BusinessWorld Article: New Treasurer to uphold securties custodian rules

BUSINESSWORLD
MANILA, PHILIPPINES | Tuesday, March 1, 2005

New Treasurer to uphold securities custodian rules

National Treasurer Omar T. Cruz vowed yesterday to abide by the Department of Finance's order to implement the controversial third-party custodian rules.

He also said he would immediately look into the issue, to resolve any misunderstanding between officials of the Bureau of the Treasury and the Bangko Sentral ng Pilipinas.

"The first order of the day is to clear out the confusion. There's been a great deal of misunderstanding," he told reporters.

He also said Treasury, under his watch, would take the position of Finance that custodianship was a function important to protecting investors.

The Treasurer also said he was optimistic that Treasury officials and securities traders opposed to the third-party regulation would eventually appreciate it.

"I'm sure we can work things out," said Mr. Cruz, who claimed familiarity with the custody business.

Before joining the University of Asia and the Pacific, Mr. Cruz headed the Treasury department of the local unit of Citibank. He also ran the custody operations of the foreign bank. He had also headed Citicorp Securities, the local Citibank's securities unit.

Mr. Purisima, for his part, said his Finance team would look at the custodian issue carefully.

Mr. Cruz replaces Norma L. Lasala, who found herself in the middle of the controversy after she strongly opposed the third-party custodian rule set by the Bangko Sentral.

Ms. Lasala had refused to turn over Treasury's registry system to Bangko Sentral's six accredited securities custodians -- a major stumbling block to the nmew regulation's implementation.

The National Treasurer manages the government's sale of bonds locally and abroad.

The third-party custodian rule requires banks to entrust to independent custodians accredited by Bangko Sentral all securities sold and traded in the market.

Bangko Sentral welcomed the appointment of Mr. Cruz, saying that it would pave the way for the smooth implementation of its third-party rule.

"We fully support the appointment as this would put order in the otherwise confused issue of custodianship," Bangko Sentral Deputy Governor Alberto V. Reyes said.

When asked about his borrowing plans, Mr. Cruz said he would still meet with Finance officials on this.

Mr. Purisima said the borrowing strategy would be consistent with Treasury's efforts to create a stronger and more reliable debt market.

The Finance chief also said the department would create a debt and risk management committee that would review all state borrowings. -- Iris Cecilia C. Gonzales