Manual of Regulations for Banks Updated as of 31 December 2018

BANoKo SErurnaL NG PIuIeINAs OFFICE OF THE GOVERNOR ctRcutAR NO. 1065 Series of 2019 Subject: Manual of Regulations for Banks Updated as of 31 December 201g The Monetary Board, in its Resolution No. 1756 dated 15 Novemb er Zorg,approved the following amendments to the Manual of Regulations for Banks (MoRB) updated as of 31 December 2018. section 1. The provisions of section 3 0f circular No. 9gg dated 4 January 2018 and Section 8, ltem "r" of Subsection x806.2, Circular No. 1022 dated 26 November 2018 are added at the end of Section 151. on Supervisory enforcement action and Section 923 on Compliance with united Notions Security Council Resolutions (lJNscR), respectively. Section 2' The Revised Rules and Procedure on Administrative Cases involving Directors and officers of BsP-supervised Financial lnstitutions contained in circular No. 1012 dated 12 September 2018 is codified as Appendix 135. Section 3. The footnotes in section 601 on The Eongko Sentral Term Deposit Facitity (TDF)and Appendix 82 on "Guidelines on the Prohibition Against the Use of Funds from Non- Resident Sources for Placement in the Bangko Sentral's Term Deposit Facility (TDF) and the Overnight Deposit Facility (ODF)" are hereby deleted. Section 4. section 276 is hereby amended to align with the requirements under section 92t of the MoRB on customer identificotion, particularly on the acceptance of either a specimen signature or biometrics of the new individual customer, and shall now read as follows: 276 MISCELLANEOUS RUTES ON DEPOSITS xxx Specimen signatures or biometrics, identilicotion photos. For opening an account/establishing relationship under the true and full name of the depositor, all banking institutions are required to obtain a minimum of three (3) specimen signatures, simultaneously executed, or biometrics from their depositors and to update the same based on risk and materiality. Banks may, at their option, require their depositors to submit clear lD photos together with the specimen signatures or biometrics. A. Mabini st., Malate 1004 Maniia, phirippines . {632} 70fi-7701 . www.bsp.1;ov.ph o bspmair(ebsp.gov.ph

For accounts used purely for digital or electronic payments or transactions, banks may define appropriate due diligence procedures provided that MWF risks are effectively managed. XXX Section 5. Section 104 is hereby amended to align with the provisions of Section 109 of the MORB on Appreciotion or increose in book volue, which provides that appraisal increment is no longer allowed, and shall now read as follows: 1O4 MERGERS AND ACQUISITIONS xxx Rules on exchange of shores. As a general rule, the ratio of exchange of shares between or among the participants in a bank merger or consolidation shall be based on mutual agreement of the parties concerned. xxx Section 6. The required report on Basel lll Net Stable Funding Ratio Report and Minimum Liquidity Ratio provided under Circular No. 1007 dated 5 June 2018 and Circular No. 996 dated 8 February 2018, respectively, are codified in Appendix 7. Section 7. Appendix 92 is hereby amended to add the grant of regulatory relief to covered areas affected bythe tropical ryclone "Josie" pursuantto Memorandum No. M-2018- 024 dated 15 August 2018. Section 8. The Sample List of Regulatory Incentives for Mergers/Consolidations and/or Acquisitions (Annex A of this Circular) contained in Memorandum No. M-2015-023 dated 21 December 2015 is hereby updated and incorporated as Annex A of Appendix 90 in Item 2(f). Section 9. The Sections/Subsections/Appendices of certain Circulars issued in 2018 are renumbered to align with the new formatting conventions of the MORB, as shown in Annex B of this Circular. Section 10. This Circular shall take effect fifteen (15) calendar days following its publication either in the Official Gazette or in a newspaper of general circulation. FOR THE MONETARY BOARD: ( c- q. BENJAMIN E. DIOKNO Governor dJ o.."rber 2019

l- r !l Annex A SAMPTE LIST OF REGUIATORY INCENTIVES FOR MERGERS/CONSOTIDATIONS AN D/OR ACqUISITIONS The Bangko Sentral promotes mergers/consolidations and/or acquisitions of majority or all of the outstanding shares of stock of a bank to strengthen the financial capabilities and enhance overall competitiveness of banks. Concerned banks may request regulatory incentives that are responsive to their specific needs and reasonable given the attendant circumstances. Any request shall be subject to Bangko Sentral's evaluation and approval. Banks may refer to the fofiowing sample list of possible incentives: a. Staggered booking of unbooked allowance for credit losses; b. Temporary relief from compliance with prudential limits/ratios such as real estate loan limits, capitaladequary ratio (cAR) and single borrower,s limit; c. Conversion/upgrading of head offices, branches, and branch-lite units; d. Condonation of liquidated damages/penalties on loan arrearages to the Bangko Sentral; e. Relocation of branches/branch-lite units in cases of duplication in certain areas; f. Concurrent directorship/officership between constituents banks; and g. lncrease in the rediscounting line ceiling that is based on the adjusted capital account. Manual of Regulations for Banks - Appendix 90 Page 3

arr Annex B Renumbering of the Sections/Subsections/Append ices of certai n Circula rs Circular Date Old Section/Subseaion/ New Section/ Number Appendix No. Appendix No. 989 01.04.18 xL87,XL87.1- X187.6 151 996 02.08.18 App.74c App.129 1000 04.23.18 x1206, X1206.1- X1206.4 804 tooT 06.06.18 App.74t App. 130 App.134 App. 131 1014 09.24.18 1603, 1603.1 629 1015 10.05.18 1603.2 -1603.5 629 App. t22 App. 132 LOLT 10.10.18 x97A 1151 App.89b App. 133 1018 10.26.18 App. 123 App. 134