Question & AnswerQ&A (BSP MEMORANDUM)
The main directive is for these institutions to submit reports on capital build-up programs, compliance with loan loss provisioning, and remedial measures for non-performing loans to the Department of Thrift Banks and Non-Bank Financial Institutions of BSP.
The initial capital build-up program as of June 30, 1999, must be submitted on or before July 31, 1999.
It should include a recapitalization scheme providing cover for the portion of capital depleted by the prescribed general loan loss provisioning and recommended specific allowance for probable losses on loan accounts and other risk assets, aside from the requirements of Circular 156 dated March 19, 1998.
The special Credit Review Group is tasked with the periodic review and assessment of the quality of the bank's loans and other risk assets.
They must follow the BSP Guidelines in Identifying and Monitoring Problem Loans and Other Risk Assets and Setting Up of Allowance for Probable Losses as set forth in Appendix 18 of the new Manual of Regulations for Banks.
Monthly Report on the actual level of compliance with the general loan loss and specific provisioning, and Monthly Report on remedial measures/action taken on non-performing loan ratios, increasing ROPOA and restructured loans, and coverage ratio must be submitted on or before the 15th day after the cut-off month.
Disqualification or deferment of processing of branching applications and imposition of sanctions under Circular-Letter dated September 9, 1998.
The coverage ratio must not be less than 25%.
It is the basis for the directives given in the BSP Memorandum, prescribing requirements for capital build-up, loan loss provisioning, sanctions for non-compliance, and other regulatory measures for thrift banks and non-bank financial institutions.
The Monthly Capital Build-up Update must be submitted on or before the 15th day after the cut-off month, similarly for other monthly reports.