Amendments to Books I, II and III of the Manual of Regulations for Banks and Other Financial Intermediaries

CIRCULAR NO. 156 Series of 1998

The Monetary Board, in its Resolution No. 374 dated March 12, 1998, approved the following amendments to Books I, II and III of the Manual of Regulations for Banks and Other Financial Intermediaries:

SECTION 1. The provisions of Subsec. 1106.1 (Book 1) are hereby amended to read as follows:

"Minimum capital for expanded commercial banks. — All expanded commercial banks, including those already in operation as well as those to be established hereafter, shall have capital accounts of at least P5.4 billion each.

The foregoing minimum capital requirement shall immediately apply to applications filed after (date of MB Resolution).

Expanded commercial banks which are existing, or which are newly authorized but not yet operating, or banks from which completed applications to operate under an expanded commercial banking authority have been received as of (date of MB Resolution) but pending action by the Bangko Sentral ng Pilipinas (BSP) are hereby allowed the following time frame within which to meet the above minimum capital requirement:

P4.500 billion on or before December 24, 1998 P4.950 billion on or before December 31, 1999 P5.400 billion on or before December 31, 2000

Provided, That for the P4.950 billion and P5.400 billion minimum capital, they shall submit to the BSP a capital build-up program for this purpose within three (3) months from the date of this Circular: Provided, further, That for expanded commercial banks which are listed in the Philippine Stock Exchange, or are in the process of listing, as certified by the Securities and Exchange Commission, shall have an additional six (6) month period to meet the minimum capital requirement."

SECTION 2. The provisions of Subsec. 1106.2 (Book 1) are hereby amended to read, as follows:

"Minimum capital for commercial banks. — All commercial banks, including those already in operation as well as those to be established hereafter, shall have capital accounts of at least P2.8 billion each.

The foregoing minimum capital requirement shall immediately apply to applications filed after (date of MB Resolution).

Commercial banks which are existing, or which are newly authorized but not yet operating, or persons from whom completed applications to establish commercial banks have been received as of (date of MB Resolution) but pending action by the Bangko Sentral ng Pilipinas (BSP) are hereby allowed the following time frame within which to meet the minimum capital requirement:

P2.000 billion on or before December 24, 1998 P2.400 billion on or before December 31, 1999 P2.800 billion on or before December 31, 2000

Provided, That for the P2.400 billion and P2.800 billion minimum capital, they shall submit to the BSP a capital build-up program for this purpose within three (3) months from the date of this Circular: Provided, further, That for commercial banks which are listed in the Philippine Stock Exchange, or are in the process of listing, as certified by the Securities and Exchange Commission, shall have an additional six (6) month period to meet the minimum capital requirement."

SECTION 3. The provisions of Subsec. 2106 (Book II) are hereby amended to read, as follows:

"Minimum capitalization. — A thrift bank shall have minimum capital accounts as follows:

a. With head office within Metro Manila — P400 million b. With head office outside Metro Manila — P 64 million

The foregoing minimum capital requirement shall immediately apply to applications filed after (date of MB Resolution)."

SECTION 4. The provisions of Item a of Subsec. 2106.2 (Book II) are hereby amended to read, as follows: "Capital build-up program for thrift banks not meeting the required minimum capital accounts.

a. Thrift banks which are existing, or which are newly authorized but not yet operating, or persons from whom completed applications to establish thrift banks have been received as of (date of MB Resolution) but pending action by the Bangko Sentral ng Pilipinas (BSP) are hereby allowed the following time frame within which to meet the above minimum capital requirement:

With head office within Metro Manila

P250 million on or before December 24, 1998 P325 million on or before December 31, 1999 P400 million on or before December 31, 2000

With head office outside Metro Manila

P52 million on or before December 31, 1999 P64 million on or before December 31, 2000

Provided, That for the P325 million, P400 million, P52 million and P64 million minimum capital, they shall submit to the BSP a capital, build-up program for this purpose within three (3) months from the date of this Circular: Provided, further, That for thrift banks which are listed in the Philippine Stock Exchange, or are in the process of listing, as certified by the Securities and Exchange Commission, shall have an additional six (6) month period to meet the minimum capital requirement."

SECTION 5. The provisions of Subsec. 3106 (Book III) are hereby amended to read, as follows: "Minimum capitalization. — Except in the City of Manila, Kalookan City, Quezon City, Pasay City, Mandaluyong City and Makati City, and the municipalities of Malabon, Navotas, San Juan and Parañaque, and in the cities of Cebu and Davao, a new rural bank may be established in any city or municipality.

The minimum capitalization requirements of rural banks shall be as follows:

a)

In the City of Manila, Kalookan City, Quezon City, Pasay City, Mandaluyong City and Makati City, and the municipalities of Malabon, Navotas, San Juan and Parañaque (existing rural banks)

P32 million

b)

In the cities of Cebu and Davao (existing rural banks)

P16 million

c)

In first, second and third class cities and first class municipalities

P8 million

d)

In fourth, fifth and sixth class cities and in second, third and fourth class municipalities

P4.8 million

e)

In fifth and sixth class municipalities

P3.2 million

The foregoing minimum capital requirement shall immediately apply to applications filed after (date of MB Resolution).

Rural banks which are existing, or which are newly authorized but not yet operating, or persons from whom completed applications to establish rural banks have been received as of (date of MB Resolution) but pending action by the Bangko Sentral ng Pilipinas (BSP) are hereby allowed the following time frame within which to meet the above minimum capital requirement:

Location of  Head Office/Branches On or before December 31, 1999

On or before December 31, 2000

a)

In the City of Manila, Kalookan City, Quezon City, Pasay City, Mandaluyong City and Makati City and the municipalities of Malabon, Navotas, San Juan and Parañaque

P26 million

P32 million

b)

In the cities of Cebu and Davao

P13 million

P16 million

c)

In first, second and third class cities and first class municipalities

P6.5 million

P8 million

d)

In fourth, fifth and sixth class cities and in second, third and fourth class municipalities

P3.9 million

P4.8 million

e)

In fifth and sixth class municipalities

P2.6 million

P3.2 million

Provided, That they shall submit to the BSP a capital build-up program for this purpose within three (3) months from the date of this Circular.

If the prescribed minimum capital necessitates an increase in the authorized capital stock, the rural bank shall cause the corresponding amendments to its articles of incorporation and submit the same to the BSP together with its capital build-up program.

It shall be the responsibility of the rural bank's board of directors and senior management to ensure full compliance with the bank's capital build-up program. Any or all of the following sanctions, among others, may be imposed on a rural bank which fails to (i) comply with the minimum requirement; or (ii) submit its capital build-up program within the prescribed deadline or to comply with its approved capital build-up program:

a) Suspension of branching privileges; b) Prohibition against granting of new unsecured loans to directors, officers, stockholders and related interests; c) Denial of access to the rediscounting window of the BSP; and d) Denial of application to accept government deposits."

This Circular shall take effect immediately.

FOR THE MONETARY BOARD:

GABRIEL C. SINGSON Governor