institution level for a more effective and stronger financial intermediation. ultimately, this will help preserve overall integrity and stability of the banking system. in fact, there are already a number of success stories on governance at the institution level. let me briefly highlight some of them. one universal bank was able to exit from its 5 - year rehabilitation program, partly due to improvements in corporate governance and oversight. this generated positive results, highlighted by a reduction in the bank ’ s npa ratio, strengthening of its capital position and improvement in the bank ’ s profitability and liquidity. another bank was able to achieve progress in building up its capital. the bank successfully raised its capital through issuance of tier 1 capital ( common shares, preferred and hybrid tier 1 capital ), thereby increasing its car from 14 percent as of end - september 2005 to 27 percent as of end - march 2007! still another universal bank launched a major bank - wide initiative designed to restructure its whole credit delivery process and resolve the increasing volume of its non - performing loans. this program, embedded under the bank ’ s credit excellence thrust, includes technical infrastructure and system enhancements, policy reviews and credit organization alignment. coupled with good governance principles, the bank was able to achieve a significant decrease in its npl ratio from 8. 68 percent to 3. 99 percent in march 2007. its risk management system also significantly improved, enabling the bank to allocate capital among the various businesses more appropriately and building its capabilities to engage in derivatives activities. the examples set by these banks demonstrate the crucial beneficial role of good corporate governance in ensuring and sustaining a strong foundation for growth and profitability. i hope their stories will inspire other banks to take the path

amando m tetangco, jr : strengthening the foundation for effective governance speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the induction of officers and annual general membership meeting of the bankers institute of the philippines ( baiphil ), makati city, 24 july 2007. * * * the newly elected officers and directors of baiphil led by its president and bsp assistant governor ms. ma. dolores b. yuvienco, my colleagues at the mb ( mbm valdepenas, boncan, villafuerte, antonio ) prime minister virata, gov. laya, gov. cuisia, sec chairman barin, members of the institute, bank chairman, vice - chairman, presidents, other distinguished guests, fellow bspers, ladies and gentlemen. first of all, let me thank you for inviting me to be your inducting officer and guest speaker in this year ’ s general membership meeting. it is an honor to be here. i am very pleased to be here today for your annual general membership meeting for several reasons. first, we at the bangko sentral ng pilipinas look at the bankers institute of the philippines more popularly known as baiphil s our partner in strengthening our banking system through research, information exchange and education. in fact, baiphil is one of only seven institutions accredited by the bangko sentral to conduct mandatory corporate governance seminars for bank directors. second, the theme chosen by baiphil ’ s new set of officers and directors for the fiscal year 2007 to 2008 echoes our own focus at the bangko sentral, which is : “ enhancing internal governance a continuing journey. ” indeed, good corporate governance is a must for banking institutions, whether they are private or government. you can say that we at the bangko sentral walk the governance talk. while i will be the first to say that we are not perfect, it is not for lack of trying. in fact, it is a continuing topic in our planning sessions. like baiphil, we at the bangko sentral believe that for as long as the environment where we operate remains dynamic, there will always be room to enhance governance ; it is a continuing journey with no finish line. we at the bangko sentral ng pilipinas are also pleased that assistant governor dolly yuvienco has been elected president of baiphi