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Inspirational Remarks for 2009 RBAP Officers Inaugural – PDIC Pres. J. Nograles

Congressman Lopez, Governor Tetangco, incoming RBAP President Omar Andaya and the other officers and directors of RBAP, immediate past RBAP president Mr. Mitch Gomez, Mr. Aurelio Montinola of the Bankers Association of the Philippines, Mr. Pascual Garcia III of the Chamber of Thrift Banks, Ms. Gilda Pico of Landbank, Mr. Virgilio Angelo of Small Business Corporation, Mr. Jovy Bernabe of Philippine Crop Insurance Corporation, rural bankers, colleagues in the industry, ladies and gentlemen, good evening.

First of all, let me congratulate the incoming officers of the RBAP for their election, and also, the outgoing officers for steering the organization through what has been the most challenging year in recent history for financial systems worldwide.

We have heard countless times how the global financial crisis has savagely shaken the world’s strongest economies, exposing weaknesses in financial systems both in terms of regulatory framework for supervisors and corporate governance for the financial institutions. But as author and leadership coach John Maxwell said, “Life is 10 percent what happens to me, and 90 percent, how I react to it.”

As you may know, PDIC worked for the passage of amendments to our charter as a preemptive response to this global crisis. The amendments took effect on June 1, 2009, increasing the maximum deposit insurance coverage to P500,000. At this level, 99.5 percent of deposit accounts in rural banks is fully covered. In effect, this offers practically full protection for all rural bank depositors. Unfortunately, increasing the coverage also compounds the risk of moral hazard. That is why under the same law, PDIC is given additional authorities that will reinforce its ability to protect the interest of depositors and safeguard the deposit insurance fund from unnecessary abuse. We are coming up with new regulations very soon to implement this new law.

I take this opportunity to thank the RBAP and the other bank groups who have supported us in pursuing these amendments. And as I speak, the primary regulator, the BSP, is also seeking amendments to its Charter, in order to strengthen its oversight functions. Let us all support this endeavor.

Notwithstanding the closure of 23 rural banks last year, I am pleased to note that RBAP, with its 2,000 banking units nationwide, has continued to demonstrate its dependability in providing services to small depositors and start up businesses, fueling growth to the countryside. You have managed to set standards for innovations in rural banking, employing technology in rural banking services. This is attested to by the growing number of automated teller machines in your network, and the fact that more than 70,000 clients are benefiting from your mobile banking services. I understand that more and more farmers are now making their loan repayments through their cell phones.

It is also noteworthy that RBAP entered into a landmark partnership with us in PDIC’s campaign for wise and responsible banking. With RBAP, we recently launched the Wise Saver campaign joined by other partners: the Bangko Sentral ng Pilipinas, Bankers Association of the Philippines, Chamber of Thrift Banks and the Bank Marketing Association of the Philippines. This is a joint industry effort that launches a massive information campaign to instill responsibility and market discipline among depositors as well as educate them on basic banking know-how. In the long run, this will contribute to a stronger banking system.

And more importantly, I count on RBAP to continue to exhort its members to adhere to high standards of performance and corporate governance. As you have manifested in your website, one of your operating principles is to work with us, the regulatory agencies to, I quote, “set and maintain the highest standards of compliance.”

In closing, let me wish RBAP success in its mission of bringing the benefits of economic development to rural customers through a strong and responsive rural banking system. Let us renew our quest to further improve our present operations so that all of us in the industry will emerge stronger and better equipped to serve the public.

I wish the new leadership of RBAP the very best as you continue to steer this organization to greater success.

Again, congratulations.

Thank you.