Corporate Governance and Access to Finance - ESBG

PPSB has a very comprehensive Corporate Governance Code, andthe practices are in line with central bank and SEC (the marketregulator) guidelines. The Philippines banking system benefits fromhaving a banking supervisor very concerned with CorporateGovernance. PPSB approach to Corporate Governance is inaccordance with international best practices, but not particularlytailored to Access to Finance objectives.Access to FinancePPSB is a small institution limited in its outreach by the constraintof not having the capacity to use the Post Office network ofbranches, which is normally considered as the main advantage ofpostal banks. Out of the 2,817 branches that the Post office has,only 25 are used as PPSB branches. There are two reasons for this.First, there is an IT connectivity problem in the postal network andsecond PPSB capital is considered insufficient by the Central Bankto allow for expansion.For the PPSB to be able to use the post office network, it will firstneed to find a solution to the capital increase problem. The plan is alsodependent on the central bank forthcoming regulation on “thirdparty entities as agent banks”, which includes a reference to thePostal Bank. This regulation will probably relax the conditions forthe use of agents, which may benefit the outreach capacity of PPSB.Corporate Governance and Access to FinanceThe mission of PPSB is to “be a strong and dynamic nationalinstitution that will mobilize savings and promote entrepreneurshipto widen economic opportunities. Provide the Filipino people witha full range of professional banking and financial services accessiblein all areas of the country and promote the values of thrift, industryand prudence especially in the youth”. This statement includesgeneral references to Access to Finance. These general guidelineshave not been translated, however, into specific financial inclusionpolicies or objectives. Thus, there seems to be certain disconnectbetween the Corporate Governance Code and the financialinclusion objectives as stated in the mission of the institution.54