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Ag yuvienco overcoming challenges 1

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  • 1. Overcoming ChallengesMa. Dolores B. Yuvienco Assistant Governor
  • 2. Governance Structure• Setting strategic goals – should taking into account the bank’s long term financial interests, level of risk tolerance and ability to manage risks effectively – should be implemented with clearly defined responsibilities and accountabilities
  • 3. Governance Structure• Setting strategic goals – adopt policies, procedures and systems commensurate and suited to the risk profile and scope of operations of the bank
  • 4. Governance Structure• Exercising objective judgment – select board of directors from a broad pool of candidates – have a sufficient number of non-executive directors in the board – minimum number of independent directors: at least 20% but not less than 2 of the members of the board, rounded up to the nearest whole number
  • 5. Governance Structure• Exercising objective judgment – adopted “5-2-5” rule of the SEC director can only serve as such in the same company for 5 consecutive years the term may be extended for another 5 consecutive years only after a 2-year cooling off period after serving for 10 years, the independent director shall be perpetually barred from being elected as such in the same company
  • 6. Governance Structure Audit Committee  CEO, CFO and/or Treasurer shall not be appointed as members of the audit committee Risk Oversight Committee  Shall be chaired by a non-executive member of the board  Shall have at least 1 independent director as member Corporate Governance Committee  Shall be chaired by an independent director
  • 7. Governance Structure• Exercising objective judgment – non-complex banks specifically, thrift; rural and cooperative banks, may constitute at a minimum, the audit committee
  • 8. Governance Structure• Strengthening checks and balances systems – Banks should have appropriate and effective checks and balances systems in place – non-executive members of the board of directors should conduct regular meetings with the heads of internal audit, compliance and risk management functions and the external auditor
  • 9. Governance Structure• Strengthening checks and balances systems – internal controls and internal audit comprise the primary line of defense of banks against abusive practices – opinion of external auditors lends credibility to the financial statements prepared by the bank – the compliance system contributes to a strengthened control environment and increase in franchise value of banks.
  • 10. Compliance function• Elements of the compliance system – compliance program duly approved by the board of directors; – a constructive working relationship of the BSP; and – a clear and open communication lines within the bank to educate and address compliance matters
  • 11. Compliance function• simple banks may designate a non-executive member of the board of directors to serve as the chief compliance officer in a concurrent capacity
  • 12. Overcoming ChallengesMa. Dolores B. Yuvienco Assistant Governor

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