StraMa Worksheet 11 – McKinsey’s 7S

Name ANCHETA, MARTIN, OBONG, PASCUA, PASCUA Date APRIL 18,2022

Section 3ALM

Strategy:

Strategy Applied

BDO Unibank Inc., (BDO) is a product of merger heralded as unprecedented in size and scale in Philippine banking
history. The bank represents a firm consolidation of distinct strengths and advantages which was built all over the
years by different entities behind its history. As such, it remains at the forefront of the banking industry in the
Philippines with over 1,500 operating branches and offices, and more than 4,400 ATMs nationwide.

BDO’s overall strategy focuses on building a strong business franchise to achieve diversity and sustainability of
earnings over the long-term; it is focused on three core areas — (1) building a diversified and sustainable earnings
stream, (2) Creating operating leverage, (3) Prudently managing the balance sheet.

Strategy in achieving business objectives

In its efforts to effectively implement its objectives, achieve its desired long-term target returns to its shareholders,
BDO remains to instill its culture of managing risk prudently within its capacity and capabilities; as such, it
continuously strengthens its risk management process. BDO believes that, as there are opportunities, there are
associated risks. Its objective, however, is not to avoid risks totally, but to adequately and consistently evaluate,
manage, control and monitor the risks, and ensure that the Bank is duly compensated for all risks taken. Through risk
management, the Bank operates an enterprise-wide framework to address the risks it faces in its banking activities.

Competitive Pressure

One of the bank’s core values is its commitment to the customers. In this light, BDO is devoted to delivering products
and services that surpass customer expectations in value and every aspect of customer service, while remaining
prudent and trustworthy stewards of their wealth. Rather than focusing solely on their rivals’ systems, BDO gives
heed to their customers’ needs. In fact, its institutional strengths and value-added products and services hold the key
to its successful business relationships with customers. On the front line, its branches remain at the forefront of
setting high standards as a sales and service-oriented, customer-focused force. In the midst of the COVID-19
pandemic, for example, BDO ensured continued access to its products and services, keeping almost all of its 1,542
branches open as the Bank adjusted branch manpower requirements and operating schedules (per government
guidelines) so that customers were well-served during the pandemic. The Bank likewise leveraged on technology to
ensure active engagement and easy-to-reach, open communication with clients, thus mitigating the impact of limited
face-to-face interaction due to intermittent lockdowns in 2021.

Dealing with changes in customer demands

The company’s “We Find Ways” service philosophy serves as its driving force, thus, keeping it abreast with the
changing needs of its clients.
BDO’s Board of Directors established nine (9) committees to help in discharging its duties and responsibilities. Each
committee has its own functions, covering both internal and external issues surrounding the company. Through such
committees, innumerable matters are being discussed and covered, enabling the company to scrutinize the
emergence of developments.

In 2021 for example, as lockdowns kept millions of Filipinos at home, the Bank used digital platforms to hold
meetings and discussions, thus generating faster communication while covering more clients and immediate feedback
for quick action/resolution. Ergo, strategic initiatives were sustained, allowing BDO to strengthen its businesses and
expand digital capabilities.

Adjusting strategies for environmental issues

As stated, risk management at BDO begins at the highest level of the organization. At the helm of the risk
management infrastructure is the Board of Directors (the Board), who assumes oversight over the entire risk
management process and regularly reviews and approves the institution’s tolerance for risks, as well as its business
strategy and risk philosophy. Under risk management, the Committee conducts regular discussions on the Bank’s
exposures to various risks including that of the environmental issues. Globally, there is also an increasing call for
companies to support the UN Sustainable Development Goals as part of sustainable business performance with
emphasis on strategies that promote economic growth, environmental protection, efforts that address a range of
social needs and a governance model that considers sustainability issues. BDO continues to be mindful of these and
creates a positive impact on sustainability as it continues to report annually on its sustainability performance and
contribution to the UN Sustainable Development Goals

Highlights:

● BDO remains to instill its culture of managing risk prudently within its capacity and capabilities.

● BDO’s Board of Directors established nine (9) committees to help in discharging its duties and responsibilities;
Each committee has its own functions, covering both internal and external issues surrounding the company.

● Independent directors chair eight (8) of nine board committees, namely Risk Management, Board Audit,
Corporate Governance, Related Party Transactions, IT Steering, Nomination, Compensation, and the Trust
committee.

Gaps and Inconsistencies:

Considering BDO’s commitment to provide for adequate and relevant services, as could be gleaned from the diverse
approaches it employs, there are no evident gaps and inconsistencies present in the company with regard to
strategies.

Structure:

Company Division
The Board of Directors is in full control of the firm's effective governance. It has 11 seats and is made up of
professionals with diverse backgrounds in fields such as banking, accounting and finance, law, merchandise
marketing, strategy formulation, bank regulations, information technology, sustainability, and risk management that
are relevant to BDO's business and strategic plans. It has a Non-Executive Chairperson, five Independent Directors,
three Non-Executive Directors, and two Executive Directors, the Vice Chairman and President & CEO.

Independent Directors comprised the majority (six of 11 or 54.50%) of the Board until April 2021, conforming with
international best practices. Independent directors chair eight of nine board committees, namely Risk Management,
Audit, Corporate Governance, Related Party Transactions, IT Steering, Nominations, Compensation, and Trust. This
provides independent and objective judgment on significant corporate matters and ensures that key issues and
strategies are objectively reviewed, constructively challenged, thoroughly discussed and rigorously examined.

Further, there are three groups controlled by the President, such as Relationship Management, Product Management,
and Support and Delivery Management. Institutional Banking and Branch Banking are covered by Relationship
Management Group. For Product Management groups, it covers consumer banking, transaction banking, and
treasury. Controllership, information technology, investor relations and corporate planning, marketing
communications, human resources, and central operations are under the supervision of Support and Delivery
Management groups.

Company Hierarchy

The Board of Directors – Board Committees – Management Groups - Employees/Members

These are the four hierarchical positions in the company.

Coordination and Activities among Members

Heads from various departments plan annually to remain as the country’s biggest bank. The managers at all levels do
planning and during mid-year, they evaluate the progress of the plans they plotted in line with their inside trackers,
whether or not there are significant changes. Evaluation is held every six months and monitors such plans and
progress monthly.

Organization and alignment of team members

BDO Team members obey the firm’s established company policies for smooth and convenient delegation of tasks and
coordinate with other departments on the basis of their job description. The firm also lays down the duties and
responsibilities of every level in the hierarchy; hence, every work they do is in line with the firm’s goal and objectives.

Decision Making and its Avenues

The decision making and controlling are centralized in a sense that the board of directors, board of committee, senior
management decide major operation and financial activities of the firm in a nationalized scale which is done in
accordance with the company’s manual and in conjunction with the bank’s Articles of Incorporation. The decision of
the management applies to all the operating branches to make it fair and uniform. Having different treatment and
application of the directive given by the top management makes it difficult for the firm to monitor the consistency and
would be unjust to certain areas. In certain instances regarding the employees in every operating branch, the area
manager is tasked to exercise his power within the limited scope and include such incidents in the reports to be
submitted to the top management.

Modes of Communication

The BDO used both explicit and implicit terms of communication. It is explicit when the high position officers in the
company conduct a meeting concerning major operation and financial decisions to be applied to the firm and it is
implicit in the sense that the employees in every operating branch are required to act and to do their work in
accordance to their job description, the company’s employee and corporate manual.

Highlights:

● The company is composed of Non-Executive Chairperson, five Independent Directors, three Non-Executive
Directors, and two Executive Directors, the Vice Chairman and President & CEO

● The hierarchy of the firm consists of the Board of Directors – Committee – Management Groups

● The heads of every department plan annually to coordinate activities

● BDO’s decision making and control is decentralized and the firm uses both explicit and implicit lines of
communication

Gaps and Inconsistencies:

BDO has a functional organizational structure wherein it shows a top-down hierarchical structure, each department
head directly reports to senior management. It does not show any gap or inconsistencies since the departments and
committees of BDO are divided according to the specific and specialized tasks.

Systems:

Main Systems Running the Organization

Risk Management Committee is responsible for managing the data and prevention of other risks in all
aspects; mainly in approving risk appetite levels, policies, and risk tolerance limits related to credit portfolio
risk, liquidity risk, market risk, interest rate risk, operational risk (including business continuity risk, IT risk,
information security risk, data privacy risk, and social media risk), consumer protection risk, and
environmental & social risk.

The Assets and Liabilities Committee is tasked within the overall system of the bank’s risk management and it
also governs the financial position and statements of the bank including the implementation of foreign
policies and in the liquidity, interest rate and foreign exchange related risks of the bank.

Information Technology Steering Committee coordinates with the whole system set-up of the bank including
 the data storage of all departments of the company. They are the ones who also inform the board of any IT-
related activities both internal and external in order to implement a better strategic practice in safeguarding
its data, and its policies and practices.

Board Audit Committee is tasked in overseeing the processes and all the systems mentioned above such as in
the financial reporting process, system of internal control and risk management systems, internal and
external audit functions, and compliance with governance policies, applicable laws and regulations.

Company controls; Monitoring and Evaluation

In determining how they are being monitored and evaluated certain groups and levels are placed underneath each
committee such as in the Risk Management Committee there is a process being applied which is the three levels: the
transaction level, the business unit level, and the portfolio level. This is to ensure that the data that each department
is being stored and delivered are safely transacted and identified in accordance to their level. That is so the capital
and returns being reported by the committee to its shareholders as well are in an in-depth form and are all well-
developed.

The Assets and Liabilities Committee evaluates and formulates the investment and financial policies of the bank
through identifying the different asset allocations and the funding mix strategies which are expected to give a rise and
attain the targeted financial results of the bank.

In the Information Technology Steering Committee, they evaluate and approve the best IT-related practices to the
board by providing strategic plans, policies and procedures. While in the Board Audit Committee, they make sure that
such are under the evaluation of the compliance charter and prevent transactions that are in violation of the Anti-
Money Laundering act, and that they evaluate that the effectiveness of the regulatory compliance framework are still
in line with the bank’s policies.

Internal rules and processes used by the firm to keep on track

Each committee are being governed by the set of rules and regulations imposed on its Corporate Governance Manual
which dictates the responsibilities of each committee as well as the different company policies such as Policy on
Retirement of Directors, Board Evaluation Survey Forms, Director Orientation & Continuing Education Policy, Board
Diversity Policy, Related Party Transactions Policy, Personal Trading Policy, Policy on Disclosure of Sensitive or
Confidential Matters to Management, Conflict of Interest Policy, Policy and Data Relating to Health, Safety and
Welfare of Employees, Dividend Policy, and Term Limit of Independent Directors. These are the policies and processes
that the team or each committee uses in order to keep track and make sure that everything is still in accordance with
the bank’s, and all of which are disseminated on each committee depending on the type of data they are handling.

Highlights:

● BDO’s committee team consisted of the Risk Management Committee, The Assets and Liabilities Committee,
Information Technology Steering Committee, and Board Audit Committee.

● BDO carefully evaluates its data depending on every level for organization and easy dissemination.
 ● BDO’s committee teams are given a manual for corporate governance to which entails the company
guidelines and policies including the responsibility of each team for an effective dissemination of tasks and
monitoring.

Gaps and Inconsistencies:

There are no gaps and inconsistencies in the system of BDO.

Shared Values:

Core Values of the Company

The core values being applied by the company are the following:

Commitment to Customers. BDO is committed to delivering products and services that surpas customer
expectations in value and every aspect of customer service, while remaining prudent and trustworthy
stewards of their wealth.

Commitment to a Dynamic and Efficient Organization. BDO is committed to creating an organization that is
flexible, responds to change, and encourages innovation and creativity; BDO is committed to the process of
continuous improvement in everything they do.

Commitment to Employees. BDO is committed to its employees’ growth and development, and BDO will
nurture them in an environment where excellence, integrity, teamwork, professionalism, and performance
are valued above all else.

Commitment to Shareholders. BDO is committed to providing its shareholders with superior returns over the
long-term.

Corporate culture in the Company

BDO has a remuneration policy wherein it is geared towards attracting, retaining and motivating employees. Their
policy includes fixed pay, bonuses and the Employee Stock Option Plan (ESOP) as a long term incentive program. All
qualified employees may be entitled to an annual merit increase in salary, based on their performance for the
immediately preceding year. This has a long-term and compounding effect on the fixed pay, which serves as the basis
for their retirement benefit. (BDO Unibank Annual Report, 2021)

During the continuous peak of the COVID-19 and its variants, BDO ensured the continued operations of the Bank as
well as the safety and convenience of its employees. Hence, BDO, through its senior management team, established a
skeletal workforce for head office and support units to provide support for its branch activities, and provided healthy
kits and the proper support system to its staff. To support its customers, BDO must support its employees first. Some
specifics include the installation of acrylic shields in workplaces for proper distancing, regular disinfection of all offices,
premises and branches, and regular testing using rapid antigen and swab tests to mitigate infection risks. (BDO
Unibank Annual Report, 2020)

BDO has also gratefully expressed that their pride is its people - that in spite of the health risks, mobility restrictions
and unavailability of public transport, its people found ways to report to work and remained committed to providing
the services its clients have grown accustomed to and have come to expect of them.

Moreover, with its goal of sustaining its performance and levelling it up, BDO has a continuing education program for
its directors to ensure the enhancement of their skills and knowledge. Every year, all directors and key officers are
given updates and briefings, and are required to attend a corporate governance seminar on appropriate topics to
ensure that they are continuously informed of the developments in the business and regulatory environments,
including emerging opportunities and risks in the banking industry.

Strength of the values

BDO complies, where appropriate, with the SEC Code of Corporate Governance for Publicly-Listed Companies and
with the Enhanced Corporate Governance Guidelines for BSP-Supervised Financial Institutions. It follows relevant
international best practices of corporate governance issued by globally recognized standards-setting bodies such as
the Organization for Economic Cooperation and Development (OECD) and the ASEAN Corporate Governance
Scorecard (ACGS) which serve as essential points of reference. Hence, BDO’s core values are well-entrenched into
their products and services.

Fundamental values built on the company

BDO Unibank, Inc. affirms its deep commitment to the highest standards of corporate governance practice firmly
anchored on the principles of accountability, fairness, integrity, transparency, and performance consistently applied
throughout the institution. BDO’s good market reputation has been built on the solid foundation of an ethical
corporate culture and responsible business conduct, underpinned by a well-structured and effective system of
governance.

Highlights:

● BDO’s commitment to its customers, employees, shareholders and to a dynamic and efficient organization
speaks volume of their perseverance to attain its goals guided by its core values. According to Jobstreet, in a
review of 161 employees from BDO, 151 rated the Bank with three to five stars for its good employability.
Hence, averaging a total of 4.4 stars.

● BDO’s continuous support for the safety and benefit of its employees, customers and shareholders showcases
its utmost concern to them and establishes trust.

Gaps and Inconsistencies:

● According to the reviews submitted to Jobstreet, there are some employees who experienced some
superiority issues from there bosses which affects how they feel about the company as well. Hence, managers
must be trained every now and then how to command and demand tasks respectfully.
Style:

Leadership Style of the Managers

The success of BDO is governed by its Board of Directors’ leadership by example. Risk management at BDO begins at
the highest level of the organization. The Bank believes that, as there are opportunities, there are associated risks.
The objective is not to avoid risks totally, but to adequately and consistently evaluate, manage, control and monitor
the risks, and ensure that the Bank is duly compensated for all risks taken. Good risk management involves making
informed and rational decisions about the level of risks the institution wants to take in the pursuit of its objectives,
but with consideration to return commensurate with the risk-taking activity.

Responsibility for good governance lies with the Board. It is responsible for providing
effective leadership and overall direction to foster the long-term success of the Bank. It oversees the business affairs
of the Bank, reviews the strategic plans and performance targets, financial plans and budgets, key operational
initiatives, capital expenditures, acquisitions and divestments, annual and interim financial statements, and corporate
governance practices. It oversees management performance, the enterprise risk management, internal control
systems, financial reporting and compliance, related party transactions, continuing director education, and succession
plans for the Board and the Chief Executive Officer (CEO). It considers sustainability issues related to the environment
and social factors as part of its sustainable banking practices.

The corporate governance in BDO is about effective oversight, strict compliance with regulations, and sustainable
value creation to promote the interest of its various stakeholders.

Effectiveness of the leadership style of the Company

Through this kind of participative management/leadership style from the managerial level, a ripple effect comes into
existence as to how employees responsibly perform their duties as well. Hence, the success of BDO is a holistic effort
of the organization from the Board of Directors down to its priceless and efficient rank-and-file employees.
Consequently, BDO was awarded with several awards such as Corporate Excellence Award by the Asia Pacific
Enterprise Awards for 2020-2021, Best Corporate Communications Awardee by the Corporate Governance Asia for
2014-2015 and 2017-2021, and numerous individual recognitions of its Directors, CEO, CFO and Treasurer. This is due
to their persistent and consistent goal of providing quality service to their clients.

Competitiveness and cooperation of the employees

Employees/team members tend to be both competitive and cooperative in a positive way, such that it works for the
betterment of BDO. Their competitiveness and cooperation is mainly born out of their goal and mission to be a
consistent preferred bank in every market they serve. It is also embraced in their corporate values as the Bank is
committed to a dynamic and efficient organization that is flexible, responds to change, and encourages innovation
and creativity.

Real teams functioning within the team

Based on the organizational structure of the Bank, there are real teams involved in their effective operations as each
of them has defined roles. Under the Board of Directors, there are Board Committees. One of which is the Executive
Committee which exercises the power of the Board in the management and direction of the affairs of the Bank and
acts as the main approving body for loans, credits, advances or commitments and property-related proposals.
Furthermore, they review and recommend for Board approval major credit policies.

Another functioning team is the Board Audit Committee which is empowered by the Board to oversee the financial
reporting process, internal control and risk management systems, internal and external audit functions, and
compliance with applicable laws and regulations.

BDO also has its Corporate Governance Committee primarily tasked to assist the Board in formulating the governance
policies and overseeing the implementation of the governance practices of the Bank as well as its subsidiaries and
affiliates. It also oversees the continuing education program for directors and key officers and proposes relevant
training for them.

BDO’s Trust Committee, on the other hand, is tasked to review and recommend for the approval of the Board the
Trust and Investment Group’s overall budget, strategies to meet budget including assets under its management, and
industry position. They also approve the offering of new products and services, establishment and renewal of lines
and limits with financial institutions, and investment outlets and counterparties.

Other functional groups of BDO include the Risk Management Committee (responsible for the oversight of the
enterprise risk management program of the Bank), Nominations Committee (makes recommendations to the Board
on the composition and chairmanship of the various committees), Compensation Committee (ensures consistency of
the compensation policies and practices across the group), Information Technology Steering Committee (responsible
for understanding, managing and mitigating technology risks that confront the Bank and its subsidiaries), and the
Related Party Transactions Committee (assists the Board in its oversight of the conduct of all Related Party
Transactions (RPTs) to protect the interests of the Bank and its stakeholders.)

Highlights:

● Good governance and active participation and coordination equates to BDO’s undeniable success.

● Functional groups or committees responsibly address main areas of concern of the organization which lessens
or mitigates conflicts.

● Recognition of the efficient collaboration of heads and employees inspires the organization to continue and
consistently improve their services.

Gaps and Inconsistencies:

● According to the reviews submitted to Jobstreet, there are some employees who experienced some
superiority issues from there bosses which affects how they feel about the company as well. Hence, managers
must be trained every now and then how to command and demand tasks respectfully.

Staff:
Governance Structure and its responsibilities

BDO Unibank, Inc. affirms its deep commitment to the highest standards of corporate governance practice firmly
anchored on the principles of accountability, fairness, integrity, transparency, and performance consistently applied
throughout the institution. BDO’s good market reputation has been built on the solid foundation of an ethical
corporate culture and responsible business conduct, underpinned by a well-structured and effective system of
governance.

Board Committees – The Board has established nine committees to help in discharging its duties and responsibilities.
These committees derive their authority from and report directly to the Board. Their mandates and scopes of
responsibility are set forth in their respective Terms of Reference, which are subjected to annual review and may be
updated or changed in order to meet the Board’s needs or for regulatory compliance. The number and membership
composition of committees may be increased or decreased by the Board as it deems appropriate, consistent with
applicable laws or regulations specifically on the majority membership and chairmanship of independent directors in
various committees. As of December 31, 2021, eight of nine board-level committees are chaired by Independent
Directors.

The standing committees of the Board are as follows:

a) Executive Committee exercises the power of the Board in the management and direction of the
affairs of the Bank. It acts as the main approving body for loans, credits, advances or commitments
and property-related proposals.

b) Board Audit Committee is empowered by the Board to oversee the financial reporting process,
internal control and risk management systems, internal and external audit functions, and compliance
with applicable laws and regulations.

c) Corporate Governance Committee is primarily tasked to assist the Board in formulating the
governance policies and overseeing the implementation of the governance practices of the Bank as
well as its subsidiaries and affiliates.It provides an assessment of the outcome and reports to the
Board the final results of the evaluation including recommendations for improvement and areas to
focus on to enhance effectiveness.

d) Trust Committee reviews and recommends for the approval of the Board the Trust and Investment
Group’s overall budget, strategies to meet budget including assets under its management, and
industry position. Significant matters include, among others, the revised table of organization of
BDO’s Trust and Investment Group to align the structure with the business objectives, setting of issuer
investment limits, and conduct of investment policy review. The Committee also approved the
consolidation of the Unit Investment Trust Funds as part of the rationalization plan and the change in
benchmark of various funds.

e) Risk Management Committee Is responsible for approving risk appetite levels, risk management
policies, and risk tolerance limits to ensure that current and emerging risk exposures are consistent
with the Bank’s strategic direction and overall risk appetite. It approves the appropriate strategies for
managing and controlling risk exposures, including preventing or minimizing the impact of losses if
risk becomes real.

f) Nominations Committee leads the process of identifying candidates for election and appointment of
Directors and all other positions requiring appointment of the Board of Directors, giving full
 consideration to succession planning and the leadership needs of the group. It also tracks and reviews
the structure, size, and composition of the board and makes recommendations with regard to any
changes.

g) Compensation Committee provides oversight on directors’ compensation and remuneration of senior

management and other key personnel, ensuring that the compensation scheme is consistent with the
Bank’s culture and strategy, effectively aligned with prudent risk taking and commensurate with
corporate and individual performance.

h) Information Technology Steering Committee provides oversight and governance over the Bank’s IT
functions, including approvals of information technology related policies and practices of the Bank
and applicable guidelines.

i) Related Party Transactions Committee assists the Board in its oversight of the conduct of all Related
Party Transactions (RPTs) to protect the interests of the Bank and its stakeholders.

BDO Compliance Group – Through the Chief Compliance Officer (CCO), it oversees the design of the Bank’s
compliance system and the overall compliance framework executed through a Compliance Program, and
promotes their effective implementation. BDO Compliance Group reports to and is under the direct
supervision of the Board Audit Committee. It is responsible for overseeing, coordinating, monitoring and
ensuring compliance of the Bank with existing laws, rules and regulations through the implementation of the
overall compliance system and program in accordance with the requirements of the BSP and other regulatory
agencies, including but not limited to the identification and control of compliance risks, prudential reporting
obligations as well as compliance training.

Internal Audit – covers the entire Group including foreign and local subsidiaries and offices. It provides
assurance and a systematic, disciplined approach to evaluate and improve effectiveness of risk management,
internal control, and governance processes. Internal Audit provides value to senior management and
governing bodies as an objective source of independent advice, not only by promoting the professional
development of its auditors but also by keeping abreast of relevant changes in regulations and trends in
technology.

Vacancy in the company

BDO in keeping their branches open and compliant with COVID-19 protocols strives to complete the seats, especially
when a position is not occupied, to foster long-term success of the Bank. On October 7, 2021, Atty. Gilberto Teodoro,
Jr., an independent director, has resigned from the Board of Directors. In line with the vacancy, independent advisor
Vipul Bhagat was appointed on January 8, 2022 to be the replacement of the former.

With respect to the tenure of its Independent Directors or those who heads the committees, elected members of the
Board serve for a one-year term and until their successors are elected. An independent director of the bank may only
serve as such for a total cumulative tenure of nine (9) years reckoned from January 1, 2012 after which, the
independent director shall be perpetually barred from re-election as such in the Bank, but may continue to qualify for
nomination and re-election as a non-independent director. If there is no suitable replacement, the Board may justify
the retention of independent directors after serving 9 years subject to the approval by the shareholders during the
Annual Shareholders’ Meeting.

For vacancies in positions lower than of Board of Directors, the workers are immediately given notice by their area
managers through an announcement, and the firm consequently posts in the public, whether physical or online, that
such position is vacant.
Gaps related to Job Position Competencies

Considering the changes done, complexity and scope of the Bank’s business, the Board believes that its current size
and composition provide sufficient diversity among its directors and employees, foster critical discussion, and
promote balanced decision-making. It views diversity at the Board level, which includes differences in skills,
experience, gender, sexual orientation or preference, age, education, race, business and other related experience, as
an essential element in maintaining an effective board for strong corporate governance.

Highlights:

● The governance structure comprises the board of directors, board committees, compliance group and internal
audit.

● BDO strives to complete the seats in case of vacant positions to foster long-term success.

● There is no gap in required competencies as its current size and composition provide sufficient diversity
among its directors and employees, foster critical discussion, and promote balanced decision-making.

Gaps and Inconsistencies:

There is no present gap in the firm because it has a well-structured and successful governance system. Corporate
governance in BDO focuses on effective oversight, strict compliance with regulations, and sustainable value creation
to promote the best interest of its various stakeholders.

Skills:

Strongest Skills represented within the Company

As BDO always finds ways, commitment has been the core value that represents the firm. They are committed to the
following: (1) customers in delivering products and services that surpass customer expectations in value and every
aspect of customer service, while remaining prudent and trustworthy stewards of their wealth; (2) dynamic and
efficient organization wherein they create an organization that is flexible, responds to change, and encourages
innovation and creativity; they are committed to the process of continuous improvement in everything they do; (3)
employees where their employees’ growth and development and we will nurture them in an environment where
excellence, integrity, teamwork, professionalism, and performance are valued above all else; and to (4) shareholders
in providing them with superior returns over the long-term.

There are no skill gaps as the Nomination Committee takes into account the relevant qualifications of every worker
with competence and integrity

There are no skill gaps in the BDO. As mentioned above, the Nomination Committee takes into account the relevant
qualifications of every worker with competence and integrity as the primary factors, including other criteria such as,
among others, physical and mental fitness, relevant educational and professional background, personal track record,
experience and training, commitment to contribute, willingness to serve, and interest to remain engaged and
involved, without regard to race, gender, ethnic origin, religion, age, or sexual orientation.

What the Company is known for Doing Well

The firm is outstanding in building a diversified and sustainable actions, create operating leverage by building an
operating platform that supports growth and scalability, complemented by digital enablers; and manage its balance
sheet by conservatively provisioning for risk assets, managing the mix of current and long-term funding sources and
ensuring sufficient capital to support growth. It has a good reputation for building a strong business franchise to
achieve diversity and sustainability over the long-term. With this, BDO has been recognized as the best bank in the
Philippines that garnered numerous titles in the banking industry.

Employees Skills

All employees in the firm are qualified to do work as they are screened by the Nomination Committee before being
hired. The members of the committee have relevant background, knowledge, skills, and/or experience in the areas of
accounting, auditing, and finance. Further, BDO mandates the adherence of its employees to its five (5) basic
principles: accountability, integrity, fairness, performance, and transparency..

Monitoring, Evaluation, and improvement

A yearly self-assessment is conducted focusing on the performance of the Board, directors, Committees and senior
management, through the Corporate Governance Committee, using an approved set of questionnaires. The
performance evaluation process begins with sending out customized Board Evaluation Questionnaires to each
director and advisor. They are required to complete the questionnaire and explain the rationale of their response. The
results of which are tabulated and consolidated. In 2021, the Corporate Governance Committee endorsed to the
Board the continuous engagement of the services of an external facilitator for its yearly self-assessment.

To the Committee, engaging an independent party every year, rather than every three years as recommended by the
Securities and Exchange Commission, provides more governance inputs to the Board and allows comparability and
continuity of aspects examined.

In 2021, the Bank reappointed PwC Philippines (PwC) as external facilitator for the 2021 Board Effectiveness
Evaluation (BEE) as continuation of being the external facilitator for the 2019 and 2020 BEE. PwC facilitated a peer and
self-evaluation process on the Board, Board Committees, and individual directors.

Likewise, the Bank annually provides various in-house programs such as orientation programs for new hires, regular
training, job specific training courses, management and leadership training programs to enhance the knowledge,
working skills and managerial ability of its employees. The Bank allocates every year a training budget for these
developmental programs

Highlights:

● Being committed to their customers, dynamic and efficient organization, employees, and shareholders are
BDO’s strongest skills.

● The firm is well-known for building a diversified and sustainable actions over the long-term

● Employees are screened by the Nominations Committee before being hired.

● A yearly self-assessment is conducted annually focusing on the performance of its employees using a set of
questionnaires.

Gaps and Inconsistencies:

Currently, BDO has neither gaps nor inconsistencies in relation to skills as their employees do a commendable
performance. The number of people employed in the firm is sufficient enough to operate efficiently. Further, the
employees are examined and chosen for their exceptional abilities, which they maintain through their performance.