To approve the expansion of the coverage of the Currency Rate Risk Protection Program (the "CRPP Facility") under BSP Circular No. 261 dated October 12, 2000.

ANNEX 1 IMPLEMENTING GUIDELINES FOR BSP CIRCULAR NO. _292 THE CURRENCY RATE RISK PROTECTION PROGRAM (THE “CRPP FACILITY”) MECHANICS: 1. A list of eligible FCDU loans outstanding as of June 30, 2001 shall be submitted by the universal/commercial banks to the BSP-DCB-I/DCB-II in the prescribed format (Annex 2) within five (5) banking days after date of Circular. 2. Qualified applicants shall file an application in the attached format (Annex 4) with the universal/commercial bank (the “Bank”) certifying under oath that the underlying foreign exchange obligation qualifies under the Circular and that such obligation is unhedged. 3. The Bank, after reviewing the application and finding the same in order, shall request the BSP-Treasury Department to quote the CRPP rate between 1:00 P.M. and 2:30 P.M. Each application shall be dealt with BSP-Treasury Department separately. 4. The Bank shall transmit the details of the deal done with BSP-Treasury Department to BSP-DCB-I/DCB-II not later than 10:00 A.M. of the following day after deal date. The details shall include a hard copy of the Reuters conversation with BSP-Treasury Department, or if the deal is done thru the telephone, a fax copy of the details of the transaction, i.e., tenor/maturity date, swap points, spot rate, forward rate and amount. 5. The client, thru the Bank, shall provide the relevant documentary requirements that BSP-DCB-I/DCB-II may require. All deals done between the Bank and the BSP-Treasury Department shall be subject to confirmation (approval/disapproval) by the BSP-DCB-I/DCB-II on the basis of the results of its evaluation of the documents submitted.

ANNEX 1 Page 2 DOCUMENTARY REQUIREMENTS: Unless otherwise indicated, all of the following documents shall be certified as true copies by the bank’s authorized signatory who shall at least be a Senior Vice- President or its equivalent and by the Compliance Officer, and submitted to the BSP- DCB-I/DCB-II together with the application to avail of the CRPP Facility: 1. BSP-registered FCDU loans and bonds For medium/long-term (MLT – with remaining tenors of up to 5 years) FCDU loans and bonds a. BSP registration letter and accompanying Schedule of Principal and Interest Payments on BSP-registered Foreign Credits (Schedule RA-2); or b. BSP letter-notation of partial utilization of loan proceeds and BSP letter indicating the approved loan terms together with bond prospectus (optional). In case document b is presented, amount eligible for hedging shall be limited to total amount noted per BSP letter. For short-term (ST – with original maturity of up to 1 year) FCDU loans a. Promissory note certified by the Head of the lending bank’s Loans Department; and b. Certification from lending bank on the date when loan account has been reported to BSP-IOD under IOS Form 4; or Certification from lending bank that the loan is outstanding (for loans which have not been reported to BSP-IOD under IOS Form 4 which is due for submission 15 banking days from end of reference month) indicating the following details: date granted, amount outstanding as of date of application, loan purpose and due date/s. For purposes of this Circular, the eligible ST FCDU loans are those that satisfy the eligibility criteria for registration under BSP Circular No. 1389, as amended.

ANNEX 1 Page 3 2. US Dollar trust receipts ($ TRs) a. Letter of credit, if applicable; b. Commercial invoice; c. Bill of lading; d. $ TR draft; and e. Trust receipt agreement 3. Foreign currency import bills/Customers’ liabilities under acceptances (CLA) a. Commercial invoice; b. Bill of exchange (import bill or customer’s acceptance); c. Bill of lading; and d. Letter of credit 4. BSP-registered DA/OA obligations a. BSP registration letter; and b. Bill of exchange with importer’s acceptance in the case of DA

ANNEX 1 Page 4 TENORS: Contract tenors will be from one to twelve (12) months but not to exceed the final maturity date of the underlying foreign exchange obligation. The eligible foreign exchange obligations falling due beyond twelve (12) months from application date may be hedged by entering into a series of CRPP contracts. A new application is required for each CRPP contract. PRICING: The BSP-Treasury Department will provide forward rates in tenors of up to 1 year. Pricing of the non-deliverable forward (NDF) contract under the CRPP Facility will be based on this formula: NDF Rate = Spot Rate x (1 + (Peso Interest Rate* x Tenor/360)) 1 + (US Dollar Interest Rate** x Tenor/360) * Peso Interest Rate will be determined by BSP * * US DollarIinterest Rate will be based on the relevant SIBOR on Bridge Telerate Page 7311 BSP-Treasury will use the A.M. Philippine Dealing System (PDS) weighted average rate for spot transactions or the last transacted deal during the morning session, whichever is higher, on deal date as the Spot Rate, or if not available, the previous day’s P.M. weighted average rate or the closing rate, whichever is higher. FIXING DATE: One business day prior to the maturity date of the CRPP contract, the Fixing Rate will be agreed upon by the Bank and the BSP, using the A.M. PDS weighted average rate on page 2920 of Bridge Telerate. The net difference between the NDF Rate and the Fixing Rate will be applied against the Notional US Dollar Amount to compute the Peso Net Settlement Amount. If the Fixing Rate is higher/lower than the NDF Rate, BSP pays/receives the Peso Net Settlement Amount. The Peso Net Settlement Amount will then be paid on the maturity date of the CRPP contract by crediting or debiting the regular demand deposit account of the Bank with the BSP. The applicable formula for computing the peso net settlement amount will be as follows: Peso Net Settlement Amount = (NDF Rate – Fixing Rate) x Notional US Dollar Amount

ANNEX 1 Page 5 PRETERMINATION OF CRPP CONTRACT: A. PRETERMINATION REQUESTED BY CLIENT 1. Pretermination of a CRPP contract shall be allowed if the corresponding foreign exchange (FX) obligation will be paid in full or in an amount at least equal to the amount of the CRPP contract. The manner of prepayment should not be done thru renewal of the loan under a new promissory note or by another form of FX obligation. 2. The client should apply for the pretermination of the CRPP contract with its Bank by submitting a document evidencing the creditor’s conforme to the proposed prepayment. The proof of payment shall be submitted on prepayment date. 3. BSP-Treasury shall quote the NDF Reversal Rate upon request of Banks on behalf of their clients, between 1:00 P.M. and 2:30 P.M. one banking day before the pretermination date. A NDF Reversal Rate shall be computed following the NDF Rate formula based on the Remaining Tenor of the CRPP contract and the New Spot Rate. BSP-Treasury will use the A.M. Philippine Dealing System (PDS) weighted average rate for spot transactions or the last transacted deal during the morning session, whichever is lower, on the date of request, adjusted for the prevailing bid-offer spread, as the New Spot Rate. If not available, the New Spot Rate shall be the previous banking day’s P.M. PDS weighted average rate or the closing rate, whichever is lower, adjusted for the prevailing bid- offer spread. 4. On pretermination date, if the NDF Reversal Rate is higher/lower than the original NDF Rate, BSP pays/receives the Pretermination Peso Net Settlement Amount, as calculated using the formula below. The Pretermination Peso Net Settlement Amount shall be paid by crediting or debiting the regular demand deposit account of the Bank with the BSP. Pretermination Peso Net Settlement Amount = (NDF Rate – NDF Reversal Rate) x Notional US Dollar Amount 1 + (Peso Interest Rate* x Remaining Tenor / 360) * Peso Interest Rate will be determined by BSP

ANNEX 1 Page 6 5. Should post-verification of pretermination show no actual payment of the FX obligation or the manner of payment was thru the renewal of the loan under a new promissory note or by another form of FX obligation, the BSP shall debit the Bank’s regular demand deposit account with the BSP for the amount received by the Bank from BSP as a result of the pretermination of the CRPP contract, if any, plus interest calculated using BSP’s overnight lending rate from the date the amount was received from the BSP to the date the amount is returned to the BSP. In addition, the Bank shall be liable to pay a monetary penalty of P30,000.00 per calendar day covering the period from the date the application for pretermination was filed up to the date BSP-DCB-I/DCB-II completes post-verification of pretermination, which shall not be longer than fifteen (15) banking days from the pretermination date. 6. Should post-verification by BSP-DCB-I/DCB-II show that the underlying FX obligation of a preterminated CRPP contract is ineligible, the BSP shall debit the Bank’s regular demand deposit account with the BSP for the amount received by the Bank from BSP as a result of the pretermination of the CRPP contract, if any, plus interest calculated using BSP’s overnight lending rate from the date the amount was received from the BSP to the date the amount is returned to the BSP. The monetary penalty of P30,000.00 per calendar day imposed by the BSP as set out in Section 5 of this Circular shall apply. In addition, the Bank shall be liable to pay a monetary penalty of P30,000.00 per calendar day covering the period from the date the application for pretermination was filed up to the date BSP-DCB-I/DCB-II completes post- verification of the FX eligible obligation, which shall not be longer than fifteen (15) banking days from the date of the CRPP contract. 7. If a client requests for pretermination of a CRPP contract but fails to satisfy the conditions set out in number 1 above, the pretermination deal shall be settled as described in part B.3. below. B. PRETERMINATION BY THE BSP 1. BSP shall preterminate CRPP contracts when the underlying FX obligation is found ineligible during post-verification by BSP-DCB-I/DCB-II. 2. BSP shall also preterminate CRPP contracts when the underlying FX obligation is paid before the maturity of the CRPP contract and the client failed to request for pretermination.

ANNEX 1 Page 7 3. Settlement on pretermination date of the Pretermination Peso Net Settlement Amount will be as follows: a) If the NDF Reversal Rate is lower than the original NDF Rate, the Bank will pay the Pretermination Peso Net Settlement Amount; b) If the NDF Reversal Rate is higher than the original NDF Rate, the BSP shall not pay the Pre-termination Peso Net Settlement Amount. Underlying FX obligations of preterminated CRPP contracts shall no longer be eligible for CRPP. Reporting requirements under Mechanics 4 and 5 of this Annex shall apply to all pretermination deals.

(NAME OF BANK) Inventory of Outstanding FCDU Loans Eligible for CRPP Facility As of June 30, 2001 (In US Dollars) Name of Bank Date of Original Date of Extended Amount Outstanding Balance Bank's PN Reference Original Due Latest Due Client Number Number 1/ Grant Date2/ Renewal/Roll-over Date Hedged Unhedged Orig. Currency USD Equivalent T O T A L 1/ Latest Bank Reference No. used in reporting the loan to BSP-IOD under IOS Form 4 for the month of June 2001 2/ In case of MLT loans, these should refer to final maturity dates We hereby certifiy that this inventory of foreign exchange obligations consist only of those which are eligible for the CRPP Facility as prescribed in BSP Circular No. dated , 2001. Senior Vice President Compliance Officer Date

ANNEX 3 (To be submitted daily to BSP-DCB-I/DCB-II not later than 4:30 PM of the following banking day ) _________________________ (NAME OF BANK) DAILY REPORT ON EXECUTED CRPP TRANSACTIONS WITH BSP _________________________ (Date) Type of FX Name of Amount Forward Maturity Date/ Obligation Bank's Client Ref. No. Actual Curr. In USD Rate Int. Repricing Date CERTIFIED CORRECT: ________________ _________________________ _________________________ Date Submitted Senior Vice President Compliance Officer

ANNEX 3A (To be submitted daily to BSP-DCB-I/ DCB-II not later than 4:30 PM of the following banking day) ___________________________ (NAME OF BANK) DAILY REPORT ON PRETEMINATED CRPP CONTRACTS WITH THE BSP ___________________________ (Date) Amount Cancelled/ CRPP Amt. Received/ Reason for Type of FX Name of Ref. Original Contract Amt Preterminated Maturity (Paid) by Client Cancellation/ Obligation Bank's Client No. Actual Curr In USD Actual Curr In USD Date on Settlement Pretermination CERTIFIED CORRECT: ______________ ____________________ ____________________ Date Submitted Senior Vice President Compliance Officer