Question & AnswerQ&A (CIRCULAR NO. 322, MARCH 7, 2002)
A thrift bank located in Metro Manila must have a net worth or combined capital accounts of at least P650 million to operate an FCDU.
A thrift bank located outside Metro Manila must have a net worth or combined capital accounts of at least P150 million to operate an FCDU.
The operation of an FCDU by a thrift bank is subject to prior approval by the Monetary Board.
The thrift bank must file its application with the Department of Thrift Banks and Non-Bank Financial Institutions (DTBNBFI).
The application must be accompanied by (a) a certified true copy of the resolution of the bank's board of directors authorizing the application, and (b) a certification signed by the president or equivalent officer that the bank has complied with all conditions/prerequisites for the operation of an FCDU.
Key prerequisites include: (a) profitable operations during the previous calendar year and until application; (b) a risk-based capital adequacy ratio of at least 12%; (c) an officer in charge of the FCDU with at least one year of similar experience; (d) no net weekly reserve deficiencies in the last 8 weeks; (e) compliance with various banking laws and regulations, including election of independent directors, attendance at seminars, adherence to DOSRI limits, liquidity floor requirements, loan limits, and fixed asset investments; (f) adequate provisions for probable losses; (g) no float items outstanding over 60 days exceeding 1% of total resources; (h) no past due obligations to BSP or government financial institutions; (i) an established and adequate risk management system; (j) a CAMELS composite rating of at least 3 with management rating not lower than 3; and (k) membership in the Philippine Deposit Insurance Corp. (PDIC) in good standing.
The officer must have at least one year of actual experience in another bank as in-charge or assistant in-charge of similar operations.
Thrift banks failing to meet the minimum capital requirements within two years, or those failing to comply with an approved capital build-up program, must liquidate their FCDU business within one year and surrender their FCDU licenses to the Bangko Sentral ng Pilipinas.
The license of such thrift banks will be automatically revoked if they do not comply with the minimum capital requirements as of the date of the Circular.
The thrift bank must have a CAMELS composite rating of at least 3 in the last regular examination, with a management rating of not lower than 3.
The bank must have complied with: election of at least two independent directors; attendance by board members at accredited seminars; ceilings on DOSRI accommodations; liquidity floor requirements for government deposits; single borrower's loan limit; and investment limits in bank premises and fixed assets.
The bank's board of directors must pass a resolution authorizing the application to operate an FCDU, and a certified true copy of this resolution must accompany the application.
A thrift bank must be a member of the PDIC in good standing to be authorized to operate an FCDU.
The bank must have an appropriate risk management system with clear responsibility delineation, adequate risk measurement, structured risk limits, effective internal controls, and thorough risk reporting suitable for their operations.