QuestionsQuestions (BSP CIRCULAR NO. 731, S. 2011)
It provides supplemental guidelines on the Internal Capital Adequacy Assessment Process (ICAAP) and the related Supervisory Review Process (SRP) specifically for foreign bank branches in the Philippines, approved by the Monetary Board through Resolution No. 791 dated 25 May 2011.
Circular No. 731 is supplemental to Circular No. 639 dated 15 January 2009, which contains the general ICAAP and SRP guidelines.
The guiding principles in Circular No. 639 are to be applied to foreign bank branches on a proportionate basis, and BSP expects variation depending on the nature, size, and complexity of the branch’s business in the Philippines.
BSP will primarily look at how the foreign bank branch assesses its capital in relation to its business plans and operations in the Philippines.
The ICAAP should cover risks arising from domestically-oriented scenarios, in addition to considerations reflecting the branch’s specific circumstances.
The ICAAP must take into account specific circumstances of the branch, such as regulatory commitments related to special licenses or authorities.
Yes. BSP acknowledges that branches may use the head office/parent bank’s methodology for all or part of their ICAAP, but the branch must explain why such processes and methodologies are appropriate to its business in the Philippines.
It must describe how capital is allocated to the branch and the factors influencing this allocation.
The branch must illustrate how capital is managed and how capital can be made available to the branch in a timely manner once a need is determined.
Pursuant to Item 2.6 of the BSP Supervisory Review Process guidelines, BSP will refer to the head office/parent bank ICAAP and the home supervisor’s assessment, and BSP will examine the extent to which the parent ICAAP covers risks of the branch in the Philippines.
Yes. BSP will look at possible impacts of scenarios that primarily affect the head office/parent bank on the operations and capital adequacy of the branch.
The ICAAP document must be submitted on or before 28 February of each year.
Yes. A “trial” ICAAP document must be submitted on or before 30 September 2011.
While Circular No. 639 provides a suggested format, branches are not precluded from modifying the format and content if certain sections do not apply or if another presentation better reflects the branch’s internal capital assessment process.
It takes effect fifteen (15) calendar days after its publication in either the Official Gazette or a newspaper of general circulation.
The Monetary Board approved it through Resolution No. 791 dated 25 May 2011.