Implementation of Subsection 4404.1(5) (a) of the trust rules

MEMORANDUM Series of 199

TO:  ALL BANKS AND OTHER FINANCIAL INTERMEDIARIES PERFORMING TRUST, OTHER FIDUCIARY BUSINESS AND INVESTMENT MANAGEMENT ACTIVITIES

We are re-issuing the following guidelines previously approved by the Monetary Board, in its Resolution No. 1059 dated 16 November 1992, with respect to the implementation of Subsection 4404.1(5) (a) of the trust rules, in so far as investment houses not authorized to engage in quasi-banking functions applying for trust/investment management authority, are concerned:

1. The adoption of the formula/criteria for non-bank financial intermediaries performing quasi-banking functions (NBQB) in the determination of compliance with capital-to-risk assets ratio and ceilings on loans of directors, officers, stockholders and related interests; and

2. The substitution of the reserve and liquidity floor requirements with the cash ratio, as follows:

a) Primary Reserves to Bills Payable b) Primary and Secondary Reserves to Bills Payable

where primary reserves consist of cash on hand, cash in vault, checks and other cash items, due from the Bangko Sentral, due from banks, and due from head office/branches/agencies outside the Philippines; and where secondary reserves consist of Bangko Sentral-supported government securities, treasury bills and other government securities.

ALBERTO V. REYES Deputy Governor