The central bank of the Philippines, Bangko Sentral ng Pilipinas (BSP) is pushing major reforms in the country’s trust industry as assets under management (AUM) jumped more than 41 percent to P4.6 trillion from January to March.
BSP Governor Benjamin Diokno said the regulator continues to enhance the regulatory framework for trust entities due to the industry’s pivotal role in the deepening of the country’s financial markets, during his weekly virtual press conference.
Diokno said key policy reforms for the industry form part of the Trust Business Model Initiative which aims to provide an environment conducive for financial innovation and growth, thereby allowing the BSP-supervised financial institutions (BSFIs) to be more responsive to the needs of the investing public.
“At the same time, the framework shall further emphasize the importance of good governance, effective risk management, and strong consumer protection,” he said.
The BSP chief said upcoming issuances as part of the reforms include comprehensive investment guidelines for trust entities, enhancements to the onboarding and client suitability assessment processes, and guidance to better align the management of unit investment trust funds (UITFs) with international standards.
“The trust industry contributes to the financial system by providing professional fund and asset management services that are consistent with their clients’ risk appetites and investment objectives,” Diokno said.
Latest data showed the industry’s AUM jumped by 41.3 percent to P4.6 trillion as of end-March after plunging in the same period last year as the stock market dipped and clients’ preference shifted amid heightened market uncertainties due to the impact of the pandemic.
The trust industry accounted for nearly one-fourth of the total assets of the Philippine banking system. Funds are invested primarily in debt securities, equities, and deposits in banks. There are 30 trust entities operating in the country.