Exclusion of clearing and settlement accounts of banks and quasi-banks from the Single Borrower's Limit (SBL)

BANOKO SEruTNAL NO PILIPINAS OFFICE OF THE GOVERNOR CIRCULAR NO. 955 Series of 2OL7 Subject : Exclusion of clearing and settlement accounts of banks and quasi-banks from the Single Borrowe/s Limit (SBLI The Monetary Board, in its Resolution No. 1002 dated 15 June 20L7, approved the following guidelines on exclusion from SBL of banks' and quasi-banks' short-term exposures to clearing and settlement banks arising from payment transactions. This exclusion is intended to promote the smooth functioning of financial markets and financial market infrastructures (FMls). Section 1. Subsection X303.4 (Exclusions from Loan Limit) of the Manual of Regulations for Banks (MORB) shall be amended to read as follows: " 9 X303.4 Exclusionsfrom loan limit. a. xxx b. xIx c. xxx d. xxx E. XXX f. xxx g. xxx h. xxx i. xxx j. Short-term exposures of banks to settlement banks arising from payment transactions pertaining to fund transfer services, check clearing, foreign exchange trades, security trades, security custody services, and other short-term payment transactions: Provided, That for the purpose of this Subsection, an exposure is considered short-term if it does not extend longer than five (5) banking days after the placement of funds into the clearing and settlement account: Provided, further, That the following conditions are met: (1) The payment transactions giving rise to short-term exposures are carried out through a clearing and settlement account maintained with a designated local settlement bank, or a foreign settlement bank. A designated settlement bank is a bank that is recognized or assigned by a consortium of banks and/or other financial institutions or by an appropriate body to accept funds from members of the consortium particularly for settlement of transactions among members. A. Mabini St., Malate 1004 Maniia, Philippines r (632) 70ti-7701 . www.bsp.Sov.ph ' [email protected]

(2) Banks shall enter into a formal agreement with the settlement bank, stipulating among other terms and conditions that the account is opened and maintained exclusively for short-term settlement transactions as described in this Subsection, and said account is not subject to a minimum balance requirement. (3) The clearing and settlement bank shall keep the funds received from client banks separate from its own funds. The client banks shall also segregate their clearing and settlement accounts from any of their other bank accounts. (4) Banks shall adopt an internal control mechanism appropriate to the said payment transactions. Section 2. Subsection 4303Q.1 (Exclusions from Loan Limit) of the Manual of Regulations for Non-bank Financial Institutions {MORNBFI) shall be amended to read as follows: "S 4303Q.1 PN9 - 4306Q.1) Exclusionsfrom loan llmit.xxx a. xxx b. xxx c. Short-term exposures of QBs to settlement banks arising from payment transactions pertaining to fund transfer services, check clearing, foreign exchange trades, security trades, security custody services, and other short-term payment transactions: Provided, That for the purpose of this Subsection, an exposure is considered short-term if it does not extend longer than five (5) banking days after the placement of funds into the clearing and settlement account. Provided, further, That the following conditions are met: (1) The payment transactions giving rise to short-term exposures are carried out through a clearing and settlement account maintained with a designated local settlement bank, or a foreign settlement bank. A designated settlement bank is a bank that is recognized or assigned by a consortium of banks and/or other financial institutions or by an appropriate body to accept funds from members of the consortium particularly for settlement of transactions among members. {21 QBs shall enter into a formal agreement with the settlement bank, stipulating among other terms and conditions that the account is opened and maintained exclusively for short-term payment transactions

as described in this Subsection, and said account is not subject to a minimum balance requirement. (3) The clearing and settlement bank shall keep the funds received from client QBs separate from its own funds. The client QBs shall also segregate their clearing and settlement accounts from any of their other bank accounts. (4) The settlement bank and its client QBs shall adopt an internal control mechanism appropriate to the said payment transactions. d. ln case of a stand-alone trust corporation x x x." xxx." Section 3. Amendments to the Financial Reporting Package. The following portions of the Financial Reporting Package (FRP) required under Subsection XL9t.2 of the MORB shall be amended as indicated below. a. Manualof Accounts ' BALANCE SHEET ACCOUNTS " Asset Accounts "xxx xxx xxx " 4. Due from Other Banks "xxx "b. Non-Resident Banks - This refers to the balances of deposit accounts xxx xxx. "The foreign currency amount maintained in the FCDU/EFCDU book shall be those held as asset cover for FCDU/EFCDU liabilities. "(c) Resident Banks - Clearing and Settlement Account - This refers to debit balances of accounts maintained with other resident banks exclusively for the settlement of payment transactions pertaining to fund

transfer services, check clearing, foreign exchange trades, security trades, security custody services, and other short-term payment transactions. (1) Local currency - This refers to balances of accounts maintained for the settlement of short-term Peso-denominated payment transactions including interbank claims in places where there is no BSP clearing facility. (2) Foreign currency - This refers to balances of accounts maintained for the settlement of short-term foreign-currency denominated payment transactions. lt includes accounts with the franchise holder of the Philippine Domestic Dollar Transfer System (PDDTS) for clearing of checks and accounts with the designated settlement bank for the Domestic Renminbi (RMB) Transfer Service, among others. "(d) Non-Resident Banks - Clearing and Settlement Account - This refers to debit balances of clearing and settlement accounts maintained with non-resident banks exclusively for the settlement of payment transactions pertaining to fund transfer services, check clearing, foreign exchange trades, security trades, security custody services, and other short-term payment transactions. "5. FinancialAssets Held forTrading {HFT) "xxx." " LiabiliW Accounts "xxx xxx xxx "4. Due to Other Banks {a) Due to Resident Banks - Clearing and Settlement Accounts - This refers to credit balances of accounts maintained by other resident banks exclusively for settlement of payment transactions pertaining to fund transfer services, check clearing, foreign exchange trades, security trades, security custody services, and other short-term payment transactions.

(i) tocal curency - This refers to credit balances of accounts maintained by other resident banks for settlement of short-term Peso-denominated payment transactions including interbank claims in places where there is no BSP clearing facility. (ii) Foreign currency - This refers to credit balances of accounts maintained by other resident banks for the settlement of short-term foreign-currency denom inated payment tra nsactions. "(b) Due to Non-Resident Banks - Working Capital - This refers to credit balances of deposit accounts maintained by non-resident x x x. b. FRP and Simplified FRP Schedules (FRP) The amendments to Schedules 2 and 23 of the FRP and Simplified FRP are hereby attached as "Annex A". The revised electronic FRP/Simplified FRP templates including the reporting guidelines shall be deployed through a Memorandum to all Banks. The revised templates shall be used starting on the 30 September 2Ot7 reporting cut off. Section 6. This Circular shall take effect fifteen (15) calendar days following its publication either in the official Gazette or in any newspaper of general circulation in the Philippines. FOR THE MONETARY BOARD o5 July 2Ot7

ANNEX A Financial Reporting Package (FRP/ Simplified FRP Due from Other Banks Schedule 2 1ol4 Classified as to Type of Deposit Demand Particulars Account Code Fo.elgn Regular FCDU/EFCDU Fo.elgn Offices Peso Accts Total InUS$ Peso Equiv. InUS$ Peso Equiv InUS$ Peso Equiv 0.0( 0.0( 0.0( 0.0( 0.0( 0.0c 0.0( 0.oc 1) JBs/KBs 2\ f,lhor Banks 0.0c {on-Resident Banks/OBUs 0.0( 0.0( 0.0( 0.0( 0.0c 0.0( 0.0c 1) )BUs 0.0c )ther Banks 1 05200000000232000 tesident aanks - Clearing ancl Settlement Account 1052000000001 90000 0.0{ 0.0( 0.0( 0.0( 0.01 0.0( 0.0( 0.0c .1) cal Currency '.21 roreign Currency 0.0c 1 052000000001 90002 Ion-Resident 0.0c td) Banks - clearjng and settlement Accour rOTAL 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0c llassl{ied as to Original Term I 0520000000061 0000 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 1) ;hort Term (one year or less) 10520000000061 1000 0-o( 2) ,,ledium Term (>'l year to 5 years) 0.0( ong Term (>5 Years jpeqal Reserve Bank Account for Securities Brokers 0.0( 0.0( i -.1 i>l if I tf I tol ix I i>l ll

ANiIEX A . Financtat REporring packag€ (FRpy Simp fled FRp Du.rromo$..Bet5 Schedule !_ -. cfe.ti.d s to tyt. ot o.oo.it zot 1 Savinglgepostt Partlculars Account Code Foreign Regular Peso Accts FCDU/EFCDU Foreign Offlces Total InUS$ Peso Equiv. InUS$ Peso Equiv InUS$ Peso Eouiv. 105200000000140000 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( UBs/KBs r us2000000001 41000 )ther Banks ,lon-Rsldent Banks/OBUs 0.0( 105200000000230000 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( )BUs 1 05200000000231 000 (21 )ther Banks 0,0( c) {esident Banks - Clearinq and SettlemenE Account r 05200000000 0J( 1 90000 0.0( 0.0( 0.0( 0.0( 1) lLocalCurency 1 052000000001 90001 0.0( 0.0( 2\ :oreign Currency 0.0( 1 05200000000190002 d) Yon-Resi.alent hnks - Clearing and Settlement Accou 0.0( IOTAT 105200000000000000 0.0( 0.0( 0.ot 0.0( 0,0( 0.0( 0.0( -;lassilied as to Original Term 0.0( 0.0( 0.0r 0.0( 0.0( 0.0( 1) ihorl Term (one year or less) 0.0( otc 2l !,ledium Term (>1 year to 5 years) 00( .ong Tem (>5 years) 0.0( 10520000000061 2200 0.0c 0.0c

ANNEX A Financial Reporting Package (FRP/ Simptified FRp Due from Other Banks Schedule 2. Classified as to Type of Deposit 3of4 NOW Particulars Account Code For€lgn Regular Peso Accts FCDU/EFCDU Foreign Offices Total InUS$ Peso Eoulv. InUS$ Peso Eauiv lnUS$ Peso Eouiv ) 0.00 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( ./ 0.0( lv(,e, oE,,^s 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( o.o( 2l Foreign Currency 0.0( 052000000001 90002 (d) !o6t Bdks - cleating and setElemenf, Accour 0.0( xxxxxxxxxxxxxxxxxx TOTAL ros2ooooooooffioo 0,0( 0.0( 0.0( 0.01 0.0( 0.0( 0.0( 0.0( 0.0( o.0l 0.0( 0.0( 0.0( 0.0( 0.00 r) ihort Term (one year or less) i4edium Term (>1 year to 5 years) 0.00 1 052000000006121 00 0.00 -ong Term (>5 years) jpecral Reserve Bank Account for Securities Brokers 0.0( 0.00

ANNEX A. Financial Reporting Package (FRP/ Simplified FRP . Due from Other Banks Schedule 2. Classified as to Type of Deposil 4ol4- Particulars Account Code Forelgn Regular Peso Accts FCDU/EFCDU Fo.eign Oftices Total Total InUS$ Peso Equiv. InUS$ Peso Eouiv. InUS$ Peso Eauiv. lesident Banks 0.0( 0.0( 0.00 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 1) lUBs/KBs 1 0520000000014.1 000 0.0( 0.0( 1 052000000001 42000 (b) 0.0[ 0.0( 105200000000230000 0.0( 0.0( 0.0c 0.0t 0.0( r) loBUs I 05200000000231000 0.0( 0.0c 0.0( 0.0( 0.0( 2) lOther Banks 1 05200000000232000 0.0( 0.0( 0.00 0.0( 0,0( 0.0( l) lLocal Curency 0.0( 2) lForeign Currency 0.01 (dl Banks - Clealing and SeEt]ement Accoun 0.0( 0.0r TOTAL 05200000000000000 1 0.0( 0.0{ 0.tx 0.0( 0.0{ 0.0( 0.0( 0.0( 0.0( llassified as to Orlginal Term 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( 0.0( lShort Term (one year or tess) 0.0( 0.00 2) lMedium Term (>1 year to 5 yea.s) 0.0( 0.00 J) lLong lerm(>5 years) 0.0( 0.00 )pecral Reserve Bank Account lor Securities Brokers 0.00 0.0c

ANNEX A Financial Reporting Package (FRP/ Simplified FRp Schedule 23 Du6 to Other Banks I ofl- Pa,llculars Account Code Peso Accounts Foclqn R.Eular tsUUUTtsFCOU Forcign Otfices InUSS Pso EqUv. ln l-JS S Peso Eouiv InUS$ Total lre to Residenl Banks - ClearirE and SerLtenenE Accoults Peso Equiv 0.0t 0.0( 0.01 0.0( 0.00 0.0( 00r 0.01 0.0( 00( 0.0( 0.0( 00r cwmerl Barks r41 1 U0 0.0t 0.0r 0.01 00( 0.01 0.01 0.0( ooi 0.0( r) lNorcowment 8a.*s 0.0( 0.0( o 0.(x 0.0( 0.0( 0.0( 001 )reign Crelcy zzmffifiO141202 0.0( 2) lottE Baiks oot 220050000500142000 0.01 22005000 1 000200000 0.0( 0.0( 0.0c 0.oc 220050001000231000 0.0r OTAL tt 0.0( 0.0( 0.1 0.0( 00( 0.0( 0.0( 00r 0.01 ;bsr 'ified as to Original Tem 0.0( 0.0( 0.0( 0.0( 0.0( 0.fi 0.01 0.01 tqqm I em (>1 year to 5 yeac) .orE Term (>5 yea6j 220050000000612200 0.0t 0