Prudential Requirements Applicable to Digital Banks, and Amendments to Relevant Provisions of the Manual of Regulations for Banks and Non-Bank Financial Institutions and Manual of Regulations on Foreign Exchange Transactions

I BANGKO STNTRAL NG PILIPINAS OFFICE OF THE GOVERNOR CIRCULAR NO. II54 Series of 2022 Subject : Prudential Requirements Applicable to Digital Banks, and Amendments to Relevant Provisions of the Manual of Regulations for Banks and Non-Bank Financial Institutions and Manual of Regulations on Foreign Exchange Transactions The Monetary Board, in its Resolution No. I33'l dated 8 September 2022, approved the amendments to the relevant provisions of the Manual of Regulations for Banks (MORB), Manual of Regulations for Non-Bank Financial Institutions (MORNBFI), and Manual of Regulations on Foreign Exchange Transactions (FX Manual) to clarifo the extent of applicability of prudential requirements to digital banks, and amend the documentary and licensing requirements on the establishment of banks. Section l. Section1O2 of the MORB on Eosic Cuidelines in Estoblishing Bonks, as amended by Circular No. ll05 dated 02 December 2O2O, is hereby further amended to read, as follows: Section lO2 BASIC GUIDELINES lN ESTABLISHING BANKS A new banking organization must have suitable/fit shareholders, including the ultimate beneficial owners (UBOs)t; adequate financial strength, a legal structure in line with its operational structure, a board of directors (or its equivalent body in the case of foreign bank branches) and senior management with sufficient expertise and integrity to operate the bank in a safe and sound manner. XXX Estoblishment of digitql banks. PolicyStotement.xxx The following guidelines shall govern the establishment of digital banks: o. Definition. A digital bank offers financial products and services that are processed end-to-end through a digital platform and/or electronic channels with no physical branch/sub-branch or branch-lite unit offering financial products and services. b. Conduct of business. Similar with other types of banks, a digital bank shall be subject to all prudential requirements set out by the Bangko Sentral including but not limited to corporate governance, risk management, particularly on information technology (lT) and cyber security, outsourcing, consumer protection and anti-money laundering (AML) and countering terrorist and proliferation financing as provided under existing regulations. I For purposes of this Section, x x x

c. Physicol touchpoints. x x x xxx Tro nsitory provision. x x x Banks converting to digital banks shall be given a period of three (3)years from approval of the Monetary Board within which to meet the minimum capital requirement and implement the transition plan, including divestment or closure of branches, sub-branches or branch lite units. Upon receipt of notice of approval of conversion, the bank shall no longer engage nor renew transactions under authorities not associated with those allowed for a digital bank. xxx XXX The foregoing transitory provisions, particularly the three-year capital build-up, shall not apply to committed capital infusion of new investors in the converting bank arising from acquisition, purchase/sale, transfer of the converting bank's shares of stock or other similar arrangements, where such required minimum capital shall be infused before the issuance of the Certificate of Authority to Register with the SEC. The Monetary Board may limit the total number of digital banks that may be established taking into account the total number of applications received and the assessment of the overall banking situation.i XXX Bank advertisements. The following rules and regulations shall govern bank advertisements. A. XXX XXX No bank advertisement shall mislead, misrepresent, give a false impression to the public, or withhold information that a reasonable consumer needs to know with respect to the banking category of a bank and the products and/or services that the bank is authorized to offer. In this regard, only a bank that is granted a digital bank license shall market itself as a digital bank. A bank belonging to other bank classifications is prohibited from representing itself as a digital bank in its marketing communications and platforms, including digital media, websites, or mobile applications, among others. Nonetheless, any bank may market itself as a bank offering'digital banking products or services" or other equivalent terms: Provided, That the bank has secured the requisite Bangko Sentral license on electronic payment and financial services for these digital banking products or seruices. In relation to this, the application window for new digital bank license, including conversion of existing bank's license to digital bank license, which was closed starting 5l August 2021, pursuant to Memorandum No. M-2O21-O46 dated 19 August 2021, remains effective. The moratorium under M-2O21-O46 also covers applications for the establishment of other types of banks that will primarily offer financial products and services that are processed end-to- end through a digital platform and/or electronic channel. Page 2 of19

g. Banks shall discontinue any advertisement x x x h. Responsibility for compliance x x x. Section 2. Section'l2l of the MORB on Minimum Required Copitol, as amended by Circular No.'l'12'l dated 8 June 2O2l,is hereby further amended to read, as follows: I2T MINIMUM REQUIRED CAPITAL xxx Minimum capitalization. The minimum capitalization of banks which shall be complied with at all times shall be as follows: Required Bank Cateqorv Minimum Capitalization UBs xxx xxx KBs XXX XXX Diqital Banks P].OO billion TBs xxx XXX TBs, RBs, and Coop Banks that primarily offer financial products and services that are processed end-to-end through a digital platform and/or electronic channels under an Advanced Electronic Payments and Financial Services (EPFS) license, as determined by the appropriate supervising department/s, shall maintain a minimum capital of P'l.O billion. Existing TBs, RBs, and Coop Banks that are primarily offering financial products and services that are processed end-to-end through a digital platform and/or electronic channels under an Advanced EPFS license, as determined by the appropriate supervising department/s, shall be given five (5) years from the date of effectivity of this Circular within which to meet the new minimum capital requirement. These banks shall submit to the Bangko Sentral an acceptable capital build-up program within six (6)months from the date of effectivity of this Circular. For purposes of compliance with this Section, the term branch shall exclude the branch-lite units of banks. xxx Section 3. Section 125^25-Q of the MORB/MORNBFI on Bose/ lll Risk-Bosed Copitolis hereby amended to read, as follows: I25 BASEL III RISK.BASED CAPITAL The guidelines implementing the revised risk-based capital adequacy framework for the Philippine banking system to conform to Basel lll recommendations is provided in Appendix 59. These guidelines apply to all UBs and KBs as well as their subsidiary banks and QBs, and digital banks. The risk-based capital ratio of a bank, x x x xxx Page 3 ofl9

,l Morket risk copital requirement. UBs/KBs and digital banks shall also measure and apply capital charges for market risk, in addition to the credit risk capital requirement in this Section, x x x xxx The instructions for accomplishing the report on computation of the Adjusted Risk- Based Capital Adequacy Flatio covering combined credit risk and market risk are shown in Appendices 44 (for UBs, KBs with expanded derivatives authority),45 (for UBs, KBs with expanded derlvatives authority but without options transactions) and 46 (for UBs and KBs without expanded derivatives authority and digital banks). XXX Required reports. xxx All UBs and KBs as well as their subsidiary banks,and digital banks shall be subject to all other reporting requirements (i.e., Basel lll Capital Adequacy Summary Report) under the Basel lll risk-based capital as may be prescribed by the Bangko Sentral. XXX 125-Q BASEL ilt R|SK-BASED CAP|TAL The guidelines implementing the revised risk-based capital adequacy framework for the Philippine banking system to conform to Basel lll recommendations is provided in Appendix Q-45. These guidelines apply to all UBs and KBs, as well as their subsidiary banks and QBs, and digital banks. The risk-based capital ratio of a QB, x x x xxx Required reports. xxx All UBs and KBs as well as their subsidiary banks and QBs, and digital banks shall be subject to all other reporting requirements under the Basel lll risk-based capital as may be prescribed by the Bangko Sentral. xxx Section 4. Section 129 of the MORB on Bose/ lll Leveroqe Rotio Fromeworkis hereby amended to read, as follows: 129 BASEL III LEVER.AGE RATIO FRAMEWORK a. Minimum requirement. x x x xxx The guidelines implementing the Basel lll Leverage Flatio framework are provided in Appendix 116. The guidelines shall apply to UBs and KBs as well as their subsidiary banks and QBs, and digital banks. xxx Page 4 of19

Section 5. Section'13O, of the MORB on lnternol CopitolAdequocy Assessrnent Process ond Supervisory Review Process is hereby amended to read, as follows: I3O INTERNAL CAPITAL ADEQUACY ASSESSMENT PROCESS AND SUPERVISORY REVIEW PROCESS The guidelines on banks' internal capital adequacy assessment process (ICAAP) and Bangko Sentral's supervisory review process (SRP) are shown in Appendices 94, 95, and 96, respectively. The ICAAP guidelines shall apply to all UBs, KBs, and digital banks on a group- wide basis. Section 6. Section '13'l of the MORB on Policy Stoternent ond Definition of Terms, as amended by Circular No. 1129 dated '12 November 2021, is hereby further amended to read. as follows: l3l POLICY STATEMENTAND DEFINITION OF TERMS XXX Definition of Terms. For purposes of these regulations, the following defi nitions shall apply: XXX c. Complex bonks shall refer to UBs/KBs and digital banks. Nonetheless, a UB/KB or digital bank may apply with the Bangko Sentral for a reclassification as simple or non-complex bank in order to avail of the reduced minimum requirement on the constitution of board committees. x x x XXX Section 7. Section 132 of the MORB on Board of Directors, as amended by Circuf ar No. lI29 dated '12 November 2021, is hereby further amended to read, as follows: 132 BOARD OF DIRECTORS XXX Composition of the boord of directors. XXX b. To the extent practicable, the members of the board of directors shall be selected from a broad pool of qualified candidates. x x x In the case of a digital bank, at least one member of the board of directors should have a minimum of three (3) years of experience and technical knowledge in operating a business in the field of technology or e-commerce. XXX Page 5 of19

Section 8. Section134 of the MORB on Officers, as amended by Circular No. ll29 dated'f 2 November2O2l, is hereby further amended to read, as follows: 734 oFF|CERS XXX Qualificotions of an officer. An officer must be fit and proper for the position he is being appointed to. x x x XXX The Bangko Sentral shall also consider its own records in determining the qualifications of an officer. In the case of a digital bank, at least one senior management officer should have a minimum of three (3)years of experience and technical knowledge in operating a business in the field of technology or e-commerce. The foregoing qualifications for officers shall be in addition to those required or prescribed under R.A. No. 8791 and other applicable laws and regulations. xxx Section 9. Sections 137/136-Q of the MORB on Confirmotion of the Election/Appointment of Directors/Officers; Bio-doto of Directors ond Officers; lnterlocking Directorships ond/or Officerships; Ruies of Procedures on Administrotive Coses involving Directors ond Officers of BSFls, as amended by Circular Nos.l'129 dated 12 November 2021, and 1136 dated l'l February 2022, are hereby further amended to read, as follows: I37 CONFIRMATION OF THE ELECTION/EPPOINTMENT OF DI RECTORS/OFFICERS; B IO.DATA OF DI RECTORS AN D OFFICERS; I NTERLOCKI NG DIRECTORSHIPS AND/OR OFFICERSHIPS; RULES OF PROCEDURES ON ADMINISTRATIVE CASES INVOLVING DIRECTORS AND OFFICERS OF BSFIS Confi rmqtion of election/appoi ntment of directors/officers. a. Confirming outhority. The election/appointment of directors/officers shall be subject to confirmation by the following: Confirminq Authoritv Position Level a. Monetary Board Directors and CEO/President or its equivalent rank, of UBs and KBs including their subsidiary banks, QBs, trust corporationsr and NBFIs with trust authority; of digital banks; of other stand- alone banks, QBs and NBFIs with trust authority with total assets of at least PIO.O billlon: and of trust corporations with assets under management of at least PIO.O billion. lxxx Page 6 of19

!t Confirminq Authoritv Position Level b. Financial Supervision Directors and CEO/President or its equivalent Sector (FSS) rankxxx Committee Heads of the following operating functions: (i) Comptrollership/Finance, (ii) Lending, (iii) Treasury, (iv) Branch Banking and (v ) nformatl on Tech nology, d i rectly reporti ng to | the CEO/President or its equivalent rank or to the foreign bank office, and with the rank of Senior Vice President (SVP) and above, of UBs, KBs and digital banks, as may be applicable. Heads of internal audit, risk management and compliance functions, regardless of rank, of banks. xxx Trust Officer, reqardless of rank, x x x xxx Bio-datq of directors o,nd officers. xxx lnterlocking Directorships ond/or Officershrps. x x x XXX e. Reports. BSFIs shall submit an annual report of all interlocking positions of its directors and officers within twenty (2O) banking days from the end of each reference year starting 3l December 2021, listed under Appendix 7, which shall be considered a Cotegory A-7 report. BSFIs shall keep a complete record of all interlocking positions x x x XXX r36-Q CONFTRMATTON OF THE ELECTTON/appO|NTMENT OF DTRECTORS/OFF|CERS; B|O-DATA OF DTRECTORS AND OFFTCERS; INTERLOCKING DIRECTORSHIPS AND/OR OFFICERSHIPS; RULES OF PROCEDURES ON ADMINISTRATIVE CASES INVOLVING DIRECTORS AND OFFICERS OF BSFIS XXX lnterlocking Directorships ond/or Officerships. x x x xxx e. Reports. BSFIs shall submit an annual report of all interlocking positions of its directors and officers within twenty (2O) banking days from the end of each reference year starting 3l December 2021, listed under Appendix 7, which shall be considered a Cotegory A-7 report. Page 7 of19

tf BSFIs shall keep a complete record of all interlocking positions x x x XXX Section lO. Section 142 of the MORB on Rrsk Oovernonce Frqmework is hereby amended to read, as follows: 142 RISK GOVERNANCE FRAMEWORK The risk governance framework x x x Risk monogement function. The risk management function shall be responsible for overseeing the risk-taking activities across the BSFI, x x x UBs/KBs and digital banks shall create a separate risk management function that shall primarily assist management in meeting its responsibility to understand and manage risk exposures and ensure the development and consistent implementation of risk policies, processes, and procedures throughout the bank. xxx Chief Risk Officer (CRO). UBs/KBs and digital banks shallappoint a CRO to head the risk management function. x x x XXX Section ll. Section I43 of the MORB on Credit Risk Monogement (Policy stotementl is hereby amended to read, as follows: 143 CREDIT RISK MANAGEMENT Policy stqte/r'rent x x x For purposes of these guidelines, Fls refer to UBs, KBs, digital banks, TBs, RBs and Coop Banks and their respective credit-granting financial subsidiaries (if any) as well as stand-alone QBs. Section 12. Section 145 of the MORB on Liquidity Risk Monogement is hereby amended to read, as follows: 145 LIQUIDIW RISK MANAGEMENT Policystoternent xxx xxx Liquidity Coveroge Rotio (LCR) To promote the short-term resilience of the liquidity risk profile of a bank, x x x The LCR framework shall apply to all UBs and KBs' as well as their subsidiary banks and QBs, and digital banks on both solo (head office plus branches/other offices) lxxx Page 8 of19

and consolidated (parent bank plus subsidiary financial allied undertakings, but excluding insurance companies) bases. XXX Net Stable Funding Ratio (NSFRI. To promote long-term resilience of a bank against liquidity risk, x x x The NSFR framework shall apply to all UBs and KBs as well as their subsidiary banks and QBs, and digital banks hereinafter referred to as "covered banks". on both solo (head office plus branches)and consolidated (parent bank plus subsidiary financial allied undertakings, but excluding insurance companies) bases. xxx Report on Intraday Liquidity. In accordance with Section V of the Guidelines on lntraday Liquidity Risk Management in Appendix Tl which expects banks with large volume of daily payments and settlements to effectively manage their intraday liquidity positions and risks, all UBs and KBs and their subsidiary TBs as well as digitJl banks shall submit the Report on Intraday Liquidity on solo basis. The report is designed to measure and monitor the different aspects of a bank's intraday liquidity position. XXX Section 13. Section 146 of the MORB on Operotionot Risk Monogement is hereby amended to read, as follows: 146 OPERATIONAL RISK MANAGEMENT Policystoternent xxx XXX Poles ond functions. a. Operotionol risk monogement function. UBs/KBs and digital banks shall create a separate ORMF or assign specific personnel under the risk management unit to handle operational risk concerns. x x x XXX Operotionol risk mdnogement fromework. Banks shall have in place an appropriate operational risk management framework, x x x a. Risk identificotion ond ossessrnent.. x x x ('l) xxx xxx (2) Banks shall adopt tools and mechanisms that are appropriate to their size, complexity of operations and risk profile to properly identiff and assess operational risk. x x x Page 9 of19

tl ta (a) Resu/ts of internol/externol oudit ond supervisory rssues roised in the Bongko Sentrol Report of Exomination (ROE)- x x x xxx (h) Compo rotive onolysis - x x x XXX UBs/KBs and digital banks are expected to adopt more sophisticated tools in identifying and assessing their operational riskexposures.xxx xxx Section 14. Section 148 of the MORB on lnformotion Technology Risk Monagement is hereby amended to read, as follows: 14A INFORMATION TECHNOLOGY RISK MANAGEMENT The enhanced guidelines on Information Technology Risk Management (ITRM)x x x XXX lT Profile Clossificstion. To ensure that lT risk management system, governance structure and processes are commensurate with the attendant lT risks, the Bangko Sentral shall determine the lT profile of all BSFIs and classiff them as "Complex", "Moderote" or "Simple". x x x xxx The lT profile of digital banks shall be classified as "Complex". In the case of RBs, Coop Banks, NBFls, and non-bank institutions, their lT profile shall be classified as 'Simple", unless notified by the Bangko Sentral of a higher classification. x x x xxx Section 15. Section 163 of the MORB on lnternol Audit Function is hereby amended to read. as follows: 163 INTERNAL AUDIT FUNCTION An effective and efficient internal audit function constitutes the third line of defense in the system of internal control. XXX Qualificotions of the heod of the internol audit function. xxx a. The head of the internal audit function of a UB, KB, and a digital bank must be a Certified Public Accountant (CPA) or a Certified lnternal Auditor (ClA), and must have at least five (5) years experience in the lxxx Page lO of19

regular audit (internal or external) of a UB, KB, or a digital bank as auditor-in-charge, senior auditor or audit manager. He must also be a Certified lnformation Systems Auditor (CISA) in the case of a digital bank. He must possess the knowledge, skills, and other compeiencies to examine all areas in which the institution operates. professional competence as well as continuing training and education shall be required to face up to the increasing complexity and diversity of the i nstitution's operations. b. The head of the internal audit function of a complex TB, RB and Coop Bank; QB and; trust entity must be a graduate of any accounting, business, finance or economics course with technical proficiency on thl conduct of internalaudit and must have at least five (5)years experience in the regular audit (internal or external) of a TB, national Coop Bank or, at least three (3) years experience in the regular audit (internal or external)of a UB, KB or digital bank. c. The head of the internal audit function of a simple or non-complex TB, RB and Coop Bank; and NSSLA must be a graduate of any accounting, business, finance or economics course with technical proficiency on the conduct of i nternal aud it and must have at least two (2 ) years experience in the regular audit (internal or external)of a UB, KB, digital bank, TB, RB, Coop Bank, QB or NSSLA. A qualified head of the internal audit function of a UB, KB or digital bank shall be qualified to audit TBs, RB, coop Banks, eBs, trust entities, NSSLAs, subsidiaries and affiliates engaged in allied activities, and other financial institutions under Bangko Sentral supervision. x x x XXX Section 16. Section 9ll of the MORB on Anti-Monev Lounderinq Risk Monogement is hereby amended to read, as follows: 9II RISK MANAGEMENT XXX Monitoring ond reporting tools. x x x a. Electronic monitoring ond reporting systems for AMUCFL UBs, KBs and digital banks and such covered persons that are considered complex pursuant to Sec. 131 (Definition of terms) shall adopt an electronic AML system capable of monitoring risks associated with ML/[F as well as generating timely reports for the guidance and information of its board of directors and senior management, in addition to the functionalities mentioned in Sec. 922 (Electronic monitorino systems for AMU:FT). XXX Section 17. Section 171 of the MORB on Reporting Covernonce Fromework is hereby amended to read, as follows: t7l REPORTING GOVERNANCE FRAMEWORK Page ll of19

The proper conduct of monetary policy and effective banking supervision are core mandates of the Bangko Sentral. These mandates are facilitated by the accurate and timely submission of required information concerning a bank's financial condition and results of operations. x x x xxx sonctions on reports for non-complionce with the reporting stqndords. a. Definitions XXX b. Monetory Penolties The applicable monetary penalty shall be based on a prescribed fine for each occurrence (in case of Erroneous reports)or for each day (in case of Delayed or Unsubmitted reports)which will accumulate until such time the report has been determined compliant with the prescribed reporting standards, as provided for in Table l: able I - Prescribed fines for ,ortinq violations Bank Tvoe Primary Report Secondary Report UBs/KBs Pxxx Pxxx Diqital Banks 2,OOO 400 TBs xxx xxx RBs/Coop Banks xxx xxx XXX Section 18. Section 251 of the MORB on Accounts Subject to Reserves;Amounts Required (Required reserves ogoinst deposit ond deposit substitute liobilities,), as amended by Circular No.'1O92 dated 27 July 2O2O, is hereby further amended to read, as follows: 251 ACCOUNTS SUBJECT TO RESERVES; AMOUNTS REQUTRED The following rules and regulations shall govern the reserves against deposit and deposit substitute liabilities. Required reserves agoinst deposit and deposit substitute liobilities. The rates of required reserves against deposit and deposit substitute liabilities in local currency of banks effective reserve week after the effectivity of this Circular shall be, as follows: Digital RBs/Coop UBs/KBs TBs Banks Banks a. Demand Deposits xxx 8o/o xxx xxx b. NOWAccounts xxx 8o/o xxx xxx c. Savings Deposits (excluding bosic xxx 8o/o xxx xxx deposit occounts) d. Time Deposits, Negotiable CTDs, Long- xxx 8Vo xxx xxx Term Non-Neqotiable Tax Exemot CTDs e. Long-term Negotiable Certificates of Time Deposits xxx NA xxx xxx f. Deoosit Substitute (DS) xxx 8o/o xxx xxx q. Bonds xxx 3%o xxx xxx h. Mortqaqe/CHM cert. xxx NA xxx xxx Page 12 of19

Digital RBs/Coop UBs/KBs TBs Banks Banks i. Peso deposits lodged under Due to xxx 8Vo xxx xxx foreiqn banks j. Peso deposits lodged under Due to xxx 8o/o xxx xxx Head Office/Branches/ Agencies Abroad (Philippine branch of a foreign bank) k. Basic deposit accounts, as defined in XXX Oo/o xxx xxx Sec.213 xxx Section 19. Section 371 of the MORB on /nvestment in Equities is hereby amended to read, as follows: 371 SCOPE OF AUTHORITY The following rules shall govern the investment of banks in the equities of allied undertakings, whether financial or non-financial, and non-allied undertakings, as well as the establishment/acquisition of subsidiaries and affiliates abroad. lnvestment in Equities. Banks may invest in equities of allied or non-allied undertakings, including corporate affiliations or structures, subject to approval of the Bangko Sentral and compliance with the prudential criteria provided under Sec. 'l'l'l (Prudentiol criterio). A bank applying for approval to invest in allied or non-allied undertakings shall submit the following documents to the appropriate supervising department of the Bangko Sentral: A.XXX xxx e. Articles of incorporation of the investee company; f. Corporate secretary's certificate on the approval of the stockholders, when required under the Corporation Code, and the board of directors of the investee company to allow the Bangko Sentral to examine its books; and g.xxx In case the investee company is at the same time an applicant requesting for authority to establish a bank, ltems "e" and "f'above shall not apply. Guidelines for mojor investments. x x x Section 20. Section 373 of the MORB on Limits on lnvestment in the Equities of Finonciol Allied Undertokings, os omended by Circulor No.1105 doted 2 December 2O2O, is hereby further amended to read, as follows: 373 LtMtTS ON TNVESTMENT tN THE EQU|T|ES OF F|NANCIAL ALLTED UNDERTAKINGS The equity investment of a bank in a single financial allied undertaking shall be within the following ratios in relation to the total subscribed capital stock and to the totalvoting stock of the allied undertaking: Page 13 of19

I ACTIVITIES INVESTOR Allied Digital Coop UB KB TB RB Enterprises Banks Banks FinancialAllied Publicly- Not Publicly- Not Undertakinq listed listed listed listed UBs xxx I xxx xxx I xxx 49%io xxx xxx xxx KBs xxx xxx xxx xxx 49o/o xxx xxx xxx Diqital Banks xxx xxx 49o/c xxx xxx xxx fBs xxx xxx 49o/o xxx xxx xxx RBs xxx xxx 49Vo xxx xxx xxx Coop Banks xxx xxx NA xxx xxx xxx lnsurance xxx xxx xxx xxx xxx Companies NA VCCs xxx xxx NA xxx xxx xxx Trust Corporation xxx xxx 4Oo/o xxx xxx xxx Others xxx xxx 4Ao/o xxx xxx xxx XXX Section 21. Section 375 of the MORB on Non-Finonciol Allied lJndertokinqs is hereby amended to read, as follows: 375 NON.FINANCIAL ALLIED UNDERTAKINGS A bank may acquire up to 'lOO7o of the equity of a non-financial allied undertaking: Provided, That the equity investment of a digital bank/fA/RB in any single enterprise shall remain less than fifty percent (5Oo/ol of the voting shares in that enterprise: x x x xxx a. UBs/KBs/DigitalBanksfiBs UBs/KBs, digital banks, and TBs may invest in equities of the following non-fi nancial allied undertakings: xxx Section 22. Section 378 of the MORB on Prudentiol Limits ond Restrictions on Equity lnvestments is hereby amended to read, as follows: 378 PRUDENTIAL LIMTTS AND RESTRTCTTONS ON EQUTTY TNVESTMENTS The following limitations and restrictions shall also apply regarding equity investments of banks. a. ln ony single enterprise. x x x b. Aggregote limits. The total amount of investments in equities in all enterprises shall not exceed the following ratios in relation to the net worth of the investing bank: UB KB Digital TB RB Coop Bank Bank LIMIT: 50%o 35o/o 25%o 25o/o 25Vo 25o/o xxx

Section 23. Section l'lO'l of the MORB on Assessment Fees on Bonks lAnnuol fees on bonks)is hereby amended to read, as follows: rIOI ASSESSMENT FEES ON BANKS Banks shall contribute to the Bangko Sentral an annual fee to help defray the cost of maintaining the appropriate supervising department of the Bangko Sentral in accordance with the following guidelines. Annual fees on banks. For purposes of computing the annual fees chargeable against banks, the term "Total Assessable Assets" shall be the amount referred to as the total assets under Section 28 of R. A. No. 7653 (end- of-month total assets per balance sheet, after deducting cash on hand and amounts due from banks, including the Bangko Sentral and banks abroad), plus Trust Department accounts and personal equity and retirement accounts (PERA)administered by the bank. Average Assessable Assets shall be the summation of the end-of-month total assessable assets divided by the number of months in operation during a particular assessment period. The rates of annual fees for banks for the current year shall be, as follows: a. UBs/KBs - 1/28 of 1o/o b. Digital banks -1/28 of 1o/o c. TBs - I/28 of 1o/o d. RBs/Coop Banks - l/+O of 'tVo multiplied by the Average Assessable Assets of the preceding year: x x x Section 24. Section 613 of the MORB on Derivotives Activities, as amended by Circufar No.1ll9 dated 07 June 2O2'l,is hereby amended to read, as follows: 613 DERIVATIVESACTIVITIES xxx Cenerolly outhorized derivqtives octiyities. x x x a. UBs and KBs may transact in the following derivatives in the capacities specified: XXX b. Digital banks, TBs, FlBs and Coop Banks may transact in the following derivatives transactions as end-user: XXX C. XXX Activities req ui ri ng odditiono I derivotives a uthority. x x x a. Classification of additional derivatives authority ('l) Type 1 - Expanded dealer authority Page 15 of19

XXX (3) Type 3 - Limited user authority Any bank may apply for a Type 3 authority. x x x A digital bank, TB, RB or Coop Bank with a Type 3 authority may transact, as an end-user for purposes other than hedging, in specific types of derivatives products, with specific underlying reference: x x x XXX Section 25. Appendix 42 of the MORB on Guidelines to lncorporate Morket Risk in the Risk-Bosed Copitol Adequocy Fromework is hereby amended to read, as follows: GUIDELINES TO INCORPORATE MARKET RISK IN THE RISK.BASED CAP|TAL ADEQUACY FRAM EWORK (Appendix to Section 125 on Mqrket risk copital requirementsJ lntroduction xxx Coverage of capital requirement for market risk 4. The capital requirement for market risk shall apply to all UBs, KBs, and digital banks. XXX Required reports lO. xxx 'l'1. One (I) of three (3) alternative report forms prescribed, shall be used depending on the complexity of the bank's operations, to wit: (a) xxx; (b) x x x;or (c) For UBs/KBs without expanded derivatives authority and digital banks. '12. xxx Section 26. Appendix 46 of the MORB on /nstructions for Accomplishing the Report on Computotion of the Adjusted Risk-Bosed CopitolAdequocy Rotio Covering Combined Credit Risk ond Morket Risk is hereby amended to read, as follows: INSTRUCTIONS FOR ACCOMPLISHING THE REPORT ON COMPUTATION OF THE ADJUSTED R|SK-BASED CAP|TAL ADEQUACY RAT|O COVERTNG COMBINED CREDIT RISKAND MARKET RISK (For Universal Banks and Commercial Banks Without Expanded Derivatives Authority and Digital Banks) (Appendix to Sec. 125 on Morket risk capitol requirement) Page 16 of19

General Instructions l. All UBs, KBs and digital banks are required to complete this Report both on a solo basis (i.e., head office plus branches) and on a consolidated basis (i.e., parent bank plus subsidiary financial allied undertakings, but excluding insurance companies). xxx Section 27. Appendix 59 of the MORB on Risk-Bosed Copitol Adequocy Framework for the Philippine Bonking System is hereby amended to read, as follows: Introduction xxx The guidelines revise the risk-based capital adequacy framework for UBs and KBs, as well as their subsidiary banks and QBs, and digital banks. x x x xxx Part l. Risk-based capital adequacy ratio (CAR) '1. UBs and KBs as well as their subsidiary banks and QBs, and digital banks shall be subject to the following risk-based CARs: xxx 3. The CAR requirement will be applied to all UBs and KBs as well as their subsidiary banks, and QBs, and digital banks on both solo2 and consolidated3 bases. x x x XXX Part lll. Capital conservation buffer l. A capital conservation buffer of two and a half percent (25%o) of risk- weighted assets, comprised of CETl capital, shall be required of UBs and KBs (both domestic and branches of foreign banks) as well as their subsidiary banks and QBs, and digital banks. XXX 8. Drawdowns on the capital conservation buffers are generally allowed, subject to certain restrictions on distributions. However, UBs and KBs as well as their subsidiary banks and QBs, and digital banks shall be subject to a capital restoration plan within the timeframe determined by the Bangko Sentral. x x x XXX Part lV. Countercyclical Capital Buffer 1. A Countercyclical Capital Buffer (CCyB) set as percent of risk-weighted assets shall be required of UBs and KBs as well as their subsidiary banks and quasi-banks, and digital banks. lt shall be comprised of CET1 capital. Page 17 of19

XXX Section 28. Appendix 94 of the MORB on Cuidelines on Bonks' lnternol Copitol Adequocy Assessment Process is hereby amended to read, as follows: GUTDELTNES ON BANKS' TNTERNAL CAPTTAL ADEQUACY ASSESSMENT PROCESS (Appendix to Sec.l3O) A. lntroduction '1. This document sets out the broad guidelines that UBs, KBs and digital banks (hereinafter referred to as 'banks') should follow in the design and use of their Internal Capital Adequacy Assessment Process (ICAAP). x x x xxx Section 29. Appendix'l'16 of the MORB on Ouidelines on the lmplementotion of the Bosel lll Leveroge Rotio Fromework is hereby amended to read, as follows: GUIDELINES ON THE IMPLEMENTATION OF THE BASEL III LEVERAGE RATIO FRAMEWORK (Appendix to Section 129) The Bangko Sentral will adopt a leverage ratio framework that is designed to act as a credible supplementary measure to the risk- based capital requirements. x x x XXX A. Definition, Minimum Requirement and Scope of Application XXX The leverage ratio shall not be less than 5.O percent and will be applied to all universal and commercial banks (UBs and KBs)as well as their subsidiary banks and quasi-banks (QBs), and digital banks computed on both solorand consolidatedz bases, XXX xxx 1. Capital Measure xxx 2. Exposure Measure a. General Measurement Principles in respect of the Exposure Measure UBs and KBs as well as their subsidiary banks and QBs, and digital banks should generally follow the accounting value of exposure for the purpose of calculating the Exposure Measure for the leverage ratio, except that: XXX r xxx 2 xxx Page l8 of19

UBs and KBs as well as their subsidiary banks and QBs, and digital banks must not take account of physical or financial collateral, guarantees or other credit mitigation techniques to reduce the Exposure Measure. Section 30. Section 'lO'l of the Manual of Flegulations on Foreign Exchange Transactions on Reportoriol Requirements is hereby amended to read, as follows: Section lol. Reportorial Requirements. The following reports are required to be submitted to the BSP by Authorized Agent Banks (AABs), Offshore Banking Units (OBUs), and AAB forex corps, where applicable: Submission Title of Report Frequency/ Submission Procedure Deadline Category A. Consolidated Reoort on Foreiqn Exchanqe Assets and Liabilities For UBs/KBs/ Oigital Banks: xxx ForTBs: xxx Section 3t. Digital banks shall comply with the prudential reporting reguirements applicable to UBs/KBs as set forth in Appendix 7 of the MORB on Reports Required of Bonks, except for the following: a. Report on Project Finance Exposures; b. List of Bank Personnel Performing Underwriting Functions; c. Registry Bank Fleport of Compliance with Prohibition on Holdings of Long- term Negotiable Certificates of Time Deposit (LTNCTD); and d. Report on Credit and Equity Exposures to Individuals/ Companies/Groups aggregating PI.O million and above (CREDEX). Appendix 7 of the MORB is hereby amended by inserting a list of reports required of digital banks pursuant to this Section. Section 32. The amendments to Appendix 33 of the MORB on the Bosic Cuidelines in Estoblishing Bonks, as amended by Circular No. ll05, is in Annex A of this Circular. Section 33. The amendments to Appendix 2 of the MORB on the Applicotion Requirements for the Entry of Foreign Bonks is in Annex B of this Circular. Section 34. This Circular shall take effect fifteen (I5)calendar days following its publication either in the Official Gazette or in a newspaper of general circulation. FOR THE MONETARY BOARD: +.a-tL;* EDUARDO GSOBIER \_l Officer-ln-Charge 14 S od. zozz Page 19 of19

Annex A of Circular Appendix 33 BASIC GUIDELINES IN ESTABLISHING BANKS (Appendix to Seetion lO2) A. THE APPLICATION PROCESS XXX Stoge l: Applicotion for Bongko Sentrol opproval to estoblish o new bank PRE-APPROVAL I. xxx 2. The required documents and other information in support of the application are as follows: a. Agreement to organize a bank using the prescribed formt,2. b. For each individual incorporator, subscriber, proposed director and principal . officer: Requirements Principal Incorporators SubscribeF Directors Officer l. Biographical data using the prescribed formr'a with (2"x2") photograph taken within the last six (6) months from the date the application was received by the Banqko Sentral. 2. Evidence of citizenship.I Evidence of financial capacity as of a date not earlier than ninety (9O) calendar days prior to the filin9 of application such as credit reports, bank deposits, investments, real estate owned, etc., accompanied by waiver of rights under R.A. No. 1405, as amended. for covered items.I 4. Certified photocopies of Income Tax Returns (lTRs) or equivalent document from other jurisdiction for non- Fi i pinos/non-resident Fi i pi nos for the last I I three (3) calendar/flscal vears.r 5. Clearances from the National Bureau of Investiqation (NBl) and Bureau of Internal I Documents issued outside the country shall be apostilled or consularized, as applicable. 2 Copy of the prescribed form may be downloaded from the BSP website under the section on Regulations - Guidelines and Other Regulations - Guidelines on Establishing Banks, using the link: httpsr#www.bsp.gov.phfF,egulations/Cr ridelines9/o2Oandc/o2Ootherc/o?ORegu lations/Agreementol?Otoo/o2 OOrg: n izeolo2Oao/o2O 8a nk-pdf 3 This shall include UBos. a Copy of the prescribed form may be downloaded from the BSP website under the section on Flegulations - Guidelines and Other Regulations - Guidelines on Establishing Banks, using the link: htf ps:l/www-bsp.gov-ph/Qegulations/Cu idelinesg/.2Oandva2Oother?d2OReguletions/Biographic6l%'2Onata.p d+ 5 This includes directors holding nominal shares.

Requirements Principal Incorporator3 Subscriber3 Directors Officer Revenue (BlR) or equivalent clearances or certificate from home country for non- Filipinos, obtained within the last six (6) months from the date the application was received bv the-Banqko Sentral.I The required certifications and other documentary proof of qualifications for the confirmation of the election/appointment of directors/officers are shown in Appendix 1O1. c. For corporate subscribers Domestic Foreign Requirements Bank Non-bank Bank6 Non-bank l. Board resolution authorizing the corporation to invest in such bank; and designating the person who will represent the corporation in connection therewith.l 2. xxx 3. xxx 4. xxx 5. xxx 6, xxx 7. Certified photocopies of lTRs or equivalent tax returns filed by foreign corporate subscribers for the last three (3) calendar/fi scal years.r L BIR clearance or equivalent clearance from home country's tax authorities for foreign corporate subscribers obtained within the last six (6) months from the date the application was received by the Banqko Sentral.r 9. xxx lO. xxx ll. Certification from relevant home country supervisory authority that it has no objection to the investment in a bank in the Philippines, and it will provide the Bangko Sentral with relevant supervisory information on the foreign corporate subscriber to the extent allowed under existinq laws.I xxx t. Feasibility study with projected monthly financial statements (FS) for the first year and projected yearly FS for the first five (5) years of operation, using realistic assumptions consistent with the proposed business model and corporate strategy of the bank. The applicant bank should be able to demonstrate the viability of its business model and compliance with the 6 For foreign bank subscriber other than those entering via Fl.A. No. 7721, as amended by R.A. No. l064l. Meanwhile, foreign bank applicants entering via R.A. No.7721, as amended by R.A. No. 1064l shall refer to the documentary requirements in Appendix 2to be submitted to the Bangko Sentral during Stage I of the application process. Page2ol 4

minimum required capital prescribed under Secs. 121 (Minimum copitolizotion/ and 1O2 (Estoblishment of digitol bonks), as applicable, on a continuing basis, among others. The details of the assumptions used shall be presented in the feasibility study. xxx I. Certification executed by each of the subscribers that the amount committed to pay the proposed paid-up capitalization in the bank was not derived from borrowings, unlawful activity or any money laundering activity.t h. XXX Other documents which may be required by the Bangko Sentral relevant to the evaluation of the application. This shall include the prior approval of the Bangko Sentral on the equity investment of an existing bank (investing bank) in the voting stock of an applicant bank (investee company/bank) pursuant to Sec. 371 (lnvestment in equitiesl. For this purpose, items "e" and "f' of the documentary requirements provided under Sec. 371 (lnvestment in equities) shall not apply. XXX EVALUATION Co pito I R eq u i re me nts/Stockh ol d i n g s XXX lncorporotors, Subscribers, Directors ond Officers l. The incorporators, subscribers and proposed directors and officers must be persons of integrity, of good credit standing in the business community, and must possess technical expertise in the field of banking and finance. x x x 2. The individual incorporators/subscribers must have adequate financial strength to pay their proposed subscriptions in the bank and/or infuse additional capital when needed. The Bangko Sentral reserves the right to require the incorporator or subscriber to submit a deed of undertaking committing himself to pay his subscription and/or infuse additional capital to support the operations of the proposed bank in an ongoing basis. XXX 7. The proposed directors and officers of the bank shall be subject to qualifications and other requirements under Secs. 132 (Qualifications of a director) and 134 (Qualifications of an officer)as well as confirmation/approval of the Bangko Sentral pursuant to Sec. 137 (Confirmation of election/appointment of directorshfficers). The required certifications and other documentary proof of qualifications for the confirmation of the election/appointment of directors/officers are shown in Appendix 1O1. xxx

POST APPROVAL Stoge II: Application for the issuonce of Certificate of Authority (COA) to f,legister with the sEc '1. Within thirty (3O)calendar days from receipt of advice of approval by the Monetary Board of the application for authority to establish the bank, the organizers shall: XXX b. Deposit with any U/KB (for KBs, TBs and digital banks), any bank (for RBs and coop banks), and any UB (for lslamic banks)the initial paid-up capital of the proposed bank, and submit a copy of the depository bank's certification of deposit indicating, among others, the source account under the name of the incorporators where the funds are debited or other source/s of fund as defined under ltem "ee" of Sec. 9O4, and a notarized waiver of rights to confidentiality of information on the source/s of funds for the initial paid-up capital. The certificate of deposit and notarized waiver of rights to confidentiality of information shall follow the prescribed format provided in Annex A of Appendix 33 (Annex A-1 of this Circulorl and Annex B of Appendix 33 (Annex A-2 of this Circulor), respectively. The said certificate of deposit and notarized waiver of rights to confidentiality of information on the source of funds shall also be submitted by subscribers in the case of additional capital infusion; c. XXX d. Submit a copy of certificate of the inward remittance of capitalT, in the case of foreign subscribers. xxx Flefer to the prescribed form in Appendix lO.l Certificate of Inward Remittance (ClR) of Foreign Exchange which may be downloaded from the Bangko Sentral website, using the link: https://www.bsp.gov.ph/SitePageslRegu lations/RegulationsList"aspx?Tabld=I Page 4ot 4

Annex A'l of Circular Annex A of Appendix 33 CERTIFICATION OF DEPOSIT AND/OR PLACEM ENT (Name of Bank) (Complete Address) (Tel. Nos./Fax/Email) Date: This is to certiff that a deposit amounting to lAmount in Wordsl $Amount in FiguresTl was credited to lClient Account Numberl of [C/ient Nome] on [Dote Creditedl maintained at [Nome of Bronch) with details as follows: Source/s of Fund for the initial paid-up -' -r Proof capitalof [Nome of Bonk] Provide breokdown ond detoils lndicote proof presented, os opplicoble of source/s of fund of the incorporotors Name and signature Authorized Bank Personnel Conforme: Name and Signature Account HolderA Pagel ofl

Annex A-2 of Circular Annex B of Appendix 33 WAIVER OF RIGHTS TO SECRECY OF BANK DEPOSITS AND CONFIDENTIALITY OF INFORMATION Date: This waiver is executed for purposes of complying with the requirements of the Bangko Sentral ng Pilipinas (Bangko Sentral) for the organization of [Nome of bonkl, undergoing Stage ll of the licensing process to establish a bank in the Philippines, or the infusion of additionalcapital, as may be needed. Pursuant to the provisions of Sections 2 and 3 of R.A. No. l4O5 (Bank Secrecy Law), as amended, and Section 8 of Fl.A. No. 6426 (Foreign Currency Deposit Act of the Philippines), as amended, and such other laws relating to the secrecy of bank deposits, l/we, as incorporatorfs or subscriberA of lNome of bonkl, waive my/our rights to confidentiality of information to the following source/s of funds indicated below, for the initial or additional paid-up capital of [Nome of bonk|.lArl/e hereby authorize the lNome of Depository Bonkl with which l/we have transactions with to disclose to the Bangko Sentral all information pertaining to the deposits, investments, loans or other transactions including the history or status of our dealings with said banks or financial institutions and for the Bangko Sentral to make all inquiries as may be necessary regarding the same. of Incorporator/s or r Source/s of Fund for the initial or Subscriber/s I additional paid-up capital of the bank IProvide breokdown ond detoils of source/s of fund of the incorporator/s or subscriber/s (e 9., Bonk bronch, account nome ond number Signature over Printed Name of I ncorporatorA or Su bscriberA SUBSCRIBED AND SWORN TO before me, this _ day of .at affiant/s exhibiting their government-issued identification cards as follows: NAME GOVERNMENT- DATE OF ISSUE PLACE OF ISSUE ISSUED ID Witness my hand and notarialsealon the date and place above-written. NOTARY PUBLIC Doc. No. _i Page No. _; Book No. _; Series of 20 Pagel ofI

ANNEX B of Circular Appendix2 APPLTCATTON REQUTREMENTS FOR THE ENTRY OF FORE|GN BANKS (Appendix to Sec. lO3 on Modes of entry of foreign banks) The information contained in the application to be filed by foreign banks, which are interested to operate in the Philippines through any of the modes of entry, shall cover the criteria enumerated in the table below. Supporting documentst attached to the application shall include but are not limited to the items enumerated below. Acquisition Establishment of Entry Criteria of Existing Domestic New Branch with Bank Domestic FullBanking Subsidiarv Authoritv a. xxx b. xxx Corporate Plan The applicant should describe in meaningful details its business model and corporate strategy which should be consistent with the policy objectives of Republic Act (R.A.) No. 772I, as amended by R.A. No. 1064'l and supportive of Philippine economic pol icy. (l ) Business model {2)Corporate strategy (3) Financial projections (including underlying assumptions) lf an applicant is seeking a digital banking license, a detailed review and assessment of the supporting information technology (lT) systems and infrastructure vis-i-vis the digital banking business model should be performed by a competent independent third-party lT expert. Said technical review shall cover a comprehensive assessment of the design, security controls, scalability, and resilience capability of the lT infrastructure, network, application, database, security systems, AML/CFT measures and other applicable technologies supporting the digital banking operations. A copy of the assessment and technical reports shall be submitted to Bangko Sentral as part of the application requirements. d. Financial Capability and Ownership Structure The applicant should demonstrate that it is financially sound and capable of conducting business in the Philippines in a safe and sound manner. r Documents issued outside the country shall be apostilled or consularized, as applicable. Page I of 3

Acquisition Establishment of of Existing Entry Criteria New Branch with Domestic Bank Domestic FullBanking Subsidiarv Authoritv The following documents should be presented: (l ) Latest annual report; xxx (5) List of directors and principal officers as well as their respective citizenship. In the case of applicants for digital banking license, at least one member of the board of directors (or its equivalent in the case of foreign bank branches) and one senior management officer should have a minimum of three (3) years experience and technical knowledge in operating a business in the field of technology or e- commerce; xxx e. Head Office Guarantee 1 X X (with sample quarantee) f. Certification from the foreign bank applicant's home country supervisory authoritvtthat: x x x q. xxx h. Divestment plan for the disposal of titlelnterest in X X all land properties held by the acquired domestic bank within a five (5)-year period reckoned from the date of Monetary Board approval of the foreiqn bank entruz i. OtherDocumentationRequirements 0) Agreement between investor and investee X domestic bank/ Agreement to organize a bankl (with sample); (2) Board Flesolution authorizing the foreign bank applicant to (i) invest in a domestic bank/establish a subsidiary/branch; and (ii) designate person/s who will represent the foreiqn bankr; (3) Certification from the foreign bank applicant's Corporate Secretary or any officer holding equivalent position containing the information that the bank is widely-owned and publicly-listedr; (4) Certification by the responsible officer of the Home Country Stock Exchange that the foreiqn bank applicant is listed thereinl; (5) xxx (6) Authority to obtain information from other relevant regu latory authoritiesr; (7) In the case of applicants for a digital banking license, the applicable requirements in offering Electronic Payments and Financial Services (EPFS) as enumerated under Sec. 7O1 (Requirements for the grant of authority to offer EPFS) and its correspondinq quidelines 2 Also applicable for change in mode of entry (i.e., from subsidiary to branch)

i'! Acquisition Establishment of of Existing Entry Criteria New Branch with Domestic Bank Domestic Full Banking Subsidiarv Authoritv under Appendix 135, and the list and nature of material outsourcing arrangements pursuant to Sec. ll2 and Appendix lO3, as amended by Circular No. l'137 dated 18 Februarv 2022; (8) Payment of application fee (non-refundable) of PSOO,OOO upon filing of application3 a and (9) Payment of license fee of P25 million upon approval of appl icationz 3 Also applicable for conversion of mode of entry 4 Creditable to the license fee