Target level of capitalization for banks as of end-2000

CIRCULAR NO. 257 Series of 2000

The Monetary Board, in its Resolution Nos. 943 and 1159 dated 9 June 2000 and 14 July 2000, respectively, universal banks, commercial banks, thrift banks and rural banks are advised that:

1. The target level of capitalization prescribed for banks as of end-2000 has been set aside;

2. The level of required capitalization as of end-2000 shall be the same as that prescribed as of end-1999;

3. For new entrants in the banking system, the minimum level of capitalization, unless otherwise prescribed by the Monetary Board, shall be as follows:

Bank Category

Minimum Capital (In Millions)

Expanded Commercial Banks P 4,950

Non-expanded Commercial Banks 2,400

Thrift Banks With Head Office within Metro Manila With Head Office outside Metro Manila

325

52

Rural Banks Within Metro Manila Cities of Cebu and Davao 1st/2nd/3rd class cities and 1st class municipalities 4th/5th/6th class cities and 2nd/3rd/4th class municipalities 5th and 6th class municipalities

P 26

13 6.5 3.9

2.6

4. For banks that have executed a Memoranda of Understanding (MOU) with the Bangko Sentral ng Pilipinas (BSP), in compliance with Circular No. 181 dated 14 November 1998, the following guidelines shall apply:

a. For banks with capital deficiency but with capital-to-risk assets ratio within the minimum prescribed and with no weaknesses (i.e. high past due loans, DOSRI violations, etc.), the MOU may be set aside; provided, that the bank will be able to comply with the minimum capital requirements as herein prescribed; and

b. For banks with capital deficiency but with significant weaknesses (i.e. deficiency in capital-to-risk assets ratio, liquidity problems, high past due loans, etc.), the MOU, as executed, shall continue to be in full force and in effect until such time it shall be amended by mutual consent of the parties thereto; waived and/or terminated by the BSP.

Non-compliance with the above capital requirements shall subject the bank to sanctions / penalties provided under existing banking laws and BSP rules and regulations.

FOR THE MONETARY BOARD:

RAFAEL B. BUENAVENTURA Governor