The Bangko Sentral ng Pilipinas (BSP) yesterday said it has revised its five-year-old trust rating system to update its roster of monitored products and make it more effective in assessing the risk management practices of banks' trust entities.
In a statement, the BSP said they had needed to "re-calibrate" the assessment tool "in light of the evolving sophistication and complexities of fiduciary activities."
The revised rating system, which will be adopted starting July 1, has shifted to a 4-point rating scale from a 5-point rating scale and adopted new regulatory issuances, the integration of risk management framework and enforcement rules.
"Under this rating system, the BSP endeavors to ensure that all trust entities are evaluated in a comprehensive and consistent manner and that proper supervisory attention is focused on those engaging in fiduciary business that are not consistent with sound fiduciary principles," the BSP stated.
According to the central bank, the trust entities will be assigned a composite rating based on the evaluation and assessment of five essential components of an institution's fiduciary activities such as capability of board of directors, trust committee and senior management responsible in the administration of fiduciary business. The other components are soundness of operations, controls and audits; adequacy of compliance with governing instruments, applicable laws, rules and regulations and sound fiduciary principles; prudent management of fiduciary assets; and earnings performance. …