Corporate Governance and Access to Finance - ESBG

To address the problem of capital, PPSB is considering the entrance ofnew shareholders. There is a major drawback. If the participation of othershareholders exceeds 50 percent PPSB will automatically lose the privilegeto receive government deposits, which would put at risk its currentbusiness model.Several other alternatives have been considered to address the problemof capital, but for some reason or another all have been turned down bydifferent stakeholders. PPSB privatization is under discussion in thecontext of a national strategy directed by the Privatization ManagementOffice (PMO), which depends on the Department of Finance (DOF).Access to FinanceThe mission of PPSB is to “be a strong and dynamic national institutionthat will mobilize savings and promote entrepreneurship to wideneconomic opportunities. Provide the Filipino people with a full range ofprofessional banking and financial services accessible in all areas of thecountry and promote the values of thrift, industry and prudenceespecially in the youth”. The mission of PPSB, although related tofinancial inclusion, is defined with certain flexibility, so that the preciseimplications in terms of policies are open to decision by PPSB Board andmanagement. For now, access to finance goals have not been translatedinto specific objectives. Thus, the activity of PPSB is similar to that of otherThrift Institutions, apart from its role in receiving public deposits.There is no clear division of labour in the Philippines among the fourgovernment owned banks. Furthermore, they tend to compete withcommercial banks in their offer of financial services. According tointernational good practices, the presence of public banks normallyrequires a very clear mission and mandate that addresses a market failure,especially if there are more than one such institutions. The case of thePhilippines seems to depart from these good practices.The range of products offered by the institution is relatively broad.Some of these products are related to access to finance objectives, butthe extent of the latter is limited by the small number of branches andthe ensuing lack of penetration in rural areas.133