CBP Circular No. 934-83

June 3, 1983 CBP CIRCULAR NO. 934-83 The Monetary Board, in its Resolution No. 828 dated May 20, 1983, approved the following amendments to Books I to III of the Manual of Regulations for Banks and Other Financial Intermediaries: SECTION 1. Subsection 1151.3 of Book I of the Manual of Regulations for Banks and Other Financial intermediaries is hereby amended to read as follows: "Subsection 1151.3. Capital Requirements . As a general rule, banks with expanded commercial banking authority, commercial banks and specialized government banks may apply for authority to establish additional banking offices upon compliance with the minimum capital required under existing regulations: Provided , however , That an applicant bank may be required to put up additional capital in an amount to be determined by the appropriate supervising and examining department based on criteria which consider expected growth of risk users and capital accounts: Provided , further , That any bank applying for authority to establish a branch/banking unit in any of the classified service areas as provided in Subsec. 1151.5 shall immediately comply with the prescribed minimum paid-in capital unimpaired, by (a) unbooked valuation reserves and other capital adjustments as may be required by the Central Bank and (b) total outstanding unsecured credit accommodations to directors, officers, stockholders, and their related interests (DOSRI)." SECTION 2. Subsection 1151.5 of the same Book is hereby amended to read as follows: "Subsection 1151.5 Conditions Precedent to Approval . a) Commercial banks including expanded commercial banks and specialized government banks applying for authority to establish, or to transfer from one service area to another, any branch or other banking unit, or to purchase any existing branch or other banking unit from another bank, shall purchase from the Central Bank with respect to each branch or other banking unit to be established, transferred or purchased in any of the following service areas, five-year Special Series Treasury Notes or five-year Central Bank Certificates of Indebtedness, in the minimum amounts indicated: a) Service Area I (Heavily P20 million overbranched areas) b) Service Area II (Over- P15 million branched areas) c) Service Area III (Ideally P10 million branched areas) d) Service Area IV (Under- P5 million branched areas) e) Service Area V -0- (Encouraged) For this purpose, the Central Bank shall classify the Philippines into Service Areas I to V based on the density of banking units as of end of calendar year, and the trend of deposits within the area during the last three (3) consecutive calendar years, preceding the date of application. b) The government securities acquired for branching purposes shall not be eligible for legal reserve purposes nor considered as compliance with agricultural and agrarian reform requirements. These shall be held by the bank concerned till maturity and shall not be returned to the Central Bank before maturity whether directly or indirectly by way of a repurchase or resale agreement through any of the accredited government securities dealers." SECTION 3. Item "a" of Subsection 1151.7 of Book I is hereby amended to read as follows: "a. Only applications complete with the minimum documents required by the appropriate supervising and examining department shall be accepted for any area on a first-come-first-served basis, regardless of whether or not there are approved but unopened banking offices in the area. Banks with expanded commercial banking authority and consolidated or merged rural banks and multi-town rural banks shall be given priority in the processing of applications to establish banking units in areas inadequately served by existing rural banks: Provided , however, That among such applicants, the first-come-first-served basis shall also apply. SECTION 4. Item "b" of Subsection 1151.8 of the same Book is hereby deleted. SECTION 5. Items "a" and "c" of Subsection 1152.1 and Item "b(4)" of Subsection 1152.2 of the same Book are hereby deleted. SECTION 6. A new subsection is hereby added as Subsection 1273.15 of Book I of the Manual of Regulations to read as follows: "Subsection 1273.15. Papers of EKBs with Banking Units in Areas Inadequately Served by Rural Banks . Banks with expanded commercial banking authority which establish branches/extension offices, and extend agricultural credit to farmers, in municipalities inadequately served by rural banks may apply for special time deposits and rediscount eligible papers at three percent (3%) per annum: Provided , That such loans shall be granted in accordance with the rules on supervised credit scheme." SECTION 7. Subsection 2151.3 of the same Book is hereby amended to read as follows: "Subsection 2151.3 Capital Requirements . A thrift bank applying for authority to establish banking offices shall comply with the required minimum paid-in capital as follows: (1) For existing banks establishing branches to be located: Within Metropolitan Manila P10 million Outside Metropolitan Manila P5 million (2) For new thrift banks establishing branches to be located within Metropolitan Manila P20 million. Any thrift bank applying for authority to establish a branch or banking unit in any of the classified service areas as provided in Subsec. 2151.5 shall immediately comply with the prescribed minimum paid-in capital unimpaired by (a) unbooked valuation reserves and other capital adjustments as may be required by the Central Bank and (b) total outstanding unsecured credit accommodations to directors, officers, stockholders, and their related interests (DOSRI). An applicant bank may be required to put up additional capital in an amount to be determined by the appropriate supervising and examining department based on criteria which consider expected growth of risk assets and capital accounts." SECTION 8. Subsection 2151.5 of Book II is hereby amended to read as follows: "Subsection 2151.5 Conditions Precedent to Approval . a) Thrift banks applying for authority to establish, or to transfer from one service area to another, any branch or other banking unit, or to purchase any existing branch or other banking unit from another bank, shall purchase from the Central Bank with respect to each branch or other banking unit to be established, transferred or purchased in any of the following service areas, the five-year Special Series Treasury Notes, or the five-year Central Bank Certificates of Indebtedness, in the minimum amounts indicated: a) Service Area 1 (Heavily P20 million overbranched areas) b) Service Area II (Over- P15 million branched areas) c) Service Area III (Ideally P10 million branched areas) d) Service Area IV (Under- P5 million branched areas) e) Service Area V (Encouraged) -0- For this purpose, the Central Bank shall classify the Philippines into Service Areas I to V based on the density of banking units as of end of calendar year, and the trend of deposits within the area during the last three (3) consecutive calendar years, preceding the date of application. b) The government securities acquired for branching purposes shall not be eligible for legal reserve purposes nor considered as compliance with agricultural and agrarian reform requirements. These shall be held by the bank concerned until maturity and shall not be returned to the Central Bank before maturity whether directly or indirectly by way of a repurchase of resale agreement through any or the accredited government securities dealers." SECTION 9. Item "a" of Subsection 2151.7 of Book II is hereby amended to read as follows: "a. Only applications complete with the minimum documents required by the appropriate supervising and examining department shall be accepted for any area on a first-come-first-served basis, regardless of whether or not there are approved but unopened banking offices in the area." SECTION 10. Item "b" of Subsection 2151.8 of Book II is hereby deleted. cdlex SECTION 11. Item "b(4)" of Subsection 2152.1, Item "b(5)", and Item "c" of Subsection 2153.1 of the same Book are hereby deleted. SECTION 12. Book III is hereby amended by the addition of the following as last paragraph of Section 3102: "A rural bank that is converted into a thrift bank or that services deposits and other transactions of another type of bank as may be determined by the Central Bank shall purchase the specified amount of the five-year Special Series Treasury Notes or the five-year Central Bank Certificates of Indebtedness which shall be issued for the purpose." SECTION 13. Subsection 3151.2 is hereby amended to read as follows: "Subsection 3151.2 Capital Requirements . A rural bank may be considered for branching privileges after full compliance with the minimum capital requirements as provided under existing regulations: Provided , That any rural bank applying for authority to establish a branch or banking unit in any of the classified service areas shall immediately comply with the prescribed minimum pain-in capital unimpaired by (a) unbooked valuation reserves and other capital adjustments as may be required by the Central Bank and (b) total outstanding unsecured credit accommodations to directors, officers, stockholders, and their related interests (DOSRI); Provided, further, That rural banks establishing branches in areas inadequately served by rural banks shall be provided government counterpart capital of up to P50,000 per branch to match the unmatched private paid-up capital." SECTION 14. Subsection 3151.4 of Book III is hereby amended to read as follows: "Subsection 3151.4 Conditions precedent to approval . A rural bank applying for authority to establish or to purchase from another bank, or to transfer from one service area to another, within its region, any branch or other banking unit shall purchase from the Central Bank a minimum of P500,000 worth of five-year Special Series Treasury Notes or five-year Central Bank Certificates of Indebtedness with respect to each branch or other banking unit to be established, transferred or purchased within each of Service Areas III and IV: Provided , further , That rural banks shall not be allowed to branch within Service Areas I and II. For this purpose, the Central Bank shall classify the Philippines into Service Areas I to V based on the density of banking units as of end of calendar year, and the trend of deposits within the area during the last three (3) consecutive calendar years, preceding the date of application. The government securities acquired for branching purposes shall not be eligible for legal reserve purposes nor as compliance for agricultural and agrarian reform requirements. These shall be held by the bank concerned until maturity and shall not be returned to the Central Bank before maturity whether directly or indirectly by way of a repurchase or resale agreement through any of the accredited government securities dealers." SECTION 15. Item "a" of Subsection 3151.6 of Book III is hereby amended to read as follows: "a. Only applications complete with the minimum documents required by the appropriate supervising and examining department shall be accepted for any area on a first-come-first-served basis, regardless of whether or not there are approved but unopened banking offices in the area. Banks with expanded commercial banking authority and consolidated or merged rural banks and multi-town rural banks shall be given priority in the processing of applications to establish banking units in areas, inadequately served by rural banks: Provided , however , That among such applicants the first-come-first-served basis shall also apply." SECTION 16. The second paragraph of Subsection 3151.7, Items "a" and "c" of Subsection 3152.1, Item "b(4)" of Subsection 3152.2, and the first paragraph of Item "b" and Sub-item (5) of the second paragraph of Item "b" of Subsection 3153.2 of the same Book are hereby deleted. SECTION 17. All banks with applications to establish or transfer branches or banking units, which have not been approved by the Monetary Board as of May 22, 1983 shall comply with the foregoing requirements. SECTION 18. All Circular or rules and regulations which are inconsistent herewith are hereby amended or modified accordingly. This Circular shall take effect immediately. For the Monetary Board: (SGD) JAIME C. LAYA Governor