Rafael Buenaventura
Encyclopedia
Rafael Carlos Baltazar Buenaventura (August 5, 1938 - November 30, 2006) was a prominent banker in the Philippines
and one-time governor of the Bangko Sentral ng Pilipinas
(from 1999 to 2005); he served under two Philippine presidents during one of the most tumultuous political transitions in the country’s history.
Known for his fierce independence, Buenaventura was often targeted for removal from public office throughout his six-year term. However, his shrewd handling of both his detractors and supporters allowed him to accomplish key policy reforms at a time when political upheavals often derailed the country's economic progress. By the end of his term as central bank
governor, he had managed to steer the financial system closer to global standards.
He died November 30, 2006 at age 68 following a protracted fight with cancer.
, La Union, Philippines
. His father, Antonio, was regional treasurer for the northern provinces of Luzon
. His mother, Consuelo, was a devoted homemaker who also went on to co-found a rural bank in Aringay.
Buenaventura was one of four siblings. His eldest brother, Cesar A. Buenaventura, was former Chairman and CEO of Pilipinas Shell, and is a partner at the investment advisory and merchant bank, Buenaventura, Echauz and Associates. His other brother, Jose, is a lawyer and is a senior partner at Romulo Mabanta, Buenaventura, Sayoc and Angeles Law Offices, one of the most prominent law firms in the country. His only sister, Elisa P. Buenaventura is a treasurer and board member of the Asian Social Institute
in Manila.
In 1965, Buenaventura married Fairley "Lee" Earl, an American writer whom he had met during his student days in New York City
. They had three children (Paul, Deanna, and Melissa) and, at the time of Buenaventura's death, two grandchildren.
, where he completed his secondary education. It was at the Ateneo that Buenaventura met and schooled with the man who would later become president of the country, Jose Marcelo Ejercito, otherwise known as the actor and politician, Joseph Estrada
. After completing his high school education, Buenaventura matriculated at the De La Salle College (later De La Salle University-Manila
), where he received a bachelor’s degree in commerce. He went on to complete a master’s degree in business administration at the Stern School of Business of the New York University
in the United States.
. Upon graduation, Buenaventura secured a management trainee position at Citibank
’s operations in Manila. He rapidly ascended, holding many senior positions in the bank, and was eventually appointed Merchant Bank Head in Citibank’s Singapore operations in 1972, just before the declaration of martial law by the late dictator Ferdinand Marcos
.
By 1974, Buenaventura had been appointed Citibank Chief Executive in Indonesia
. Two years later, in 1976, he was assigned to head the bank’s Malaysian operations, also as Chief Executive. He would hold this position until 1979, at which time he was given the post of Senior Vice President and Regional Treasurer in Hong Kong
. There, for the next three years, he managed Citibank’s treasury activities in twelve countries. In 1982, Buenaventura returned home to become the first Filipino Chief Executive Officer of Citibank Philippines
, a position he would hold until the end of his tenure in 1985.
As Chief Executive of Citibank Philippines, Buenaventura had his first serious involvement in macroeconomic planning. In the early 1980s, the Philippines had descended into a debt crisis, and urgently required massive restructuring of its heavy debt burden. A member of the committee of private and government experts that were charged with negotiating the restructuring, Buenaventura played a central role in the crisis' resolution.
After his stint as Citibank chief in the Philippines, Buenaventura next served as Senior Vice President and Division Executive for Southern Europe, responsible for Italy
, Spain
, Portugal
, Greece
, and Turkey
(1985-1989).
Buenaventura was then tapped by the Gokongwei Group, headed by Philippine businessman John Gokongwei
, whose interests ranged from food processing to heavy industries, air transportation and banking. Buenaventura was hired by the Gokongwei patriarch to head the Philippine Commercial International Bank
(PCIB), where he served as president and chief executive officer for ten years. During
his time at PCIB, Buenaventura also served as President of the Bankers Association of the Philippines (1994-1997), and Chairman of the ASEAN Banking Council (1996-1997).
, was elected president of the country. Buenaventura was subsequently asked to head the Bangko Sentral ng Pilipinas
(BSP), the Philippine central monetary authority, as central bank governor. The incumbent governor of the BSP had turned in his courtesy resignation, but the financial market was already in turmoil following the outbreak of the Asian financial crisis in 1997. Removing the incumbent central bank chief would have added uncertainty in an already jittery market, so Buenaventura promptly turned down the offer.
Estrada took over the presidency but he retained then BSP governor Gabriel Singson and instead opted to allow his six-year tenure to expire.
Buenaventura was offered various positions in government but politely declined them all until 1999, when Estrada once again offered him the position as BSP chief, in anticipation of Singson’s end-of-term departure. Buenaventura would later explain that he and his siblings had made a promise to their late father that none of them would ever work in government. It was only after persistent convincing from Estrada himself and then finance secretary Jose Trinidad Pardo, a close adviser of the president and friend to Buenaventura himself, that Buenaventura was ultimately persuaded to accept the appointment to take over the BSP.
Two months before Singson’s term ended, Buenaventura’s appointment as central bank governor was announced by Estrada; and when his PCIB contract ended in June that year, he elected not to renew. On July 6, 1999, Buenaventura took over as the second governor of the BSP.
governor than Buenaventura himself expected. It had good reason: Buenaventura was taking over the position at a time when the industry was in deep trouble, having accumulated a gargantuan portfolio of bad loans that, in the face of the Asian financial crisis, threatened to collapse the entire financial system. Moreover, the industry was on the threshold of increasing globalization
, and required radical shifts in regulatory policies in order to comply with global standards.
The Enron scandal
had happened continents away, but its reverberations in a market already weakened by the 1997 financial crisis necessitated rapid action to plug regulatory loopholes while still allowing the rule of market forces.
By the time Buenaventura became central bank governor, over fifteen percent of the total loan portfolio of the entire banking sector was considered non-performing loans. Within the next year, this peaked at seventeen percent. The need to unload these bad loans before they collapsed the industry spurred the BSP-led lobby for the Special Purpose Vehicles Act, a law that would allow banks to sell their bad loans at a discount to companies that specialized in taking over bad loans and turning them around. Carefully orchestrating the lobby before both houses of Congress
, Buenaventura led the efforts for the passage of the law, telling lawmakers that the banking industry needed the flexibility since the government did not have the resources to launch its own rescue efforts.
But the process was halted when Estrada, Buenaventura’s primary supporter and appointing power, was booted out of office during EDSA II, a popular uprising occurring in January, 2001. He was soon to be replaced by vice president Gloria Macapagal-Arroyo
, who was catapulted by the opposition into power as the least offensive standard bearer. Barely two years at the helm of the BSP, Buenaventura had begun to feel pressures for him to resign and make way for an Arroyo-appointed BSP governor.
Although he was not eager to cling to his position in government, Buenaventura nonetheless stated that the stability of a fixed six-year term for a central bank governor was more important than the actual person sitting on the chair. Philippine governance was already under attack from the international community; it was seen not merely as unstable, but downright whimsical, depending on the mood of whoever was wielding the power at any given moment. Buenaventura thus refused to resign, even as a courtesy to the new president. It was at this time that he made public his second career: counting the years, months, weeks, days and minutes to the end of his six-year term.
Through the political turmoil, Buenaventura doggedly persisted with his efforts to relieve the banking sector of its crippling burden of bad loans. Although the transition of power from Estrada to Arroyo interrupted congressional discussions on the issue, the talks eventually resumed, tracking the rescue plan outlined by the BSP
and the Bankers Association of the Philippines. Finally, in 2003, congress passed the Special Purpose Vehicles Act, allowing banks to sell their bank loans at a discount and giving them regulatory incentives that made it easier to book the losses.
(FATF) had in June 2000 designated the Philippines as a ‘non-cooperative country’. A spot on the FATF blacklist essentially meant that a country was a prime candidate for the laundering of dirty funds from criminal activities. This translated to higher transaction costs, and often, outright restrictions on the international transactions of Philippine banks to ensure that they did not involve dirty money.
Desperate to avoid formal sanctions and to get off the FATF blacklist, the BSP spearheaded another lobby, this time to legislate a law that would criminalize money-laundering and create an anti-money-laundering body, as required by the FATF. The process, however, proved to be more complicated than anticipated. Buenaventura was repeatedly attacked by irate congressmen, who accused the BSP of attempting to amass power that would allow it to poke into the private accounts of individuals it considered suspicious. Legislators did not want the BSP peeking into private accounts, fearing that such power would be used as a political tool to ferret out ill-gotten wealth that was being laundered through banks.
The debates lasted almost a year, with Buenaventura spending much of his time explaining international anti-money laundering laws and procedures, convincing lawmakers that the Philippines would be merely complying with standards already in use in the rest of the world. Finally, in September 2001 Congress agreed to pass the Anti-Money Laundering Act, which led to the creation of the Anti-Money Laundering Council, a body headed by the BSP and the Securities and Exchange Commission (SEC). Subsequent legislation in 2002 and 2003 implemented and strengthened the AMLA's mechanisms and measures.
As a direct result of these actions, the Philippines was taken off of the FATF blacklist at the start of 2005.
in financial transactions, and they wanted their investments to be as safe and predictable as possible. This provided the momentum for the on-going global shift towards transparency, good governance and accountability – not just in banking but in business as well.
Seizing upon this opportunity, Buenaventura strongly advocated a regulatory regime that would allow maximum transparency and protection of both banks and their clients. He instituted key policy changes that had the effect of slowly dismantling well-entrenched interests that had until then been out of reach of the regulatory arms of the BSP
as bank regulator.
During his term as BSP governor, Buenaventura abolished the controversial and easily-abused common trust funds and replaced them with the more transparent and easier to understand unit investment trust funds.
Helped by his deputy governor Alberto Reyes, Buenaventura quietly restructured the banking system to allow more transparency than ever seen before in the history of Philippine banking, and lifted artificial protection from market forces that created artificial profits for financial institutions.
from market forces through the wanton manipulation of the currency market.
While recognizing the BSP's
institutional capabilities, traders saw Buenaventura as "personify[ing] the central bank’s powers of moral suasion," an abstract weapon frequently employed by the BSP in order to keep banks from "straying from the path." He was frequently known to call bank officials into his office and wield this weapon when the peso was under heavy speculative attack
.
In 2002, when the government fell into another budget crisis that saw the public deficit widening to 220 billion pesos, political pressures mounted for the Philippine government to ask for debt relief. Buenaventura, however, was no less adamant and loud in his opposition to this suggestion than he had been toward shielding the peso or compromising the BSP’s regulatory authority.
On more than one occasion, perennial in-fighting within the Arroyo administration fueled rumors that Buenaventura would be booted out of office for his fierce independence and refusal to pander to political interests while pressing for reforms. But his popularity in the local and international business and finance communities made Buenaventura an indispensable thorn in the side of the administration.
In 2003, Bloomberg
columnist William Pesek, Jr. commented that the “64-year old Buenaventura has proven to be what the Philippine economy needs most: an adult in the room.”
"He's the guy who has held it all together", said Cezar P. Consing, co-head of investment banking in Asia at J.P. Morgan
.
Despite his popularity and record of success as governor, Buenaventura trumpeted years in advance that he had no intentions of accepting any other government position once his fixed term ended at the BSP. After six years, Buenaventura left his office on July 6, 2005 to his deputy, Amando Tetangco, Jr., one of the primary architects of the reforms instituted by his predecessor.
, reflecting the results of an annual survey of the world’s central bankers based on their performance, effectiveness and general success in wielding monetary tools to steer their country’s economy. The elite list included preeminent Australian central bank chief Ian Macfarlane
and Poland’s Leszek Balcerowicz
.
In 2001, Buenaventura was also awarded “Central Bank Governor of the Year for the Asian Region” by The Banker
magazine, a sister publication of the Financial Times
. He was the first central banker to receive this award from the The Banker, as it began an annual awards program for the first time in its 75-year history.
In 2003, BusinessWeek
’s sixth annual ‘Stars of Asia’ report chose Buenaventura as one of its five selected financiers, hailing him for maintaining strict economic discipline in the face of financial turmoil.
Philippines
The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...
and one-time governor of the Bangko Sentral ng Pilipinas
Bangko Sentral ng Pilipinas
The Bangko Sentral ng Pilipinas and commonly abbreviated as BSP is the central bank of the Philippines. It was rechartered on July 3, 1993, pursuant to the provision of the 1987 Philippine Constitution and the New Central Bank Act of 1993...
(from 1999 to 2005); he served under two Philippine presidents during one of the most tumultuous political transitions in the country’s history.
Known for his fierce independence, Buenaventura was often targeted for removal from public office throughout his six-year term. However, his shrewd handling of both his detractors and supporters allowed him to accomplish key policy reforms at a time when political upheavals often derailed the country's economic progress. By the end of his term as central bank
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...
governor, he had managed to steer the financial system closer to global standards.
He died November 30, 2006 at age 68 following a protracted fight with cancer.
Family
Rafael Carlos "Paeng" Baltazar Buenaventura was born to a middle-class family in San Fernando CitySan Fernando City, La Union
The City of San Fernando in La Union is a 1st class component city in the Philippines. It is the capital city of La Union and the regional center of the Ilocos Region...
, La Union, Philippines
La Unión Province
La Unión Province may refer to:* La Unión Province, Peru* La Union, Philippines...
. His father, Antonio, was regional treasurer for the northern provinces of Luzon
Luzon
Luzon is the largest island in the Philippines. It is located in the northernmost region of the archipelago, and is also the name for one of the three primary island groups in the country centered on the Island of Luzon...
. His mother, Consuelo, was a devoted homemaker who also went on to co-found a rural bank in Aringay.
Buenaventura was one of four siblings. His eldest brother, Cesar A. Buenaventura, was former Chairman and CEO of Pilipinas Shell, and is a partner at the investment advisory and merchant bank, Buenaventura, Echauz and Associates. His other brother, Jose, is a lawyer and is a senior partner at Romulo Mabanta, Buenaventura, Sayoc and Angeles Law Offices, one of the most prominent law firms in the country. His only sister, Elisa P. Buenaventura is a treasurer and board member of the Asian Social Institute
Asian Social Institute
The Asian Social Institute is a graduate school in Manila, Philippines. It is one of the few graduate institutes specializing in economics, sociology, social work and social services and development in the country....
in Manila.
In 1965, Buenaventura married Fairley "Lee" Earl, an American writer whom he had met during his student days in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
. They had three children (Paul, Deanna, and Melissa) and, at the time of Buenaventura's death, two grandchildren.
Education
Born and raised as a Roman Catholic, Buenaventura was educated in Ateneo de ManilaAteneo de Manila University
The Ateneo de Manila University is a private teaching and research university run by the Society of Jesus in the Philippines. It began in 1859 when the City of Manila handed control of the Escuela Municipal de Manila in Intramuros, Manila, to the Jesuits...
, where he completed his secondary education. It was at the Ateneo that Buenaventura met and schooled with the man who would later become president of the country, Jose Marcelo Ejercito, otherwise known as the actor and politician, Joseph Estrada
Joseph Estrada
Joseph "Erap" Ejercito Estrada was the 13th President of the Philippines, serving from 1998 until 2001. Estrada was the first person in the Post-EDSA era to be elected both to the presidency and vice-presidency.Estrada gained popularity as a film actor, playing the lead role in over 100 films in...
. After completing his high school education, Buenaventura matriculated at the De La Salle College (later De La Salle University-Manila
De La Salle University-Manila
De La Salle University is a private Lasallian university in Malate, Manila, Philippines. It was founded in 1911 by De La Salle Brothers as the De La Salle College in Paco, Manila with Blimond Pierre serving as its first director...
), where he received a bachelor’s degree in commerce. He went on to complete a master’s degree in business administration at the Stern School of Business of the New York University
New York University
New York University is a private, nonsectarian research university based in New York City. NYU's main campus is situated in the Greenwich Village section of Manhattan...
in the United States.
Career
Buenaventura, who often described his banking career as “serendipitous”, began as a credit investigator while in his senior year in college, at the Security BankSecurity Bank
Security Bank , more formally known as Security Bank Corporation and abbreviated as SBC, is one of the largest commercial banks in the Philippines. It is one of the twenty largest banks in the Philippines in terms of assets.-History:...
. Upon graduation, Buenaventura secured a management trainee position at Citibank
Citibank
Citibank, a major international bank, is the consumer banking arm of financial services giant Citigroup. Citibank was founded in 1812 as the City Bank of New York, later First National City Bank of New York...
’s operations in Manila. He rapidly ascended, holding many senior positions in the bank, and was eventually appointed Merchant Bank Head in Citibank’s Singapore operations in 1972, just before the declaration of martial law by the late dictator Ferdinand Marcos
Ferdinand Marcos
Ferdinand Emmanuel Edralin Marcos, Sr. was a Filipino leader and an authoritarian President of the Philippines from 1965 to 1986. He was a lawyer, member of the Philippine House of Representatives and a member of the Philippine Senate...
.
By 1974, Buenaventura had been appointed Citibank Chief Executive in Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
. Two years later, in 1976, he was assigned to head the bank’s Malaysian operations, also as Chief Executive. He would hold this position until 1979, at which time he was given the post of Senior Vice President and Regional Treasurer in Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
. There, for the next three years, he managed Citibank’s treasury activities in twelve countries. In 1982, Buenaventura returned home to become the first Filipino Chief Executive Officer of Citibank Philippines
Citibank Philippines
Citibank Philippines is the Philippines chapter of Citibank. Since its establishment in 1902, Citibank Philippines has played a central role in shaping the financial infrastructure and development of the country.-History:...
, a position he would hold until the end of his tenure in 1985.
As Chief Executive of Citibank Philippines, Buenaventura had his first serious involvement in macroeconomic planning. In the early 1980s, the Philippines had descended into a debt crisis, and urgently required massive restructuring of its heavy debt burden. A member of the committee of private and government experts that were charged with negotiating the restructuring, Buenaventura played a central role in the crisis' resolution.
After his stint as Citibank chief in the Philippines, Buenaventura next served as Senior Vice President and Division Executive for Southern Europe, responsible for Italy
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
, Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
, Portugal
Portugal
Portugal , officially the Portuguese Republic is a country situated in southwestern Europe on the Iberian Peninsula. Portugal is the westernmost country of Europe, and is bordered by the Atlantic Ocean to the West and South and by Spain to the North and East. The Atlantic archipelagos of the...
, Greece
Greece
Greece , officially the Hellenic Republic , and historically Hellas or the Republic of Greece in English, is a country in southeastern Europe....
, and Turkey
Turkey
Turkey , known officially as the Republic of Turkey , is a Eurasian country located in Western Asia and in East Thrace in Southeastern Europe...
(1985-1989).
Buenaventura was then tapped by the Gokongwei Group, headed by Philippine businessman John Gokongwei
John Gokongwei
John L. Gokongwei, Jr. is a Chinese Filipino businessman with holdings in telecommunications, financial services, petrochemicals, power generation, aviation and live stock farming...
, whose interests ranged from food processing to heavy industries, air transportation and banking. Buenaventura was hired by the Gokongwei patriarch to head the Philippine Commercial International Bank
Equitable PCI Bank
Equitable PCI Bank was one of the largest banks in the Philippines, being the third-largest bank in terms of assets. With PCI Bank the largest bank before it was overtaken by Metrobank in 1995. It is the result of the merger of Equitable Banking Corporation and Philippine Commercial International...
(PCIB), where he served as president and chief executive officer for ten years. During
his time at PCIB, Buenaventura also served as President of the Bankers Association of the Philippines (1994-1997), and Chairman of the ASEAN Banking Council (1996-1997).
Recruitment
In 1998, while Buenaventura was still head of PCIB, his old schoolmate, Joseph EstradaJoseph Estrada
Joseph "Erap" Ejercito Estrada was the 13th President of the Philippines, serving from 1998 until 2001. Estrada was the first person in the Post-EDSA era to be elected both to the presidency and vice-presidency.Estrada gained popularity as a film actor, playing the lead role in over 100 films in...
, was elected president of the country. Buenaventura was subsequently asked to head the Bangko Sentral ng Pilipinas
Bangko Sentral ng Pilipinas
The Bangko Sentral ng Pilipinas and commonly abbreviated as BSP is the central bank of the Philippines. It was rechartered on July 3, 1993, pursuant to the provision of the 1987 Philippine Constitution and the New Central Bank Act of 1993...
(BSP), the Philippine central monetary authority, as central bank governor. The incumbent governor of the BSP had turned in his courtesy resignation, but the financial market was already in turmoil following the outbreak of the Asian financial crisis in 1997. Removing the incumbent central bank chief would have added uncertainty in an already jittery market, so Buenaventura promptly turned down the offer.
Estrada took over the presidency but he retained then BSP governor Gabriel Singson and instead opted to allow his six-year tenure to expire.
Buenaventura was offered various positions in government but politely declined them all until 1999, when Estrada once again offered him the position as BSP chief, in anticipation of Singson’s end-of-term departure. Buenaventura would later explain that he and his siblings had made a promise to their late father that none of them would ever work in government. It was only after persistent convincing from Estrada himself and then finance secretary Jose Trinidad Pardo, a close adviser of the president and friend to Buenaventura himself, that Buenaventura was ultimately persuaded to accept the appointment to take over the BSP.
Two months before Singson’s term ended, Buenaventura’s appointment as central bank governor was announced by Estrada; and when his PCIB contract ended in June that year, he elected not to renew. On July 6, 1999, Buenaventura took over as the second governor of the BSP.
Central banking in a time of turmoil
The banking industry proved more enthusiastic about Buenaventura’s appointment as BSPBangko Sentral ng Pilipinas
The Bangko Sentral ng Pilipinas and commonly abbreviated as BSP is the central bank of the Philippines. It was rechartered on July 3, 1993, pursuant to the provision of the 1987 Philippine Constitution and the New Central Bank Act of 1993...
governor than Buenaventura himself expected. It had good reason: Buenaventura was taking over the position at a time when the industry was in deep trouble, having accumulated a gargantuan portfolio of bad loans that, in the face of the Asian financial crisis, threatened to collapse the entire financial system. Moreover, the industry was on the threshold of increasing globalization
Globalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...
, and required radical shifts in regulatory policies in order to comply with global standards.
The Enron scandal
Enron scandal
The Enron scandal, revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world...
had happened continents away, but its reverberations in a market already weakened by the 1997 financial crisis necessitated rapid action to plug regulatory loopholes while still allowing the rule of market forces.
By the time Buenaventura became central bank governor, over fifteen percent of the total loan portfolio of the entire banking sector was considered non-performing loans. Within the next year, this peaked at seventeen percent. The need to unload these bad loans before they collapsed the industry spurred the BSP-led lobby for the Special Purpose Vehicles Act, a law that would allow banks to sell their bad loans at a discount to companies that specialized in taking over bad loans and turning them around. Carefully orchestrating the lobby before both houses of Congress
Congress of the Philippines
The Congress of the Philippines is the national legislature of the Republic of the Philippines. It is a bicameral body consisting of the Senate , and the House of Representatives although commonly in the Philippines the term congress refers to the latter.The Senate is composed of 24 senators half...
, Buenaventura led the efforts for the passage of the law, telling lawmakers that the banking industry needed the flexibility since the government did not have the resources to launch its own rescue efforts.
But the process was halted when Estrada, Buenaventura’s primary supporter and appointing power, was booted out of office during EDSA II, a popular uprising occurring in January, 2001. He was soon to be replaced by vice president Gloria Macapagal-Arroyo
Gloria Macapagal-Arroyo
Gloria Macapagal-Arroyo is a Filipino politician who served as the 14th President of the Philippines from 2001 to 2010, as the 12th Vice President of the Philippines from 1998 to 2001, and is currently a member of the House of Representatives representing the 2nd District of Pampanga...
, who was catapulted by the opposition into power as the least offensive standard bearer. Barely two years at the helm of the BSP, Buenaventura had begun to feel pressures for him to resign and make way for an Arroyo-appointed BSP governor.
Although he was not eager to cling to his position in government, Buenaventura nonetheless stated that the stability of a fixed six-year term for a central bank governor was more important than the actual person sitting on the chair. Philippine governance was already under attack from the international community; it was seen not merely as unstable, but downright whimsical, depending on the mood of whoever was wielding the power at any given moment. Buenaventura thus refused to resign, even as a courtesy to the new president. It was at this time that he made public his second career: counting the years, months, weeks, days and minutes to the end of his six-year term.
Through the political turmoil, Buenaventura doggedly persisted with his efforts to relieve the banking sector of its crippling burden of bad loans. Although the transition of power from Estrada to Arroyo interrupted congressional discussions on the issue, the talks eventually resumed, tracking the rescue plan outlined by the BSP
Bangko Sentral ng Pilipinas
The Bangko Sentral ng Pilipinas and commonly abbreviated as BSP is the central bank of the Philippines. It was rechartered on July 3, 1993, pursuant to the provision of the 1987 Philippine Constitution and the New Central Bank Act of 1993...
and the Bankers Association of the Philippines. Finally, in 2003, congress passed the Special Purpose Vehicles Act, allowing banks to sell their bank loans at a discount and giving them regulatory incentives that made it easier to book the losses.
Resolving the FATF crisis
The BSP was also faced with another serious problem during Buenaventura's term: the Financial Action Task Force on Money LaunderingFinancial Action Task Force on Money Laundering
The Financial Action Task Force , also known by its French name, Groupe d'action financière , is an intergovernmental organization founded in 1989 on the initiative of the G7. The purpose of the FATF is to develop policies to combat money laundering and terrorist financing...
(FATF) had in June 2000 designated the Philippines as a ‘non-cooperative country’. A spot on the FATF blacklist essentially meant that a country was a prime candidate for the laundering of dirty funds from criminal activities. This translated to higher transaction costs, and often, outright restrictions on the international transactions of Philippine banks to ensure that they did not involve dirty money.
Desperate to avoid formal sanctions and to get off the FATF blacklist, the BSP spearheaded another lobby, this time to legislate a law that would criminalize money-laundering and create an anti-money-laundering body, as required by the FATF. The process, however, proved to be more complicated than anticipated. Buenaventura was repeatedly attacked by irate congressmen, who accused the BSP of attempting to amass power that would allow it to poke into the private accounts of individuals it considered suspicious. Legislators did not want the BSP peeking into private accounts, fearing that such power would be used as a political tool to ferret out ill-gotten wealth that was being laundered through banks.
The debates lasted almost a year, with Buenaventura spending much of his time explaining international anti-money laundering laws and procedures, convincing lawmakers that the Philippines would be merely complying with standards already in use in the rest of the world. Finally, in September 2001 Congress agreed to pass the Anti-Money Laundering Act, which led to the creation of the Anti-Money Laundering Council, a body headed by the BSP and the Securities and Exchange Commission (SEC). Subsequent legislation in 2002 and 2003 implemented and strengthened the AMLA's mechanisms and measures.
As a direct result of these actions, the Philippines was taken off of the FATF blacklist at the start of 2005.
Increasing transparency
At the time of these two major undertakings, the banking sector itself was also undergoing an upheaval, stemming from the increasing globalization of the financial world. Markets were tolerating less and less secrecy, investors demanded transparencyTransparency (humanities)
Transparency, as used in science, engineering, business, the humanities and in a social context more generally, implies openness, communication, and accountability. Transparency is operating in such a way that it is easy for others to see what actions are performed...
in financial transactions, and they wanted their investments to be as safe and predictable as possible. This provided the momentum for the on-going global shift towards transparency, good governance and accountability – not just in banking but in business as well.
Seizing upon this opportunity, Buenaventura strongly advocated a regulatory regime that would allow maximum transparency and protection of both banks and their clients. He instituted key policy changes that had the effect of slowly dismantling well-entrenched interests that had until then been out of reach of the regulatory arms of the BSP
Bangko Sentral ng Pilipinas
The Bangko Sentral ng Pilipinas and commonly abbreviated as BSP is the central bank of the Philippines. It was rechartered on July 3, 1993, pursuant to the provision of the 1987 Philippine Constitution and the New Central Bank Act of 1993...
as bank regulator.
During his term as BSP governor, Buenaventura abolished the controversial and easily-abused common trust funds and replaced them with the more transparent and easier to understand unit investment trust funds.
Helped by his deputy governor Alberto Reyes, Buenaventura quietly restructured the banking system to allow more transparency than ever seen before in the history of Philippine banking, and lifted artificial protection from market forces that created artificial profits for financial institutions.
An adept, independent style
Buenaventura, however, was more publicly known for his adept management of monetary policies, resisting pressure to protect the Philippine pesoPhilippine peso
The peso is the currency of the Philippines. It is subdivided into 100 centavos . Before 1967, the language used on the banknotes and coins was English and so "peso" was the name used...
from market forces through the wanton manipulation of the currency market.
While recognizing the BSP's
Bangko Sentral ng Pilipinas
The Bangko Sentral ng Pilipinas and commonly abbreviated as BSP is the central bank of the Philippines. It was rechartered on July 3, 1993, pursuant to the provision of the 1987 Philippine Constitution and the New Central Bank Act of 1993...
institutional capabilities, traders saw Buenaventura as "personify[ing] the central bank’s powers of moral suasion," an abstract weapon frequently employed by the BSP in order to keep banks from "straying from the path." He was frequently known to call bank officials into his office and wield this weapon when the peso was under heavy speculative attack
Speculative attack
A speculative attack is a term used by economists to denote a precipitous acquisition of something by previously inactive speculators. The first model of a speculative attack was contained in a 1975 discussion paper on the gold market by Stephen Salant and Dale Henderson at the Federal Reserve Board...
.
In 2002, when the government fell into another budget crisis that saw the public deficit widening to 220 billion pesos, political pressures mounted for the Philippine government to ask for debt relief. Buenaventura, however, was no less adamant and loud in his opposition to this suggestion than he had been toward shielding the peso or compromising the BSP’s regulatory authority.
On more than one occasion, perennial in-fighting within the Arroyo administration fueled rumors that Buenaventura would be booted out of office for his fierce independence and refusal to pander to political interests while pressing for reforms. But his popularity in the local and international business and finance communities made Buenaventura an indispensable thorn in the side of the administration.
In 2003, Bloomberg
Bloomberg L.P.
Bloomberg L.P. is an American privately held financial software, media, and data company. Bloomberg makes up one third of the $16 billion global financial data market with estimated revenue of $6.9 billion. Bloomberg L.P...
columnist William Pesek, Jr. commented that the “64-year old Buenaventura has proven to be what the Philippine economy needs most: an adult in the room.”
"He's the guy who has held it all together", said Cezar P. Consing, co-head of investment banking in Asia at J.P. Morgan
JPMorgan Chase & Co.
JPMorgan Chase & Co. is an American multinational banking corporation of securities, investments and retail. It is the largest bank in the United States by assets and market capitalization.It is a major provider of financial services, with assets of $2 trillion and according to Forbes magazine is...
.
Despite his popularity and record of success as governor, Buenaventura trumpeted years in advance that he had no intentions of accepting any other government position once his fixed term ended at the BSP. After six years, Buenaventura left his office on July 6, 2005 to his deputy, Amando Tetangco, Jr., one of the primary architects of the reforms instituted by his predecessor.
International recognition
By the time his six-year term ended, Buenaventura had twice (2002, 2003) been named one of the world’s top, or "Grade A" central bankers by the New York-based magazine Global FinanceGlobal Finance (magazine)
Global Finance is an English-language monthly financial magazine.Joseph D. Giarraputo, the founder and former publisher of Venture, the magazine for entrepreneurs, in 1987 joined forces with Carl G. Burgen, Stephan Spahn, H. Allen Fernald, and Paolo Panerai to start a magazine on financial...
, reflecting the results of an annual survey of the world’s central bankers based on their performance, effectiveness and general success in wielding monetary tools to steer their country’s economy. The elite list included preeminent Australian central bank chief Ian Macfarlane
Ian Macfarlane (economist)
Ian John Macfarlane, AC , Australian economist, and Governor of the Reserve Bank of Australia , Australia's central bank, from 1996 to 17 September 2006...
and Poland’s Leszek Balcerowicz
Leszek Balcerowicz
Leszek Balcerowicz is a Polish economist, the former chairman of the National Bank of Poland and Deputy Prime Minister in Tadeusz Mazowiecki's government...
.
In 2001, Buenaventura was also awarded “Central Bank Governor of the Year for the Asian Region” by The Banker
The Banker
The Banker is an English-language monthly international financial affairs publication owned by The Financial Times Ltd. and edited in London...
magazine, a sister publication of the Financial Times
Financial Times
The Financial Times is an international business newspaper. It is a morning daily newspaper published in London and printed in 24 cities around the world. Its primary rival is the Wall Street Journal, published in New York City....
. He was the first central banker to receive this award from the The Banker, as it began an annual awards program for the first time in its 75-year history.
In 2003, BusinessWeek
BusinessWeek
Bloomberg Businessweek, commonly and formerly known as BusinessWeek, is a weekly business magazine published by Bloomberg L.P. It is currently headquartered in New York City.- History :...
’s sixth annual ‘Stars of Asia’ report chose Buenaventura as one of its five selected financiers, hailing him for maintaining strict economic discipline in the face of financial turmoil.