THE BANGKO SENTRAL ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) last week signed a revised agreement on bank examination for better coordination.

BSP Governor Eli M. Remolona, Jr. said the revised memorandum of agreement (MoA) they inked on Friday follows the passage of new laws boosting both institutions’ regulatory and supervisory powers to improve financial consumer protection.

This was the third update to their agreement, with the first MoA signed in 2005 and a second agreement inked in 2013.

“This new MoA strengthens our partnership by defining our division of labor more clearly,” Mr. Remolona said in a speech at the signing. “BSP focuses on credit, market (and) operational risks. PDIC focuses on deposit-related risks.”

Republic Act (RA) No. 11211 signed in 2019, which amended the New Central Bank Act, widened the BSP’s power to identify, correct, and resolve banking issues.

Meanwhile, RA 11840 enacted in 2022 updated the PDIC’s charter to give it clearer authority to intervene in cases involving fraud, unsafe practices or amid failed corrective actions.

Mr. Remolona cited a case wherein the PDIC reported the understated discrepancies of a bank, and the BSP required additional provisions.

“We have seen how this kind of coordination works in practice,” the BSP chief said.

“Because of this cooperation, the bank closed in an orderly manner — minimizing losses to depositors. This is the kind of teamwork we will see more of under this new MoA.” — Katherine K. Chan

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