benjamin e diokno : opening remarks during the signing of the establishment of a supervisory college for financial conglomerate supervision opening remarks by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), during the signing of the multilateral mou on establishment of supervisory college for financial conglomerate supervision, manila, 24 january 2022. * * * good morning. it is my pleasure to welcome our financial sector forum principals, emilio aquino, chairman of the securities and exchange commission ; dennis funa, commissioner of the insurance commission ; and sandra diaz, senior vice president of the philippine deposit insurance corporation to witness another momentous event for the forum. in line with the principles for the supervision of financial conglomerates of the basel committee on banking supervision, the financial sector forum created the financial conglomerate supervision committee which is tasked to work towards identifying conglomerate risks in the financial system ; and to plan ahead supervisory initiatives to mitigate conglomerate risks. the basel principles highlight, among others, the need for a clear legal framework that provides supervisors with the necessary powers, authority and resources to perform, with independence and in coordination with other supervisors, comprehensive group - wide supervision. the principles re - affirm the importance of supervisory cooperation, coordination and information exchange. in the 2020 financial sector assessment program technical note on supervision and regulation of financial conglomerates, the international monetary fund recommended the implementation of a multilateral agreement among financial sector forum member agencies on the establishment of supervisory college to agree on the approach of group level risk assessment for financial conglomerates. the establishment of a supervisory college is an important regulatory platform in achieving effective and efficient supervision of financial conglomerates. it is also an international practice amongst international financial supervisory authorities. thus, this memorandum of understanding shall govern the establishment of an inter - agency cross - sectoral supervisory college which shall serve as the forum, to facilitate cooperation and coordination between and among the financial sector forum member agencies specifically, for the supervision of financial conglomerates in the philippines. this supports a clear process for coordinating various roles and responsibilities of the financial sector forum with clearly delineated responsibilities for effective supervision. as such, we would like to re - affirm the spirit of collaboration by signing the memorandum of understanding on the establishment of supervisory college for financial conglomerate supervision. finally, let me share a quote from the american industrialist and business magnate, henry ford. he said that a€œcoming together is a beginning, staying together is progress, and working

working with industry players, industry associations such as baiphil, and other financial regulators to further strengthen the foundation of corporate governance for our supervised financial institutions. rationale for corporate governance reforms on a global level, adherence to good corporate governance also plays a key role in sustaining the overall health of the financial system and ensuring its ability to withstand crises. to recall, fundamental weaknesses in corporate governance have been identified as among the factors that triggered the 1997 asian crisis and other financial catastrophes in recent years. in the case of the asian crisis, financial systems in the region became vulnerable to external shocks arising from excessive concentration of risk, poor credit policies, and inadequate risk management systems. the international response, which emerged as a consensus was to move toward best practices particularly on corporate governance. on our part, we at the bangko sentral rationalized the regulatory framework to closely align prudential standards with practices that promote the good governance tenets of transparency, accountability and fairness. let me now highlight these initiatives. bsp ’ s corporate governance initiatives bangko sentral ’ s corporate governance agenda is anchored on the practice of effective corporate directorship, sound audit and compliance systems, and enhanced disclosure in financial reporting. in this regard, we have issued several regulations intended to reinforce these critical elements of good governance. at the core of these regulatory initiatives is the leading role to be played by the board of directors in the overall corporate governance agenda. clearly, board oversight is key to effective bank governance and ultimately, to achieving overall stability within the organization. toward this end, we have emphasized the collective responsibility of the banks ’ board of directors and senior management to ensure the soundness and stability of their respective banks. one way to instill such accountability to the board of directors is through director education. since 2002, the bsp has been requiring bank directors and trustees of non - stock savings and loans associations ( nsslas ) to undergo the mandatory seminar on corporate governance to familiarize them with their duties and responsibilities as corporate decision makers. as of end - march 2007, a total of 6, 856 directors and trustees or 84. 7 percent of the 8, 094 directors / trustees of banks, quasi - banks and nsslas have attended corporate governance courses. let me take this opportunity to remind those who have yet to take the governance course to get their schedule as soon as possible. this is mandatory. we have also enforced and strengthened our fit and proper standards for directors and officers of financial institutions. in this