TOAP’s 2014-15 board: Fit and proper

Like all the previous changing of the guards that I could remember of the nearly two-thirds of its by now 50 years of existence,  the turnover of the reins of Trust Officers Association of the Philippines (TOAP) by the 2013 to the 2014 board last March 27 was low profile and, on the surface, uneventful.

But the placid outside atmosphere of the induction ceremonies, presided over by Bangko Sentral ng Pilipinas’ Deputy Governor Nesting Espenilla at the Makati Shangri-La Hotel, was a severe understatement of the increasingly important role of the trust industry in the country’s economy.

President Benigno Aquino III, on the occasion of the Trust Consciousness Week two weeks earlier, had on March 9 recognized this role. He referred to the members of the association as “allies in broadening the advantages of a revitalized nation.” Hence, PNoy submitted that TOAP ought to “help cement the foundations of an equitable society by strengthening the competencies of the trust industry through policies that help your field evolve in response to needs of our people and the complexities of the global economy.”

PNoy’s appreciation of the role of the trust industry is shared by Manny Gaite, a SEC Commissioner, as well as by Hans Sicat, president of the Philippine Stock Exchange. Both walked the extra mile and took time out from their Friday night schedules to attend the induction. 

Unit Investment Trust Fund Development is the task of Arnulfo De Pala of Eastwest Bank. As befits lawyers, Atty. Josephine Jolejole of the Philippine National Bank and Atty. Maria Pax Garcia of the Bank of the Philippine Islands, are  responsible, respectively, for Fiduciary Products Development and Taxes & Regulated Products. Capital Markets is right down the alley of Dreda Teresa Mendoza of the First Metro Investment Corporation. Ma. Elizabeth Aquino of Robinsons Bank takes care of Investor Relations & Education.

The issues facing the new board are formidable. Heading the list is how the local trust players are to brace themselves against the incoming onslaught of foreign banks expected as a consequence of the ASEAN integration in 2015. 

Although undoubtedly the neighboring banks are believed to be inclined to proceed initially with caution due to their unfamiliarity with the preferences of Filipino clients, it cannot be ignored that their ASEAN counterparts have very deep pockets that can easily absorb the costs of introducing themselves to the country’s rich and presenting themselves as gilded gateways to the rest of the region.

Using the trust department, undoubtedly a loss leader when considered standing alone, as a foot in the door has been a technique successfully employed since the glorious days of the then Far East Bank and Trust Company. Not to mention that many Filipinos who are presently employed by banks in the other ASEAN countries are vulnerable to be persuaded by expat perks and compensation to set up the trust operations here.  

Trust product development, in terms of crafting new ones and/or refining existing others, is another challenge, specifically for the genre of the Unit Investment Trust Fund. 

Multi-class funds – close-ended funds (or those where the number of units available to the public is limited ab initio), funds of funds (i.e. collective investment in a menu of other collective investment programs) – are just some of top of mind instances.

Navigating through the exposed rocks as well as hidden sandbars in the tax and regulatory landscape is another area of industry concern.  

There is a need for more practical understanding with the tax authorities and the banking regulators on the questions of the implementation of cross-selling by banks of one another’s collective investment products, of the bank’s degree of monitoring of an employee’s self-contributory retirement scheme authorized under the Personal Equity and Retirement Account of 2008 (R.A. No. 9505), of putting to rest the question of the trust banks’ ability to place funds under their management in the BSP’s window (known as Special Deposit Accounts which was functionally intended as a liquidity mopping tool of the Banko Sentral) without being subjected to the Banks’ Gross Receipts Tax on the income therefrom, of the regulatory favour of the  Grantor Trust (which is given under banking regulations a signification that is different from its common tax significance) and the reconciliation of some features of global best practices with the regulators’ unease over their being more liberal than what they assess as appropriate at the current state of the trust banking industry.

The 2014 board is well-prepared to stand up to the obstacles that might seek to obstruct its progress. All of its members  graduated, at one time or another, from the one-year course given to trust officers by the Trust Institute Foundation of the Philippines, an educational entity that was set up in 1977 under the leadership of the late Victorio Gomez, trust officer of the then Consolidated Bank and Trust Company.

Danao, Antonio, de Pala, Mendoza, Aquino and Velasco finished in the 1990s; Ramos, Jolejole, and Garcia attended in the 2000s.  – Rappler.com

 

Reynaldo “Gerry” Geronimo is a partner at the Romulo, Mabanta, Buenaventura Sayoc & De los Angeles law office.  He is known as The Trust Guru and maintains a website, www.thetrustguru.com.