Amendments to the Guidelines on the Computation of Minimum Required Capital and Risk-Based Capital Adequacy Ratio

BANGKO SENTRAL NG PILIPINAS CIRCULAR NO. II42 Series of 2c22 OFFICE OF THE GOVERNOR Subject: Amendments to the Guidelines on the Computation of Minimum Required Capital and Risk-Based Capital Adequacy Ratio The Monetary Board, in its Resolution No.372 dated 17 March 2022, approved the following amendments to the guidelines on the computation of the minimum required capital under Section l2l and the risk-based capital adequacy ratio under Appendices 59 and 62 of the Manual of Regulations for Banks (MORB) and other related regulations. Section l. Section 121 of the MORB, is hereby amended, as follows: 12I MINIMUM REQUIRED CAPITAL Definition of Capital. The following provisions shall govern the capital requirements for banks. The term capital shall be synonymousto unimpaired capital and surplus, combined capital accounts and net worth and shall refer to the total of the unimpaired paid-in capital, surplus and undivided profits. For this purpose, the following items shall likewise be added to or deducted from capital: a. Deposit for stock subscription x x x. b. The following shall be deducted from capital: 0 ) Treasury stock; (2)xxx; (3) Total outstanding unsecured credit accommodations, both direct and indirect, to directors, officers, stockholders, and their related interests (DOSRI) granted by the bank proper: Provided,That in the case of government-owned or- controlled banks, the adjustment shall not include the unsecured peso-denominated credit accommodations to the Philippine National Government; xxx Section 2. Paragraph 4 of Part ll of Appendix 59 of the MORB, as amendedt, on Qualiffing Capital under the Risk-Based Capital Adequacy I Amended by Circular Nos. llOT dated 23 December 2O2O, lO84 dated 28 April 2O2O, 1067 dated 13 December2Ol9, and lO44 dated 6 August 2Ol9 Pagel of4 a a -a

J Framework for the Philippine Banking System (Appendix to Section 125 of the MORB) is hereby further amended, as follows: 'Part ll. Qualifying Gapital xxx Regulatory adjustment to CETI capital 4. The following shall be deducted from/(added to) CET I capital: a. Common stock treasury sharesr x x x; xxx d. Total outstanding unsecured credit accommodations, both direct and indirect, to DOSRL Provided, That in the case of government- owned or <ontrolled banks, the adjustment shall not include the unsecured peso-denominated credit accommodations to the Philippine National Government; xxx" Section 5. Paragraph 5 of Part ll on Qualiffing Capital and Paragraph 2 of Part lllon Credit Risk-Weighted Assets of Appendix 62 of the MORB under the Risk-Based Capital Adequacy Framework fior the Stand-Alone Thrift Banks, Rural Banks and Cooperative Banks (Appendix to Section 127 oJ the MORB), as amended by Circular Nos.lO84 and lO79 dated 28 April 2O2O and 09 March 2O2O, respectively, is hereby further amended, as follows: 'Part ll. Qualiffing Capital xxx A. Tierl capital xxx Regulatory AdJustments to CET I capital 5. The following must be deducted from/(added to) CETI capital: xxx I Treasury shares are: 0 ) shares of the parent bank held by a subsidiary financial allied undertaking in a consolidated statement of condition, or (2) the reacquired shares of a subsidiary banldQB that is required to compute its capital adequacy ratio in accordance with this framework. P.g.2oJ4

c) Total outstanding unsecured credit accommodations, both direct and indirect, to directors, officers, stockholders and their related interests (DosRl), net of allowance for credit losses: Provided, That in the case of government-owned or -controlled banks, the adjustment shall not include the unsecured peso-denominated credit accommodations to the Philippine National Government; xxx" "Part lll. Credit Risk-Weighted Assets xxx A. On-Balance Sheet Assets 2. The risk-weighted amount shall be the product of the net carrying amount of the asset and the risk weight associated with thatasset.Xxx a) O% risk weight - xxx g)tOO% riskweight- All other assets including, among others, the following: (i) Claims on central governments and central banks of foreign countries other than those with the highest credit quality; XXX;and xii. Foreign currency checks and other cash items not acceptable as international reserues. except those which are deducted from capital, as follows: (l) Total outstanding unsecured credit accommodations, both direct and indirect, to DOSRI - net of allowance for credit losses: Providd, That in the case of government-owned or <ontrolled banks, the adjustment shall not include the unsecured peso- denominated credit accommodations to the Philippine National Government; xxx" Section 4. Section ll2l of the MORB, as amended by Circular Nos.lOSl and lO32 dated 4 March 2o2o and 15 February 2019, respectively, is hereby further amended to align with the foregoing amendments, as follows: P.gc3 oft

1I2I PERSONAL EQUITY AND RETIREMENT ACCOUNT (PERA) MARKET PARTICIPANTS AND PERA INVESTMENT PRODUCTS xxx Qualifi cation/Accreditation requi rements a. As an Administrator. The Bangko Sentral shall issue a Qualification Certificate as Administrator to an entity upon compliance with the following requirements: (l ) The applicant shall have a net worth of at least PhpIOO million. Net worth shall refer to the total of the unimpaired paid-in capital, surplus and undivided profits, net of: xxx (b) Total outstanding unsecured credit accommodations, both direct and indirect, extended by the Administrator to DOSRI: Provided, That in the case of government-owned or -controlled banks, the adjustment shall not include the unsecured peso- denominated credit accommodations to the Philippine National Government; and xxx' Section 5. Effectivity. This Circular shall take effect fifteen (15) calendar days after its publication either in the Official Gazette or in a newspaper of general circulation. FOR THE MONETARY BOARD: r^ \ a r- f,\ BENJAMIN E. DIOKNO Governor &4 Marchzozz P.g.4of4