Question & AnswerQ&A (BSP MEMORANDUM NO. M-2014-002)
The memorandum provides guidelines on proposed investment from Third Party Investors (TPIs) to help capital deficient banks comply with the minimum capital requirements prescribed by the Manual of Regulations for Banks (MORB).
The guidelines were approved under Monetary Board Resolution No. 65 dated January 9, 2014.
The bank must immediately submit the subscription contract or written agreement with the TPI to the Bangko Sentral ng Pilipinas (BSP).
No, submission of a TPI's Letter of Intent alone is not sufficient to address the capital deficiency under BSP guidelines.
The bank must submit: 1) A request signed by the President or equivalent officer for BSP approval, with a Board Resolution of the TPI if applicable; 2) Certified copy of the Escrow Agreement and a certificate of escrow deposit; 3) Documentary requirements under Subsection X126.2b of the MORB; 4) Other documentary requirements as may be required by BSP.
The Escrow Agreement ensures that funds equivalent to at least the amount of the proposed investment are deposited and accounted for as part of the investment to cover the capital deficiency.
The investment will not be considered for purposes of addressing the capital deficiency, and BSP may recommend appropriate supervisory actions against the bank.
A joint certification signed by the President or equivalent officers of both the bank and the TPI indicating the pending PDIC application, along with PDIC's acknowledgment receipt of the application, must be submitted.
BSP Circular No. 762 dated July 25, 2012 covers the treatment of deposit for stock subscription as part of equity.
Prior BSP approval is required under Subsection X126.2b of the Manual of Regulations for Banks.