Amendments to the Manual of Regulations for Banks on the guidelines on the adoption of and to incorporate market risk in the risk-based capital adequacy framework

Annex “A” Page 1 of 6 pages Revised September 2003 DEADLINE : 15 banking days after end of reference quarter (solo basis) 30 banking days after end of reference quarter (consolidated basis) SUBMISSION : Original copy to SED I/ SED II/SED III/SED IV FOR UNIVERSAL BANKS, COMMERCIAL BANKS AND THRIFT BANKS (Name of Bank) (Code) (Address) COMPUTATION OF THE RISK-BASED CAPITAL ADEQUACY RATIO COVERING CREDIT RISKS ________________________________________ (Indicate if for Solo Basis or Consolidated Basis) As of ___________________________________ REPUBLIC OF THE PHILIPPINES) ___________________________ ) S.S. I solemnly swear that all matters set forth in this report and all its supporting schedules are true and correct, to the best of my knowledge and belief. _______________________________ (Signature of President/Senior/ Executive Vice President) SUBSCRIBED AND SWORN TO BEFORE ME this _______________ day of __________________________________________ 20___, affiant exhibiting to me his Community Tax Certificate No. _______________________ issued at ____________________ on ______________________________20___. ______________________________ Notary Public Until December 31, 20 ___________ PTR No. ______________________ Place _________________________ Doc. No. _________ Page No. _________ Book No. _________ Series of _________

Annex “A” Page 2 of 6 pages PART II. RISK-WEIGHTED ON-BALANCE SHEET ASSETS (Amounts in P0.000 million) Book X Risk = Risk Item Nature of item Value Weight Weighted (In %) Amount A. 0% Risk Weight – (1) Cash on hand (2) Claims on or portions of claims guaranteed by or collateralized by securities issued by Philippine national government and BSP (a) Due from BSP (b) TAS – loans i) GS purchased under resale agreement ii) GS purchased under certificate of assignment/participation with recourse iii) GS purchased under reverse repurchase agreement with BSP (c) TAS – investments i) GS purchased ii) GS sold under repurchase agreements (d) ASS – GS (e) IBODI i) GS ii) Agrarian reform credit – PD 717 (f) Loans and discounts secured by CBCI and other GS (g) Agrarian reform/other agricultural credit and alternative development incentive loans secured by CBCI and other GS (h) Others

Annex “A” Page 3 of 6 pages Book X Risk = Risk Item Nature of item Value Weight Weighted (In %) Amount (3) Claims on or portions of claims guaranteed by or collateralized by securities issued by central governments and central banks of foreign countries with the highest credit quality as defined in Subsec. X116.3 (4) Loans and discounts to the extent covered by hold-out on, or assignment of, deposits/deposit substitutes maintained with the lending bank (5) Agrarian reform/other agricultural credit and alternative development incentive loans to the extent covered by hold- out on, or assignment of, deposits/deposit substitutes maintained with the lending bank (6) Loans or acceptances under LCs to the extent covered by margin deposits (a) Customers’ liability on bills/drafts under LCs/TRs to the extent covered by margin deposit (b) Customers’ liability on acceptances outstanding to the extent covered by margin deposit (7) Portions of STD loans covered by IGLF guarantee (8) Real estate mortgage loans to the extent guaranteed by the HGC (9) Loans to the extent covered by the TIDCORP (10) Loans to exporters to the extent guaranteed by the GFSME (11) Foreign currency notes and coins on hand acceptable as international reserves (12) Gold bullion held either in own vaults, or in another’s vaults on an allocated basis, to the extent it is offset by gold bullion liabilities (13) Sub-total (Sum of A(1) to A(12)) 0 0 B. 20% Risk Weight - (1) Checks and other cash items

Annex “A” Page 4 of 6 pages Book X Risk = Risk Item Nature of item Value Weight Weighted (In %) Amount (2) Claims on or portions of claims guaranteed by or collateralized by securities issued by non-central government public sector entities of foreign countries with the highest credit quality as defined in Subsec. X116.3 (3) Claims on or portions of claims guaranteed by Philippine incorporated banks/quasi-banks with the highest credit quality as defined in Subsec. X116.3 (4) Claims on or portions of claims guaranteed by foreign incorporated banks with the highest credit quality as defined in Subsec. X116.3 (5) Claims on or portions of claims guaranteed by or collateralized by securities issued by multilateral development banks (6) Loans to exporters to the extent guaranteed by SBGFC (7) Foreign currency checks and other cash items denominated in currencies acceptable as international reserves (8) Claims on Philippine incorporated banks, which claims obtain and maintain credit ratings of at least equal to that of the Philippine national government (9) Sub-total (Sum of B(1) to B(8)) 20 C. 50% Risk Weight – (1) Loans for housing purpose, fully secured by first mortgage on residential property that is or will be occupied or leased out by the borrower (2) LGU bonds which are covered by Deed of Assignment of IRA of the LGU and guaranteed by LGUGC (3) Securities issued by SPVs against assignment of receivables arising from future payments of the Philippine national government in connection with projects undertaken in pursuance of R.A. No. 6957, as amended, which securities obtain and maintain a credit rating of not more than one notch lower than that of the Philippine national government

Annex “A” Page 5 of 6 pages Book X Risk = Risk Item Nature of item Value Weight Weighted (In %) Amount (4) Claims on Philippine incorporated banks, which claims obtain and maintain credit ratings of not more than one notch lower than that of the Philippine national government (5) Sub-total (Sum of C(1) to C(4)) 50 D. 75% Risk Weight – (1) Direct loans component of defined SME and microfinance loan portfolio 75 E. 100 % Risk Weight – (1) Other assets (Total assets, gross of general loan loss provision less sum of A(13), B(9), C(5) and D(1) ) E.1 Deductions From Other Assets (1) Total outstanding unsecured credit accommodations, both direct and indirect, to DOSRI (2) Deferred income tax (3) Goodwill (4) Sinking fund for redemption of limited life redeemable preferred stock (to the extent deducted from capital) (5) Equity investments in unconsolidated subsidiary banks and other subsidiary financial allied undertakings, but excluding insurance companies (for solo basis) (6) Investments in debt capital instruments of unconsolidated subsidiary banks (for solo basis) (7) Equity investments in subsidiary insurance companies and subsidiary non-financial allied undertakings (8) Reciprocal investments in equity of other banks/enterprises (9) Reciprocal investments in unsecured subordinated term debt instruments of other banks, in excess of the lower of (i) an aggregate ceiling of 5% of total Tier 1 capital of the bank; or (ii) 10% of the total outstanding unsecured subordinated term debt issuance of the other bank.

Annex “A” Page 6 of 6 pages Book X Risk = Risk Item Nature of item Value Weight Weighted (In %) Amount (10) Net due “from” head office, branches, subsidiaries, and other offices outside the Philippines, if any (for foreign bank branches) (11) Total Deductions (Sum of E.1(1) to E.1(10)) E.2 Net Other Assets (E(1) minus E.1(11)) 100 F. TOTAL BOOK VALUE, GROSS OF GENERAL LOAN LOSS PROVISION (Sum of A(13), B(9), C(5), D(1) and E(1)) TOTAL RISK-WEIGHTED ON-BALANCE SHEET ASSETS (Sum of A(13), B(9), C(5), D(1), E.2)

Annex “A-1” Page 1 of 6 pages Revised September 2003 DEADLINE : 15 banking days after end of reference quarter (solo basis) 30 banking days after end of reference quarter (consolidated basis) SUBMISSION : Original copy to SED IV FOR RURAL BANKS AND COOPERATIVE BANKS (Name of Bank) (Code) (Address) COMPUTATION OF THE RISK-BASED CAPITAL ADEQUACY RATIO COVERING CREDIT RISKS ________________________________________ (Indicate if for Solo Basis or Consolidated Basis) As of ___________________________________ REPUBLIC OF THE PHILIPPINES) ___________________________ ) S.S. I solemnly swear that all matters set forth in this report and all its supporting schedules are true and correct, to the best of my knowledge and belief. _______________________________ (Signature of President/Senior/ Executive Vice President) SUBSCRIBED AND SWORN TO BEFORE ME this _______________ day of __________________________________________ 20___, affiant exhibiting to me his Community Tax Certificate No. _______________________ issued at ____________________ on ______________________________20___. ______________________________ Notary Public Until December 31, 20 ___________ PTR No. ______________________ Place _________________________ Doc. No. _________ Page No. _________ Book No. _________ Series of _________

Annex “A-1” Page 2 of 6 pages PART II. RISK-WEIGHTED ON-BALANCE SHEET ASSETS (Amounts in P0.000 million) Book X Risk = Risk Item Nature of item Value Weight Weighted (In %) Amount A. 0% Risk Weight – (1) Cash on hand (2) Claims on or portions of claims guaranteed by or collateralized by securities issued by Philippine national government and BSP (a) Due from BSP (b) TAS – loans i) GS purchased under resale agreement ii) GS purchased under certificate of assignment/participation with recourse iii) GS purchased under reverse repurchase agreement with BSP (c) TAS – investments i) GS purchased ii) GS sold under repurchase agreements (d) ASS – GS (e) IBODI i) GS ii) Agrarian reform credit – PD 717 (f) Loans and discounts secured by CBCI and other GS (g) Agrarian reform/other agricultural credit and alternative development incentive loans secured by CBCI and other GS (h) Others

Annex “A-1” Page 3 of 6 pages Book X Risk = Risk Item Nature of item Value Weight Weighted (In %) Amount (3) Claims on or portions of claims guaranteed by or collateralized by securities issued by central governments and central banks of foreign countries with the highest credit quality as defined in Subsec. X116.3 (4) Loans and discounts to the extent covered by hold-out on, or assignment of, deposits/deposit substitutes maintained with the lending bank (5) Agrarian reform/other agricultural credit and alternative development incentive loans to the extent covered by hold- out on, or assignment of, deposits/deposit substitutes maintained with the lending bank (6) Loans or acceptances under LCs to the extent covered by margin deposits (a) Customers’ liability on bills/drafts under LCs/TRs to the extent covered by margin deposit (b) Customers’ liability on acceptances outstanding to the extent covered by margin deposit (7) Portions of STD loans covered by IGLF guarantee (8) Real estate mortgage loans to the extent guaranteed by the HGC (9) Loans to the extent covered by the TIDCORP (10) Loans to exporters to the extent guaranteed by the GFSME (11) Foreign currency notes and coins on hand acceptable as international reserves (12) Gold bullion held either in own vaults, or in another’s vaults on an allocated basis, to the extent it is offset by gold bullion liabilities (13) Sub-total (Sum of A(1) to A(12)) 0 0 B. 20% Risk Weight - (1) Checks and other cash items

Annex “A-1” Page 4 of 6 pages Book X Risk = Risk Item Nature of item Value Weight Weighted (In %) Amount (2) Claims on or portions of claims guaranteed by or collateralized by securities issued by non-central government public sector entities of foreign countries with the highest credit quality as defined in Subsec. X116.3 (3) Claims on or portions of claims guaranteed by Philippine incorporated banks/quasi-banks with the highest credit quality as defined in Subsec. X116.3 (4) Claims on or portions of claims guaranteed by foreign incorporated banks with the highest credit quality as defined in Subsec. X116.3 (5) Claims on or portions of claims guaranteed by or collateralized by securities issued by multilateral development banks (6) Loans to exporters to the extent guaranteed by SBGFC (7) Foreign currency checks and other cash items denominated in currencies acceptable as international reserves (8) Claims on Philippine incorporated banks, which claims obtain and maintain credit ratings of at least equal to that of the Philippine national government (9) Sub-total (Sum of B(1) to B(8)) 20 C. 50% Risk Weight – (1) Loans for housing purpose, fully secured by first mortgage on residential property that is or will be occupied or leased out by the borrower (2) LGU bonds which are covered by Deed of Assignment of IRA of the LGU and guaranteed by LGUGC (3) Securities issued by SPVs against assignment of receivables arising from future payments of the Philippine national government in connection with projects undertaken in pursuance of R.A. No. 6957, as amended, which securities obtain and maintain a credit rating of not more than one notch lower than that of the Philippine national government

Annex “A-1” Page 5 of 6 pages Book X Risk = Risk Item Nature of item Value Weight Weighted (In %) Amount (4) Claims on Philippine incorporated banks, which claims obtain and maintain credit ratings of not more than one notch lower than that of the Philippine national government (5) Sub-total (Sum of C(1) to C(4)) 50 D. 75% Risk Weight – (1) Direct loans component of defined SME and microfinance loan portfolio 75 E. 100 % Risk Weight – (1) Other assets (Total assets, gross of general loan loss provision less sum of A(13), B(9), C(5) and D(1) ) E.1 Deductions From Other Assets (1) Total outstanding unsecured credit accommodations, both direct and indirect, to DOSRI (2) Deferred income tax (3) Goodwill (4) Sinking fund for redemption of limited life redeemable preferred stock (to the extent deducted from capital) (5) Equity investments in unconsolidated subsidiary banks (for solo basis) (6) Investments in debt capital instruments of unconsolidated subsidiary banks (for solo basis) (7) Equity investments in subsidiary insurance companies and subsidiary non-financial allied undertakings (8) Reciprocal investments in equity of other banks/enterprises (9) Reciprocal investments in unsecured subordinated term debt instruments of other banks, in excess of the lower of (i) an aggregate ceiling of 5% of total Tier 1 capital of the bank; or (ii) 10% of the total outstanding unsecured subordinated term debt issuance of the other bank.

Annex “A-1” Page 6 of 6 pages Book X Risk = Risk Item Nature of item Value Weight Weighted (In %) Amount (10) Net due “from” head office, branches, subsidiaries, and other offices outside the Philippines, if any (for foreign bank branches) (11) Total Deductions (Sum of E.1(1) to E.1(10)) E.2 Net Other Assets (E(1) minus E.1(11)) 100 F. TOTAL BOOK VALUE, GROSS OF GENERAL LOAN LOSS PROVISION (Sum of A(13), B(9), C(5), D(1) and E(1)) TOTAL RISK-WEIGHTED ON-BALANCE SHEET ASSETS (Sum of A(13), B(9), C(5), D(1), E.2)

Annex “B” Page 1 of 3 pages Revised September 2003 DEADLINE : 15 banking days after end of reference quarter (solo basis) 30 banking days after end of reference quarter (consolidated basis) SUBMISSION : Original copy to SED I/ SED II/SED III FOR UNIVERSAL BANKS AND COMMERCIAL BANKS (Name of Bank) (Code) (Address) COMPUTATION OF THE ADJUSTED RISK-BASED CAPITAL ADEQUACY RATIO COVERING COMBINED CREDIT RISK AND MARKET RISK ________________________________________ (Indicate if for Solo Basis or Consolidated Basis) As of ___________________________________ (Quarter–End) REPUBLIC OF THE PHILIPPINES) ___________________________ ) S.S. I solemnly swear that all matters set forth in this report and all its supporting schedules are true and correct, to the best of my knowledge and belief. _______________________________ (Signature of President/Senior/ Executive Vice President) SUBSCRIBED AND SWORN TO BEFORE ME this __________________ day of _________________________________________________ 20___, affiant exhibiting to me his Community Tax Certificate No. _______________________ issued at ____________________ on ______________________________20___. ______________________________ Notary Public Until December 31, 20 ___________ PTR No. ______________________ Place _________________________ Doc. No. _________ Page No. _________ Book No. _________ Series of _________

Annex “B” Page 2 of 3 pages REPORT FORMS – For Universal Banks and Commercial Banks Part I Interest Rate Exposures (Trading Book) 1. Debt securities and other debt related derivatives – specific risk In 0.000 Million Pesos Positions Govern- Qualifying Debt LGU Others TOTAL ment Securities Bonds & and Issued by Debt Residual Multi- Phil. Securities Item Nature of item lateral Over 6 Banks Issued by Develop- 6 (Item 1.8) Phil. Banks months Over 24 ment months to 24 months (Item 1.9) Banks or less months 1.1 Debt securities issued by the Philippine national government and Long BSP Short 1.2 Debt securities issued by central governments and central banks of Long foreign countries with the highest credit quality Short 1.3 Debt securities issued by multilateral development banks Long Short 1.4 Debt securities issued by non-central government public sector Long entities of foreign countries with the highest credit quality Short 1.5 Debt securities issued by Philippine incorporated banks/quasi-banks Long with the highest credit quality Short 1.6 Debt securities issued by foreign incorporated banks with the highest Long credit quality Short 1.7 Other debt securities with the highest credit quality Long Short 1.8 Debt securities issued by Philippine incorporated banks, which Long have credit ratings of at least equal to that of the Philippine national government Short 1.9 LGU bonds covered by Deed of Assignment of Internal Revenue Allotment and guaranteed by LGU Guarantee Corporation and debt Long securities issued by Philippine incorporated banks, which have credit ratings of not more than one notch lower than that of the Short Philippine national government 1.10 All other debt securities in the trading book not included under 1.1 to Long 1.9 above Short TOTAL Long Short Risk Weight 0.00% 0.25% 1.00% 1.60% 1.60% 4.00% 8.00% SPECIFIC RISK CAPITAL CHARGE FOR DEBT SECURITIES AND DEBT DERIVATIVES (ON GROSS POSITION, I.E., LONG PLUS SHORT)

Annex “B” Page 3 of 3 pages 1/ Debt securities in items 1.1 to 1.10 include cash positions, such as: (a) GS purchased (b) GS sold under repurchase agreement (c) GS purchased under resale agreement (d) GS purchased under certificate of assignment/participation with recourse (e) GS purchased under reverse repurchase agreement with the BSP (f) Private debt securities/CPs purchased (g) Private debt securities/CPs sold under repurchase agreement (h) Private debt secur ities/CPs purchased under resale agreement (i) Private debt securities/CPs purchased under certificate of assignment/participation with recourse (j) TAS – equity – non-convertible preferred shares which trade like debt securities (for UBs) (k) UA – debt securities (for UBs) (l) UA – equity – non-convertible preferred shares which trade like debt securities (for UBs) (m) ASS – government (n) ASS – private (o) ASS – foreign as well as underlying of debt derivative contracts. (However, interest rate and currency swaps, FRAs, forward foreign exchange contracts and interest rate futures will not be subject to a specific risk charge.) For debt related options, either the delta weighted positions shall be reported above, or if the bank engages in purchase of options only as defined in the Instructions for Accomplishing the Report, the options shall be carved out and reported under Part IV.1.1.