Question & AnswerQ&A (BSP CIRCULAR NO. 444)
BSP Circular No. 444 covers the treatment of deposit substitutes evidenced by repurchase agreements (repos) covering government securities up to an amount equivalent to the adjusted Tier 1 capital of the bank or quasi-bank.
The statutory reserve requirement for such repos is 2%.
The 2% statutory reserve rate applies only to repos covering government securities up to the amount equivalent to the adjusted Tier 1 capital of the bank or quasi-bank.
The documentation of repos must conform with existing BSP regulations and must be delivered to a BSP-accredited third party custodian.
A BSP accredited third party custodian must receive the documentation.
Monetary Board Resolution Nos. 914 and 1713 dated 26 June 2003 and 20 November 2003 respectively.
Subsection X 253.1 of the Manual of Regulations for Banks and Section 4246Q of the Manual of Regulations for Non-Bank Financial Institutions.
It took effect immediately upon its adoption on August 18, 2004.
Banks and quasi-banks are covered by this circular.
Adjusted Tier 1 capital refers to the core capital of the bank/quasi-bank that has been adjusted according to BSP regulations for the purpose of calculating limits or reserves such as under the repo rules.