FCDU/EFCDU Trust, Other Fiduciary or Investment Management Accounts

CIRCULAR NO. 666 Series of 2009

Subject: FCDU/EFCDU Trust, Other Fiduciary or Investment Management Accounts

Pursuant to Monetary Board Resolution No. 1183 dated 19 August 2009, allowing trust departments of banks with authority to operate foreign currency deposit unit (FCDU) or expanded foreign currency deposit unit (EFCDU) under  R. A. No. 6426, as amended, to accept foreign currency-denominated investment management activities accounts, the provisions of the Manual of Regulations for Banks (MORB) and Circular No. 609 dated 26 May 2008, as amended, are hereby amended as follows:

Section 1.  Section X412 and its corresponding subsections of the MORB are hereby amended to read as follows:

“Sec. X412 FCDU/EFCDU Trust, Other Fiduciary or Investment Management.Accounts  Only a bank with authority to operate a foreign currency deposit unit (FCDU) or an expanded foreign currency deposit unit (EFCDU) under R.A. No. 6426, as amended, may accept foreign currency-denominated trust, OTHER FIDUCIARY OR INVESTMENT MANAGEMENT ACCOUNTS

“§ X412.1 Banks with trust authority or investment management authority.  A bank authorized to engage in trust business under Section 79 of R.A. No. 8791, OR IN INVESTMENT MANAGEMENT ACTIVITIES ONLY UNDER SUBSECTION 53.4 OF R. A. NO. 8791, which is also authorized to operate an FCDU or EFCDU under R.A. No. 6426, as amended, shall include FCDU/EFCDU trust, OTHER FIDUCIARY OR INVESTMENT MANAGEMENT accounts among those managed or administered by its trust/INVESTMENT MANAGEMENT department under the responsibility of the board of directors, the trust/INVESTMENT MANAGEMENT committee and the trust/INVESTMENT MANAGEMENT officer.

“§ X412.2 Additional deposit for the faithful performance of trust duties OR INVESTMENT MANAGEMENT ACTIVITIES. A bank authorized to engage in trust business OR INVESTMENT MANAGEMENT ACTIVITIES that accepts FCDU/EFCDU trust, OTHER FIDUCIARY OR INVESTMENT MANAGEMENT accounts shall deposit with the BSP additional eligible government securities under Subsec. X405.2 as security for the faithful performance of trust duties OR INVESTMENT MANAGEMENT ACTIVITIES equivalent to at least one percent (1%) of the value of the FCDU/EFCDU trust or INVESTMENT MANAGEMENT ASSETS based on the average of the month-end balances of such assets during the immediately preceding quarter as converted in the local currency at the prevailing foreign exchange rate.  Such securities shall be deposited within thirty (30) banking days after the end of every calendar quarter.

“§ X412.3 Applicability of rules and regulations. Unless otherwise revised by the provisions of this Section, the rules and regulations governing the administration of trust, OTHER FIDUCIARY OR INVESTMENT MANAGEMENT accounts, including UITFs, shall be observed.  Also applicable are rules and regulations on the operations of FCDUs/EFCDUs that include, among other things, regulations on acceptable foreign currencies, eligible and ineligible foreign currency sources; foreign currency cover requirements; and allowable loans and investments.”

Section 2.  Section X419 of the MORB is hereby amended to read as follows:

“Sec. X419  Conduct of Investment Management Activities.  The provisions of Sections X411 AND X412 shall govern the conduct of investment management activities of a bank without a trust license.”

Section 3.  Schedules A2 (Balance Sheet - FCDU/EFCDU Accounts), B2 (Investments in Debt and Equity Securities – FCDU/EFCDU Accounts) and C2 (Details of Loans and Receivables – FCDU/EFCDU Accounts) of the Financial Reporting Package for Trust Institutions reporting templates issued under Circular No. 609 dated 26 May 2008, as amended, are hereby revised to unblock cells pertaining to FCDU/EFCDU agency accounts.  Details of said amendments are shown in Appendices A to C.

Section 4.  This Circular shall take effect fifteen (15) days following its publication in the Official Gazette or in any newspaper of general circulation.

FOR THE MONETARY BOARD:

AMANDO M. TETANGCO, JR. Governor