Amando M. Tetangco, Jr.
BSP Governor


It is always a pleasure to be at the general assembly of the officers and members of BAIPHIL, the training arm of the Philippine banking industry, one of the most important pillars of our economy.

Given that the environment within which we operate is far from static and is in reality, quite dynamic, BAIPHIL’s role is quite challenging. I am glad therefore that BAIPHIL is up to this challenge.

Under the leadership of its immediate past president Rhoneil Fajardo, BAIPHIL adopted for its theme “Building Capacity Towards Financial Inclusion and Integration.” This reflected the industry’s efforts in support of the BSP’s thrust to develop an inclusive financial system to promote inclusive growth and long-term stability. And you walked your talk. We also saw this in the way BAIPHIL escalated its increasingly popular financial education program for teachers and parents and for other marginalized sector groups. Congratulations!

This time, with BAIPHIL President Liza Ortiz at the helm (from July 2016 to June 2017), your theme is “Leveraging Capabilities and Synergies for Banking Excellence.” Indeed, this is the call of the times.

The dramatic changes we have been seeing in the financial system are unparalleled. We are witnessing a sea change via global reforms, regional initiatives and domestic developments. The market’s underlying architecture is being re-shaped and this has also changed what we expect of bankers as professionals.
Global best practices continue to evolve and the bar set to ever higher standards. But beyond standards, what all these really mean is that it is no longer enough for financial professionals to focus only on their own institutions. Proper planning requires a more holistic view of market developments and how these changes can create and possibly lead up to system-wide dislocations.

It is the identification and mitigation of these system-wide dislocations that now drive the efforts of financial regulators. The build-up of systemic risk should be a collective concern because we have seen the extent of dislocation and the high costs that it can bring.
This is the mindset for the pursuit of “financial stability” as the new global prudential norm — our efforts are organized towards preventing another systemic collapse of the financial markets.

Keynote Speech delivered by Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. during the First General Membership Meeting of BAIPhil held on 15 July 2016 at Makati Shangri-la.

This is very apparent in the global reform agenda where containing “too- big-to-fail” financial institutions and addressing the consequences of inter- connectedness are prominent objectives. Basel 3 runs under the mantra of “making banks stronger”. It does so by institutionalizing better quality capital, introducing loss-absorbency parameters for capital-compliant instruments, improving market transparency and setting prescriptive caps/floors for prudential purposes.

On the other hand, new standards completely redefine the risk governance for Financial Market Infrastructures or FMI. This is done with an increased appreciation for contagion risk and the need for stronger IT security protocols. Consumer protection and financial literacy are now considered prudential norms rather than as optional add-ons. This is because the decisions and behavior of informed financial consumers are itself effective stabilizers against market shocks.

From the perspective of the market, these reforms increase the cost of doing business. Granted, these regulatory premia have cost implications; but it would be costly to have yet another crisis.

We should also factor in, that new standards now cover more risks and look at the same risks at a higher prudential bar. The “new market landscape” is defined not only by tighter regulations but by wider coverage of risks and a more definitive handling to mitigate further build-up of known risks into systemic proportions.
It can be said that new norms change our understanding of the market — from allocating scarce resources into one that allocates risk capital. By extension then, the key commodity is information that drives decisions across various options. It is important that reforms are put in place and safeguards continuously updated to uphold the integrity of that information so that it is not abused.

Excellence Starts from Core Competencies

Ladies and gentlemen, it should be apparent that the preferred market architecture today is substantially different from what we had in the past. If we aspire to excellence in banking, it must start from developing core competencies.

However, let me be clear — the need for continuing education has not changed; what has changed is the mindset for achieving “banking excellence”. We still need to know about market, credit and operational risks; but beyond these, we now need to also appreciate risks that are not so apparent — like contagion, concentration, leverage and liquidity.

These four risks — of 2 Cs and 2 Ls — are important. At the BSP, we refer to them as “CL-2 risks”. These CL-2 risks are systemic because exposures to them are formed through a chain of bilateral transactions. Once any single point of the chain is compromised, the entire chain is weakened. Monitoring this chain of counterparty dealings is a challenge for each institution, but it is precisely the basis for systemic risk that concerns regulators.

An added challenge is that financial stability cannot be defined in absolute terms. Building core competencies therefore will be an exercise not only of “what is” but increasingly more of “what can be”. This is where judgment, perspective and collaboration play a critical role. While the market may be more complexandempirics-based, intheend,itisstillthehumanfactorthatwillbe needed to execute transactions.

In many ways, the task of achieving banking excellence thru synergies is no different from operating a dragon boat.

  • There is a sweep whose task it is to steer the boat with an oar and to protect the safety of the crew by avoiding collisions.
  • There is a drummer whose rhythmic pounding of the drum establishes synchronicity. Considered the heartbeat of the dragon boat, the drummer decides when it is appropriate to increase or decrease the pace of the team.
  • And there are the paddlers whose collective and coordinated strokes move the boat.

If the dragon boat crew does not work together, the boat itself will not move. But as a team, one can see that the beauty of cadence and the commitment to collaborate will propel the dragon boat to move with direction, purpose and urgency.

Final Thoughts

Ladies and gentlemen, all these simply reiterate that financial markets warrant a strong framework for risk governance because of the network of linkages between transactions, stakeholders and product lines. Thus, the reform agenda has instigated a tighter framework that now recognizes new risks and treats old risks in a different light.

The responsibility of achieving financial stability and sustaining the strength of the financial market rests on all industry stakeholders. We are all in this together, and therefore, we should work together. Like wisdom, strength
cannot be granted; strength must be earned.

To move forward stronger and better requires that we all collaborate and work on a common vision and policy direction. To me, this is the essence of your theme: “Leveraging Capabilities and Synergies for Banking Excellence.”

I see BAIPhil scaling up its role within the banking industry. You can serve as the dragon boat drummer, be the heartbeat of the industry thru trainings, calibrating coverage and content to what is needed most at any point in time.

And BAIPHIL’s role should continue to go beyond addressing gaps in technical skill sets. It is important for BAIPHIL to broaden and deepen its coverage of human behavior, values, ethics, and the need to maintain financial integrity at all times. In particular, BAIPHIL can address the need to cascade governance standards across banks to levels below Directors.

And through BAIPHIL, the banking industry stands to benefit even more, from having global experts you can learn from and benchmark with, in your conferences and training courses.

Ladies and gentlemen. It has been said that we can have a good future only if we prepare ourselves today. We need the cadence and rhythm of a dragon boat to navigate uncertain waters that challenge stability and the pursuit of excellence.

Under its new set of officers, I am confident that BAIPHIL will continue to be a positive force in the banking industry.
Mabuhay ang BAIPHIL at ang ating banking industry! Mabuhay ang ating mahal na bansang Pilipinas! Mabuhay po tayong lahat!
Maraming salamat!

Liza L. Ortiz
BAIPHIL President

Inaugural Address

BAIPHIL Induction Ceremony
12:00 noon, July 15, 2016
Rizal Ballroom C, Makati Shangrila Hotel

The Honorable Governor of the Bangko Sentral ng Pilipinas (BSP) and Chairman of the Monetary Board Amando M. Tetangco Jr., Honorable members of the Monetary Board Juan D. Zuniga, Jr. and Armando L. Suratos, Deputy Governor Nestor A. Espenilla, Jr. , may I also mention my boss, Mr. Tadahiro Miyamoto, General Manager, Bank of Tokyo-Mitsubishi UFJ Manila Branch, for without his support I would not be here today, distinguished guests, BAIPHIL past presidents, partners and friends in the industry, fellow BAIPHIL members, good afternoon.

I humbly stand before you as the 71st president of the Bankers Institute of the Philippines. Thank you all for sharing your precious time with us in celebrating this momentous event despite your busy schedules. To the people who worked hard to make this event come into reality, my sincerest gratitude.

This fiscal year, BAIPHIL is celebrating its 76 years of service to the Philippine banking system since 1941. As you can see, “1941” is already proudly embedded in the new BAIPHIL logo that we launched last month.

Indeed, BAIPHIL represents a solid tradition of continuous quest for banking excellence through quality education and training. We therefore take great pride in being recognized by the BSP as the training arm of the Philippine banking industry. Of course this could not have been made possible without the strong support of the institutional members – the banks – and the commitment and dedication of the men and women of BAIPHIL throughout the years.

At this juncture, let me mention our theme for this year – “Leveraging capabilities and synergies for banking excellence”.

The theme underscores the need for the Philippine banking industry to continuously strive for excellence in order to provide quality and satisfactory service to its customers, adhering to global standards and best practices especially in the midst of the changes happening in the banking industry, in our country and in global community, as a whole.

We are confident that with BAIPHIL’s dynamism and enthusiasm in responding to and proactively working on the evolving needs of the financial industry, and the steadfast commitment to continuing collaboration with its partners and stakeholders, we will be able to seize and leverage on the emerging opportunities from these changes.

At present, the Philippine banking industry is facing a number of challenges:

The stiff competition among banks and financial service providers in the light of regional efforts towards banking integration;
The changing regulatory landscape, both locally and globally;
And the increasing expectations from the stakeholders and the society as a whole.
The emerging trend of financial technology or ‘fintech’ and its potentially transformative implications may also have to be included in the equation.

All these forces have significantly magnified the role and importance of continuing education and training more than ever.

BAIPHIL will be your partner in these challenges and opportunities.
BAIPHIL will leverage on the strength and capabilities it has developed over the years. It boasts of a stable organizational infrastructure, more so with the new office in Makati which was inaugurated last month. It draws strength from the rich resource of the talents and banking expertise of its members including that of the former officers and directors who are still actively engaged in professional development.

BAIPHIL will likewise leverage on the synergies from the partnerships that it has established with the regulators, most especially the BSP, and the various organizations such as the accounting firms, the academe, and the other associations in the banking industry.
Hence, for this year, let me mention the priority projects and initiatives of the incoming leadership team.

Strengthen training framework

BAIPHIL will conduct in-depth consultations with the member-banks through their respective Training Heads to arrive at a training plan that is suitable to these challenging times and be able to define the role of BAIPHIL in the banking industry in the long term. In fact, a Training Needs survey has already been released last month to kick off this initiative.

Likewise, we will pursue development of certification courses in collaboration with subject matter experts (SMEs), academic community, and BAIPHIL counterparts in the Asia Pacific. The groundwork for the creation of specialized and holistic development programs has already been laid down by our predecessors, after discussions with the regional and global counterparts.

Moreover, we will apply for accreditation with the Philippine Regulation Commission as a provider of Continuing Professional Development programs for the Accountancy profession. This will benefit our members who are subject to the requirements of Board of Accountancy under Resolution 3-2016.

Of course, we will continue to deliver relevant training courses with global perspective on products, finance, Information technology, cyber security, risk management, governance, anti- money laundering, among others.

At this point, let me take advantage of this opportunity to express our sincerest appreciation to the BSP for its steadfast support to BAIPHIL, providing the SMEs for the compliance-related trainings that we conduct.

Hold the biennial national convention

This fiscal year will be special for BAPHIL because we will be holding the 29th National Convention. The date has been set on March 10-12, 2017 at Taal Vista Hotel, Tagaytay. This event will bring new knowledge and additional competency to the participants from the timely and relevant topics to be discussed by our notable speakers, not to mention the camaraderie and engagement that it will promote.

May I therefore take this opportunity to request the heads of the banks present here today to give their full support to this upcoming event.

Enhance research and information exchange

We will review existing modes and channels of distribution of our flagship publications on legal, regulatory and market developments (BAIPHIL Market Watch, BAIPHIL on the Go!, BAIPHIL Soft Empowerment series, BAIPHIL Legislative/Regulatory Update) to ensure effective and wider reach to our members.

We will further enhance our internal communication to bring the various communities closer, so they can showcase their achievements and get the buy-in from the different stakeholders in the process.

Through the general membership meetings and/or the national convention, we will facilitate discussions to heighten awareness of emerging developments such as the FinTech or digitalization to accelerate the further advancement of the Philippine banking and financial services industry.

Enhance the engagement of BAIPHIL members

The rekindled commitment of each member is a primary catalyst in the achievement of our vision and mission. We will implement actions plans to raise the level of participation of the members, develop camaraderie and enhance their engagement in the process. We encourage all members to visit our new office at The Peak Tower, in Leviste St. Makati. This is our office.

Continue efficiency measures

We will continue to rationalize our processes and procedure to attain efficiency and prudently manage our resources.

Continue with corporate social responsibility activities

As bankers, it is also our fundamental responsibility to extend support to the fulfillment of our social mission for the development of our society. In this respect, we affirm our sustained cooperation with BSP and other partners in the achievement of financial inclusion and sustainable growth.

With the changes and challenges ahead, we assure you that with our enhanced capabilities and the pro-active participation of our partners and stakeholders, we will be able to gain new grounds in banking excellence. We are stewards of the legacy of the men and women who have pioneered, nurtured and cultivated BAIPHIL into becoming a robust and dynamic institution that it is now today.

In closing, may I therefore call on the heads of the member banks present here today to continue to support BAIPHIL and to my fellow BAIPHIL members, let’s walk together in this journey with zeal, fortitude, open mind, and inclusive attitude.

Magandang hapon sa inyong lahat!