By Fel V. Maragay

Senator Edgardo Angara is pushing for a measure to equip the Bangko Sentral ng Pilipinas with more powers to deal quickly with bank failures, prevent losses and protect the depositors.

Angara, chairman of the Senate finance committee, suggested that the Bangko Sentral should implement best international practices in banking supervision and other measures that will strengthen its regulatory powers over banks and other financial institutions.

In the aftermath of the collapse of Legacy group of banks, Angara underscored the need for effective and orderly insolvency procedures for business enterprises that are in deep trouble. He warned that failure to institute financial reforms, including changes in insolvency proceedings, could be harmful to the national economy and the financial system especially during time of global economic crisis.

The senator from Quezon province said the malpractices committed by several banks under the Legacy group that led to their closure exposed the weaknesses in the Bangko Sentral?s regulatory and supervisory authority that should be remedied with dispatch.

?Experience highlighted the inability of the Bangko Sentral to deal effectively and expeditiously with problem banks. The authority of the BSP over problem banks, in general, is limited to the grant of emergency advances in case of insolvency,? Angara said. ?Prompt corrective actions cannot be implemented due to absence of clear and strong legal basis. Such inability on the part of the Bangko Sentral often causes losses of hard-earned money of the depositors and losses of public funds.?

Under Senate Bill 87l introduced by Angara, the Bangko Sentral charter will be amended to authorize the central bank to adopt international best practices to strengthen the hand of the central monetary authority in overseeing banks and other financial institutions.

The changes envisioned under the bill  include the adoption of the principle of consolidated supervision. It will authorize the Bangko Sentral to approve transfers or acquisitions of shares in a supervised institution and to prescribe guidelines for the examination of the same.