Government News Analysis

Search for the banker

In four months time, the biggest job in Philippine banking will be filled. Right now though, no-one – not even President Rodrigo Duterte – knows who will occupy that position, even though Duterte will be the person to make the appointment. The job opening is for the next governor of Bangko Sentral ng Pilipinas (BSP), the country’s central bank – and it’s one of the most important appointments any president can make.

Duterte’s first choice is believed to be the incumbent governor, Amando Tetangco Jr., but there’s a couple of problems – BSP governors are restricted to two six-year terms and in July Tetangco’s second term comes to an end. To offer him a further six years Duterte would need Congressional approval. In other words, the BSP Charter would need to be amended to allow for a third term – something Finance Secretary, Carlos Dominguez, is also in favour of.

The other issue is that this post carries a mandatory retirement age of 65 – a birthday which Tetangco will be celebrating in November. That means that he would be four months short of his 70th birthday when the next governor’s term concludes. So this rule, too, would need to be changed.

Tetangco – in office under former presidents, Gloria Macapagal-Arroyo and Benigno “Noynoy” Aquino, and now Duterte – is already the BSP’s longest-serving governor. His two predecessors – there have only been three governors of the BSP – each served for just one term. They were Gabriel C. Singson, the first governor, 1993-99, and second governor, Rafael B. Buenaventura, 1999-2005.

The chances are though, if Duterte wants to keep the present governor in place until 2023, he could garner enough political support to make that happen. But Tetangco, who is also chairman of both the BSP Monetary Board and the Anti-Money Laundering Council, would also need to want to spend another six years at the BSP Main Complex in Malate, Manila. And so far – publically at least – he hasn’t expressed such an interest.

What we do know is that if he isn’t reappointed, whoever succeeds him has big shoes to fill. Tetangco is universally regarded as one of the safest pair of hands in the central-banking business. Last year, Global Finance magazine gave him an ‘A Grade’ on its Central Banker Report Card – just one of eight out of 74 worldwide to receive that rating. Janet Yellen of the US Federal Reserve was given an A- (minus); Mario Draghi of the European Central Bank managed a B+.

In addition to being the country’s chief monetary regulator, Tetangco also represents the Philippines as its Governor in the International Monetary Fund and as Alternate Governor in both the World Bank and the Asian Development Bank.

Duterte, however, has many other options. For a start there are the three deputy governors of the BSP – Diwa C. Guinigundo, Monetary Stability Sector; Nestor A. Espenilla, Jr., Supervision and Examination Sector, and Maria Almasara Cyd N. Tuaño-Amador, Supervision and Examination Sector.

The name of former Deputy Governor, Vicente Aquino, whom Tuaño-Amador replaced – he headed the Anti-Money Laundering Council from 2001-2013 – has also been mentioned. But he is also past the retirement age, so special dispensation would be needed if he was to be considered.

Outside the central-bank bubble, Duterte has the entire private-banking sector to explore. It’s not written anywhere that governors must come from within the BSP – in fact, Tetangco, who has been with the central bank for more than three decades, is the only governor to come from BSP ranks. Buenaventura was president and CEO of Philippine Commercial International Bank (now, Equitable PCI Bank) when former president, Joseph Estrada, appointed him. Singson moved to the BSP from his post as president of Philippine National Bank, after being called by former president Fidel V. Ramos.

Thus, the next governor could, for example, come from the top of one of the country’s “Big 10” banks – Banco de Oro (Nestor Tan), Metrobank (Fabian Dee), Landbank (Alex Buenaventura), Bank of the Philippine Islands (Cezar Peralta Consing), Security Bank (Alberto Villarosa), Philippine National Bank (Florencia Gozon Tarriela), Development Bank of the Philippines (Cecilia Borromeo), China Bank (Ricardo Chua), RCBC (Gil Buenaventura), and UnionBank (Justo Ortiz).

Or he/she could come from elsewhere in the local banking community; or from overseas. This is a common route for central bankers – while Yellen came up through the ranks of the US Fed, Draghi had been vice chairman and managing director of investment-banking leviathan, Goldman Sachs International. Mark Carney, the current Governor of the Bank of England, the UK central bank, came from Canada’s central bank. Prior to that he had also been a Goldman Sachs executive.

But there are other options, and names that might be in the hat right now include former Department of Trade and Industry secretary and Monetary Board member, Peter V. Favila; East West Banking Corp. president, Antonio C. Moncupa Jr., and even closer to home, Foreign Affairs Secretary, Perfecto R. Yasay. Coincidentally, Yasay will be handing over his portfolio to Duterte’s vice-presidential running mate, Alan Peter Cayetano, at the same time as Tetangco steps down.

In short, Duterte has a big rich pool to choose from.

He may, however, be looking to maintain continuity and so the present deputy governors, all time-served professionals who can hit the ground running, might be favourites if a third-term Tetangco option isn’t forthcoming. Of these, in order, Guinigundo and Espenilla look the most likely.

Both these dep-govs are part of the Tetangco team that steered the BSP engine through some often tricky terrain – from currency fluctuations and inflationary pressures to full-blown financial crises – over the past 12 years, fine-tuning that engine and building the BSP’s reputation as one of the finest central banks anywhere. Probably no one better than them knows the difficult contours of the Philippines monetary landscape.

Furthermore, they’ve overseen one of the best periods of economic growth in the country’s history – and much of it against a backdrop of a global slowdown. On their watch, millions of Filipinos have been lifted from poverty. In all this, their credentials speak for themselves and each of them is eminently qualified for the top post.

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