Question & AnswerQ&A (BSP CIRCULAR NO. 257)
BSP Circular No. 257 prescribes the level of capitalization required for different categories of banks in the Philippines as of end-2000, maintaining the same capital requirements as prescribed at end-1999.
The target level of capitalization prescribed for banks as of end-2000 was set aside according to BSP Circular No. 257.
For new entrants, the minimum capitalization requirements are: Universal Banks - P4,950 million; Commercial Banks - P2,400 million; Thrift Banks (Metro Manila) - P325 million; Thrift Banks (outside Metro Manila) - P52 million; Rural Banks (Metro Manila) - P26 million; Rural Banks (Cebu and Davao) - P13 million; Rural Banks (1st/2nd/3rd class cities and 1st class municipalities) - P6.5 million; Rural Banks (4th/5th/6th class cities and 2nd/3rd/4th class municipalities) - P3.9 million; Rural Banks (5th and 6th class municipalities) - P2.6 million.
Yes. For banks with capital deficiency but capital-to-risk asset ratio within minimum and no weaknesses, the MOU may be set aside if the bank complies with minimum capital requirements. For banks with significant weaknesses, the MOU remains in full effect until amended, waived, or terminated by the BSP.
Significant weaknesses may include deficiency in capital-to-risk asset ratio, liquidity problems, high past due loans, and DOSRI violations.
Banks that fail to comply with the capitalization requirements are subject to sanctions and penalties provided under existing banking laws and BSP rules and regulations.
Capital-to-risk assets ratio is a measure of a bank's capital adequacy, indicating the proportion of its capital to its risk-weighted assets, which is used to ensure financial stability and soundness.
The Monetary Board decided to maintain the same capitalization requirement as end-1999 for end-2000, and set aside the newly prescribed target level to possibly provide banks more time to adjust amid economic conditions.
Yes. Unless otherwise prescribed by the Monetary Board, the minimum capitalization levels stated in BSP Circular No. 257 apply; this means the Monetary Board can set different requirements.