MORNBFI Vol. 1 - Planters Development Bank

§ 4141Q.308.12.31QB/trust entity and the means to attain thesame as well as the mechanism formonitoring management’s performance.While the management of the day-to-dayaffairs of the institution is the responsibilityof the management team, the board ofdirectors is, however, responsible formonitoring and overseeing managementaction.c. Specific duties and responsibilitiesof the board of directors(1) To select and appoint officers whoare qualified to administer the QB’s/trustentity’s affairs effectively and soundly andto establish adequate selection process forall personnel. It is the primary responsibilityof the board of directors to appointcompetent management team at all times.The board of directors should apply fit andproper standards on key personnel.Integrity, technical expertise andexperience in the institution’s business,either current or planned, should be the keyconsiderations in the selection process. Andbecause mutual trust and a close workingrelationship are important, the board’schoice should share its general operatingphilosophy and vision for the institution.The board of directors shall establish anappropriate compensation package for allpersonnel which shall be consistent withthe interest of all stakeholders.(2) To establish objectives and drawup a business strategy for achieving them.Consistent with the institution’s objectives,business plans should be established todirect its on-going activities. The boardshould ensure that performance against planis regularly reviewed, with correctiveaction taken as needed.(3) To conduct the affairs of theinstitution with high degree of integrity.Since reputation is a very valuable asset, itis in the institution’s best interest that indealings with the public, it observes a highstandard of integrity. The board of directorsshould prescribe corporate values, codesof conduct and other standards ofappropriate behaviour for itself, the seniormanagement and other employees.Among others, activities and transactionsthat could result or potentially result inconflict of interest, personal gain at theexpense of the institution, or unethicalconduct shall be strictly prohibited. Itshould provide policies that will preventthe use of the facilities of the QB/trust entityin furtherance of criminal and other illegalactivities.(4) To establish and ensure compliancewith sound written policies. The boardshould adopt written policies on all majorbusiness activities, i.e., investments, loans,asset and liability management, businessplanning and budgeting. A mechanism toensure compliance with said policies shallalso be provided.(5) To prescribe a clear assignment ofresponsibilities and decision-makingauthorities, incorporating a hierarchy ofrequired approvals from individuals to theboard of directors. The board shouldestablish in writing the limits of thediscretionary powers of each officer,committee, sub-committee and such othergroup for the purpose of lending, investingor committing the QB/trust entity to anyfinancial undertaking or exposure to riskat any time. The board should have aschedule of matters and authoritiesreserved to it for decision, such as: majorcapital expenditures, equity investmentsand divestments.(6) To effectively supervise the QB’s/trust entity’s affairs. As QBs/trust entitiesare entrusted with the handling andinvestment of public funds, the supervisionrequired from the board involves a higherdegree of wisdom, prudence, goodbusiness judgment and competence thanthat of directors of ordinary companies.Although directors may delegate certainauthority to senior officers, it is theirresponsibility to supervise and beQ Regulations Manual of Regulations for Non-Bank Financial InstitutionsPart I - Page 28