QuestionsQuestions (BSP MEMORANDUM NO. M-2008-034)
RBUs or FCDU/EFCDUs of banks with FCDU/EFCDU authority that can demonstrate legitimate funding needs.
For legitimate liquidity requirements of the FCDU/EFCDU or RBU for local operations, specifically: (1) compliance with FCDU/EFCDU cover requirements; (2) servicing withdrawals of FCDU/EFCDU; and (3) servicing trade-related requirements.
No. Borrowing must not be used to fund liquidity requirements of foreign head office, foreign branches, affiliates, or subsidiaries; it must be for the account of the applicant bank and for local operations of the RBU/FCDU/EFCDU.
Eligible securities consisting of US Dollar-denominated evidences of indebtedness issued directly by the Government of the Philippines—ROP Bonds—held by the applicant bank.
ROP Bonds to be pledged have to be transferred/credited to the BSP’s designated securities account before the bank can avail of the USD R/P facility.
The ROP Bonds may be lodged in the FCDU/EFCDU or RBU in Available-for-Sale (AFS), Held-for-Trading (HFT), and Held-to-Maturity (HTM) portfolios.
The tenor of the underlying security should not be shorter than the overlying instrument (i.e., the collateral’s tenor must be at least as long as the repurchase instrument).
The haircut on underlying securities is determined by the Treasury Department, with the concurrence of the Governor.
Through periodic margin calls as specified in the repurchase agreement, with valuation subject to periodic review and modification when necessary.
It is based on the outstanding US Dollar-denominated evidences of indebtedness issued directly by the Government of the Philippines (ROP Bonds) held by the applicant bank as of 30 September 2008.
The Treasury Department sets the rates and term, with the concurrence of the Governor. If a bank becomes disqualified for the R/P facility, the outstanding repurchase agreement immediately becomes due and payable.
From 10:00 AM to 12 Noon, and from 1:00 PM to 2:00 PM.
An application stating: the amount, requested term, specific purpose of borrowing, disclosure of specific collateral (including whether from RBU or FCDU/EFCDU). Also a notarized undertaking/certification signed by the required officers indicating specific fund utilization, exclusivity for local RBU/FCDU/EFCDU liquidity requirements, and that the bank is not a conduit for another bank and will not take arbitrage positions.
Signed by the bank’s President or Country Manager (for local branch of a foreign bank), Compliance Officer, and Head of Treasury. It must state: specific purpose of fund utilization; proceeds will be used exclusively for local liquidity requirements of FCDU/EFCDU or RBU; and the bank will not act as a conduit nor take arbitrage positions.
Banks must submit a report on deployment/utilization of USD repo borrowing (and other required documents) within three (3) banking days from release of proceeds, to enable BSP to assess legitimacy. They must also make available all related documents and records upon BSP request.
If funds are found used for ineligible purposes, or if collateral margins (if any) are not met.
The transaction must be covered by a master repurchase agreement, repurchase agreement confirmation, and such other documentation as may be necessary.
Treated as collateralized borrowings from BSP and accounted for under the Financial Reporting Package (FRP) under Subsection X161.3 of the MORB, as amended. HTM-eligible securities are subject to the tainting provision under Subsection X388.5 of the MORB upon default/non-payment of the amount due three (3) banking days after maturity or disqualification of borrowers.
Sanctions under BSP Circular No. 627 dated 23 October 2008, as amended—such as termination of eligibility and pre-termination of any outstanding balance through repayment and/or sale of the collateral.