Bankers prefer an insider to succeed outgoing BSP chief

Less than three months before Amando M. Tetangco Jr. steps down as Bangko Sentral ng Pilipinas (BSP) governor in July, industry players are considering an insider as a natural successor to the outgoing central bank chief.

Out of the four possible candidates, two are insiders, and two are industry stalwarts. BSP Deputy Governor Diwa C. Guinigundo currently runs the Monetary Stability Sector, and Nestor A. Espenilla Jr. is the deputy governor who chairs the Supervision and Examination Sector.

Former Trade Secretary and Monetary Board member Peter B. Favila is also a candidate, as well as East West Banking Corp. President Antonio C. Moncupa Jr.

"For me, somebody from the inside would be better. One who can immediately run the show, less the learning and adjustment period," said Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion.
 
"Otherwise, it would seem ... like a political appointment rather than apolitical, which may undermine great gains of the past twelve years," he said.

Asuncion made it clear that his opinion on the matter does not reflect the position of Union Bank and its management.

Tetangco is serving his second six-year term as central bank chief. According to a Reuters report, he "has significantly brought down inflation, shored up foreign exchange reserves, and steered the economy through the 2008 global financial crisis, with the Philippines among the few Asian nations to have avoided recession."

Another economist from a local bank also prefers an insider who is familiar with the regulatory functions of the central bank.

"I prefer internal candidates, as they most likely have a better understanding of the operations of the BSP," he said, asking not to be named as the issue seemed to have turned more political than a choice regarding the larger scope of the economy.

"Among the internal candidates, I prefer BSP Deputy Governor Diwa Guinigundo. I believe that his background as the head of the Monetary Stability Sector gives him the best preparation to occupy the top post of the BSP, an institution whose main goal is to maintain price stability," he said.

Classmates and politics

China Banking Corp. Senior Vice President Alexander C. Escucha prefers any of the two deputy governors, considering they were his schoolmates.

"Medyo biased ako for the two DGs, my schoolmates at UP School of Economics," he said.

Tetangco has said he prefers someone from the inside to ensure seamless transition.
 
Favila is a member of the Monetary Board, the BSP's policy-setting body. He also served as Trade secretary under then-President Gloria Macapagal-Arroyo, as well as president to several banks such as Philippine National Bank and Allied Banking Corp.
 
Moncupa, the outgoing president and CEO of East West Bank, was endorsed by the Partido Demokratiko Pilipino-Lakas ng Bayan (PDP-Laban) and Senate President Aquilino Martin "Koko" D.L. Pimentel III, an ally of President Rodrigo Duterte who is the appointing authority for the central bank governorship.

Duterte chairs the PDP-Laban, and Pimentel is party president.
 
Moncupa is going to be the vice chairman of the Gotianun-led East West Bank by May 1. He will be replaced Union Bank of the Philippines Senior Executive Vice President and Chief Financial Officer and Treasurer Jesus Roberto S. Reyes.

Tetangco is making P13 million a year as central bank governor, including P6.69 million in basic salary and up to P3.9 million in bonuses, according to the Commission on Audit.

"I think all of them are well qualified. I believe we can work with any of them," said Gregorio B. Anonas III, president of the Chamber of Thrift Banks.

"In the end,  it's the President that will decide," he added.

The first qualification
 
In a separate interview, Finance Secretary Carlos G. Dominguez III said he does not know how if political backing would weigh on President Duterte's decision on the matter.
 
"I don't know what his weighting is. I don't know how he weighs it," Dominguez told reporters on the sidelines of the ASEAN Finance Ministers Investors Seminar in Cebu province last week.

"I think, it's clear that the President intends to appoint a person who is fully qualified for this job. And that is, I think, the first qualification. Of course, he has to be healthy and all that," the Cabinet official noted.
 
Asked if a central bank insider may be deemed advantageous, Dominguez said a central banker has an edge at the beginning of the selection process. "In the sense that they will be considered ... Yes, it's an advantage."

Dominguez is unsure who among the names cropping up in media reports is better qualified, as he does not keep tabs of developments from the news.
 
"I don't even know if all those in the local media were on the list at all. Maybe, there were names in the local media that I haven't read ... I don't know if I've read everybody's comments," he said.
 
What Dominguez is certain is the "short number" of people being interviewed by "a combination of people who are trusted (by the President) to sound out people."
 
He emphasized on the nature of the selection process. "It's not a race. It is a process to determine who the most qualified person to do the job is. It's not a race," Dominguez said.
 
"You will know the truth soon. The truth will reveal itself," he added.

Continuity

Tetangco last week said the announcement could be made in a month or so.

Bankers are explicit in that they want a continuity of the way Tetangco – regarded as one of the best central bankers in the world – handled the BSP in the last 12 years.
 
"What is important is continuity of the excellent performance of the BSP. We cannot pre-judge which one will best continue the policies. So, I would rather not give my preference," Alfonso L. Salcedo Jr., Security Bank president and CEO, said.

Tetangco is leaving on July 2, completing his second term in office. Appointed by Arroyo in 2005, he was reappointed by former President Benigno Aquino III in 2011.
 
Duterte earlier told Dominguez that he would ask Congress to amend existing laws, particularly the two-term limit, as a way of accommodating Tetangco for a third term.
 
In February, Dominguez said that Tetangco has declined the offer.

Arroyo was also named as a likely candidate for the position, but Duterte immediately doused such speculation. — VDS, GMA News