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RETAIL INVESTMENT | Cesar Tordesillas, Philippines

Philippines to have new rules On trust and investment management

The Bangko Sentral ng Pilipinas’ Monetary Board has crafted new guidelines on the expanding trust, fiduciary and fund management industry, with assets under management now exceeding P3 trillion.

This will be the first of several regulations in a set of reforms that are related to the trust business.

“Governance and risk management has to be reemphasized first before (releasing) more crucial reforms,” he said. The next revisions are major ones, including the cross-selling and marketing of trust products. “We have to do this first (governance circular) before we could complete cross-selling policy,” Espenilla added.

In a separate statement issued by the BSP yesterday, the Monetary Board inked the new governance reforms last August 9 and approved changes to the existing trust regulations for both bank and non-bank institutions, specifically relaxing some provisions and providing some allowance to the composition of trust committees.

“The BSP considers the issuance of said guidelines timely in view of the remarkable growth of the trust industry in the last five years in terms of assets under management, which reached the P3-trillion mark last April,” according to the BSP.

In the statement, the central bank said the new guidelines zeroed in on the required separation of financial institutions’ fiduciary business and proprietary dealings.

It also introduced the risk management standards, which provide principles-based guidance in the implementation of sound risk management practices for trust, other fiduciary business, and investment management activities, said the BSP. “As such, the applicability of said guidelines will depend on the size, complexity, and risk profile of the institution’s fiduciary activities, consistent with BSP’s risk-based supervision framework,” the BSP explained. There will be one year transitory period from effectivity date of the circular issuance to allow banks and non-banks time to modify existing organizational structures.

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