Transfer of "Undivided Profits - FCDU/EFCDU" to the "Surplus Free" account in the Regular books of the Bank Proper

CIRCULAR LETTER Series of 2003

TO  :    All Banks with Foreign Currency Deposit Units (FCDUs)/ Expanded Foreign Currency Deposit Units (EFCDUs)

The Monetary Board, in its Resolution No. 1430 dated October2, 2003 decided to amend the provisions of Circular Letter dated September 17, 1992 as follows -

It is hereby clarified that in accordance with Circular No. 108 dated May 9, 1996, as amended, the transfer of the "Undivided Profits - FCDU/EFCDU" to the "Surplus Free" account in the Regular books of the Bank Proper shall pertain to both EFCDU/EFCDU profits or EFCDU/FCDU loss (positive or negative Undivided Profits), Provided, that the EFCDU/FCDU shall fully provide for its classified accounts prior to the transfer of Undivided Profits (positive or negative) to the Regular books.  The transfer of EFCDU/EFCDU profits shall be accompanied by a corresponding transfer of eligible EFCDU/EFCDU assets to the Regular books in the form of:

Foreign currency deposits with the Bangko Sentral;

Foreign currency deposits with foreign banks;

Foreign currency deposits with resident OBUs and other EFCDUs except deposits with FCDU; and

Investment in Bonds and Other Debt Instruments - Foreign, except Philippine debt papers which were restructured during the period of moratorium in the payment of external debt.

The transfer of EFCDU/EFCDU loss shall be accompanied by a corresponding transfer from Regular books to the EFCDU/EFCDU of the above-mentioned eligible foreign currency assets.

The frequency of transfer of EFCDU/EFCDU profits/loss to the Regular books of the Bank Proper shall be on a periodic basis: Provided, that in the case of EFCDU/EFCDU profits, transfer shall be made at the end of the accounting period, i.e., at the end of the calendar year or fiscal year adopted by the bank: Provided, further, that in the case of EFCDU/EFCDU loss, transfer to RBU of said loss shall be made immediately.

This Circular Letter shall take effect immediately.

ARMANDO L. SURATOS Officer-In-Charge