MANILA, Philippines - My friend, being offered a position as a director of a government-owned bank, asked me as a former member of the Monetary Board to give him some advice.
I began by asking him to consider whether he has the qualifications of a bank director. In Circular No. 296, the Bangko Sentral in addition to those required under Section 16 of the General Banking Law, the Corporation Code and other existing laws and regulations sets these minimum qualifications - at least 25 years of age at time of election or appointment; at least a college graduate or have at least five years experience in business; attended a special seminar for board of directors conducted or accredited by the Bangko Sentral; and fit and proper for the position of director based on his integrity/probity, competence, education, diligence, and experience/training.
My former colleague in the Monetary Board, Atty. Fe Barin in her article, Strengthening Corporate Governance of Banks in the Philippines, in the book, The Bangko Sentral & the Philippine Economy wrote that the "fit and proper" rule for bank directors should be interpreted more stringently than for other corporate directors. Since banking is vested with public interest, the degree of diligence required of bank directors is more than that of a good father of a family but with the highest degree of care and she cited a number of decisions of the Supreme Court and the Court of Appeals that upheld this view.
Assuming he has the qualifications, I asked him whether he was prepared to undertake the general and specific responsibilities of the board of directors. Generally, as enumerated by BSP Circular No. 283, the board of directors "is primarily responsible for the corporate governance of the bank.
To ensure good governance of the bank, the board of directors should establish strategic objectives, policies, and procedures that will guide and direct the activities of the bank and the means to attain the same as well as the mechanism for monitoring management's performance. However, while the management of the day-to-day affairs of the institution is the responsibility of the management team, the board of directors is responsible for monitoring and overseeing management action."
The specific duties and responsibilities of the board of directors of a bank are also listed in the circular as follows - to select and appoint officers who are qualified to administer the bank affairs effectively and soundly and to establish adequate selection process for all …