Tom Apacible Ceo Panel 2

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  • 1. A PROJECT OF: IN COLLABORATION WITH:
  • 2. Overview The CG Scorecard The Process for the CG Scorecard Initiative The Coverage - Commercial and Universal Banks The Questionnaire and Weights Used Over - All results Summary and Recommendations
  • 3. The CG Scorecard A Corporate Governance (CG) Scorecard is already available for Publicly-Listed Companies (PLCs) since 2005. The CGSC has become a joint undertaking involving ICD, SEC and PSE since 2007. It has become a useful tool for raising the standards of compliance with CG rules and regulations
  • 4. The CG Scorecard Does observance of good corporate governance practices matter; and does it make a difference in the share price of corporations listed on the exchange? The answer is a straightforward “yes”. An econometric study that the PSE commissioned clearly shows that high CG scores relate positively with firm valuation.
  • 5. The CG Scorecard for Commercial Banks Commercial Banks - commercial banks provide the predominant bulk of external corporate finance in the Philippines - corporations in the Philippines do rely much more---and predominantly so---on commercial banks for their external finance than on the stock exchange Therefore: There is a felt demand from the CG reform advocates in the Philippines such as the Fellows of ICD for a more specific focus on commercial banks.
  • 6. The CG Scorecard for Commercial Banks The Questionnaire Initiated with the Bangko Sentral ng Pilipinas (BSP) BSP has tapped ICD as its institutional partner in this specialized CG undertaking At the 2008 annual Woking Session in Palawan, a group of ICD Fellows with the participation of the BSP Officers was organized and agreed to prepare a preliminary questionnaire that would be the basis of such a specialized CG Scorecard. Approved by the BSP Governor and the Monetary Board in July 2009
  • 7. The Process Self rating Validation process Analysis of Scores “Person on the Street” approach takes the side of an ordinary investor, with no special access to any privileged information.
  • 8. Validation Process Self Rating Validator A and B Evaluator A Evaluator B UA & P 5th year Management Students Evaluator C Validator C ICD Project Director Institute of Internal (Identification of Auditors (IIA-P) Issues) members ICD Fellows (Issue Resolution)
  • 9. Results Number of Participants 7 Commercial Banks 13 Universal Banks Out of 20 Banks Encouraged to Participate: All Responded 100% PARTICIPATION
  • 10. Results List of Covered Banks Universal Banks Commercial Banks 1 Allied Banking Corporation Asia United Bank 2 Banco De Oro Unibank 1 Corporation 3 Bank of the Philippine Islands 2 Bank of Commerce 4 China Banking Corporation 5 Development Bank of the Philippines 3 BDO Private Bank 6 Land Bank ofBank and Trust Metropolitan the Phil. East West Banking 7 Company 4 Corporation 8 Philippine National Bank 5 Export and Industry Bank 9 Philippine Trust Company Rizal Commercial Banking Philippine Bank of 10 Corporation 6 Communication 11 Security Bank Corporation 12 Union Bank of the Philippines 7 Philippine Veterans Bank 13 United Coconut Planters Bank
  • 11. The CG Scorecard for Banks Weights Used in the Questionnaire OECD Principles For PLCs For Banks I. Rights of Shareholders 20% 15% II. Equitable Treatment of 20% 10% Shareholders III. Role of Stakeholders 10% 10% IV. Control Environment and ----- 20% Processes V. Disclosure & Transparency 25% 20% VI. Board Responsibilities 25% 25%
  • 12. Results Aggregate Score for Commercial and Universal Banks Universal and Commercial Banks Aggregate Score Commercial Banks 76 % Universal Banks 88% 84% 2008 CG Scorecard for PLCs Aggregate Score Publicly-Listed Companies 72%
  • 13. Results Per Category Scores Universal and Commercial Banks AVERAG Categories Weight E I The Right of Shareholders 15% 82% II Equitable Treatment of Shareholders 10% 86% III The Role of Stakeholders in CG 10% 82% IV Control Environment and Processes 20% 89% V Disclosure and Transparency 20% 83% VI Board Responsibility 25% 83% TOTAL 100% 84%
  • 14. Results Aggregate Score for Commercial and Universal banks 89% 84% 82%
  • 15. Results Lowest and Highest Universal & Commercial Banks Difference Highest 96% 33 Lowest 63% Top 3 and Bottom 3 Universal & Commercial Banks Difference Top 3 94% 28 Bottom 3 66%
  • 16. Results Lowest and Highest Universal Banks Difference Highest 96% 29 Lowest 67% Top 3 and Bottom 3 Universal Banks Difference Top 3 94% 15 Bottom 3 79%
  • 17. Results Per Category Scores Universal Banks AVERA Categories Weight GE I The Right of Shareholders 15% 87% Equitable Treatment of II Shareholders 10% 90% III The Role of Stakeholders in CG 10% 87% Control Environment and IV Processes 20% 91% V Disclosure and Transparency 20% 86% VI Board Responsibility 25% 86% TOTAL 100% 88%
  • 18. Results Lowest and Highest Commercial Banks Difference Highest 90% 27 Lowest 63% Top 3 and Bottom 3 Commercial Banks Difference Top 3 85% 15 Bottom 3 70%
  • 19. Results Per Category Scores Commercial Banks AVERA Categories Weight GE I The Right Treatment of Equitable of Shareholders 15% 73% II Shareholders 10% 80% III The Role of Stakeholders in CG Control Environment and 10% 70% IV Processes 20% 86% V Disclosure and Transparency 20% 75% VI Board Responsibility 25% 76% TOTAL 100% 76%
  • 20. Summary and Recommendations 1. The objective of having a benchmark result, we now have: 1. The average score for all universal and other commercial banks b. The average score for all universal banks separately from the average score for the other commercial banks. c. The “per category scores” for the 6 CG categories included in the CG scorecard questionnaire. d. The difference between the average scores of the three top- rated and the three lowest-rated for both Universal and Commercial Banks.
  • 21. Summary and Recommendations 2. While all the figures reported as averages for all universal and other commercial banks are available as benchmarks for the corresponding figures for individual banks, we believe that at this stage, it is productive and proper to release ONLY the average figures as benchmarks. 3. As in the case of the PLCs, we recommend that a sufficient period of time should be allowed for universal and commercial banks to improve their CG scores and raise their standards of compliance.
  • 22. Thank you