Regulatory Relief for Banks Affected by Tropical Storm "Pepeng"

MEMORANDUM NO. M-2009-038

To   : ALL BANKS

Subject  : Regulatory Relief for Banks Affected by Tropical Storm "Pepeng"

The Monetary Board, in its Resolution No. 1466 dated 8 October 2009 approved to grant temporary regulatory relief to banks with head offices and branches located in the following areas which were devastated by tropical storm "Pepeng", declared under State of Calamity by President Gloria Macapagal Arroyo on 2 October 2009 in view of its extensive effects:

• Region I:  La Union, Pangasinan, Ilocos Norte and Ilocos Sur; • Region II:  Isabela, Quirino and Cagayan; • Region III:  Aurora, Bulacan, Pampanga, Zambales and Nueva Ecija; • Region IV-A:  Quezon and Rizal; • Region V:  Albay, Camarines Sur, Catanduanes and Sorsogon; • Cordillera Administrative Region:  Apayao, Mt. Province, Kalinga, Benguet,  Abra, Ifugao and La Trinidad; and • The National Capital Region (NCR)

The temporary relief shall be in the form of the following whenever applicable:

For Rural Banks/Thrift Banks/Cooperative Banks (RBs/TBs/Coop Banks)

1. During a temporary grace period for payment or upon their restructuring and subject to reporting to BSP, exclusion of the loans of borrowers in affected areas, which should have been reclassified as past due loans under Section X306 of the MORB on 3 October 2009 and those maturing up to 31 December 2010, from computation of past due loan ratio; provided that BSP documentary requirements for restructuring of loans for this purpose are waived; provided further that bank will adopt appropriate and prudent operational controls;

2. Reduction of the 5 percent general loan loss provision to 1 percent for restructured loans to borrowers in affected areas from 3 October 2009 to 31 December 2010;

3. Non-imposition of penalties on legal reserve deficiencies of RBs/TBs/Coop Banks with head office and/or branches in the affected areas incurred starting from reserve weeks ended 8 October 2009 to 1 April 2010 provided these reserve deficiencies can be shown to be calamity related rather than due to pre-existing condition;

4. Moratorium without penalty on monthly payments due to the BSP until 31 March 2010 for banks with ongoing rehabilitation programs upon filing of application for extension/rescheduling;

5. For all types of credits extended to individuals and businesses directly affected by the calamity, allowing, subject to BSP prior approval, the booking of allowances for probable losses on a staggered basis over a maximum period of five years on loans outstanding as of 3 October  2009;

6 Non-imposition of monetary penalties for delays in the submission of all supervisory reports due to be submitted from 31 October 2009 to 31 March 2010; and

7 Allowing banks to provide financial assistance to their officers and employees who were affected by the calamity even if not within the scope of the existing BSP-approved Fringe Benefit Program (FBP) subject to subsequent submission of request for approval of the amendment to FBP to the appropriate supervision and examination department for regularization.

For All Rediscounting Banks

1. Upon application, granting of a 60-day grace period to settle the outstanding rediscounting obligations as of 28 September 2009 with the BSP of all rediscounting banks with head office, or with branches or with end-user borrowers in the affected areas except those with serious violations of findings with the SES; and

2. In addition to above, allow the rediscounting banks to restructure with the BSP, on a case-to-case basis the outstanding rediscounted loans of their end-user borrowers affected by the calamity, subject to the terms and conditions stated in the implementing guidelines (Annex A).

For information and guidance.

NESTOR A. ESPENILLA, JR. Officer-In-Charge