Scope: what ROPA timing is covered
- BSP Circular No. 555 amends the timing of booking for Real and Other Properties Acquired (ROPA) under Circular No. 520.
- The amended rule applies to real and other properties acquired (ROPA) in settlement of loans through:
- judicial foreclosure;
- extrajudicial foreclosure; and
- dation in payment (dacion en pago).
- ROPA must be treated under the ROPA account using the specified booking triggers for each acquisition mode.
When ROPA is booked
- For ROPA in settlement of loans through judicial foreclosure, the property is booked upon entry of judgment.
- For ROPA in settlement of loans through extrajudicial foreclosure, the property is booked upon execution of the Sheriff’s Certificate of Sale.
- For ROPA in settlement of loans through dation in payment (dacion en pago), the property is booked upon notarization of the Deed of Dacion.
Initial booking amount standard
- Real and other properties acquired (ROPA) must be booked initially at the carrying amount of the loan, computed as follows:
- the outstanding loan balance adjusted for any unamortized premium or discount;
- less allowance for credit losses, computed based on PAS 39 provisioning requirements, taking into account the fair value of the collateral;
- plus booked accrued interest, less allowance for credit losses computed based on PAS 39 provisioning requirements; and
- plus transaction costs incurred upon acquisition, including non-refundable capital gains tax and documentary stamp tax paid in connection with the foreclosure/purchase of the acquired real estate property.
Appraisal requirement threshold
- If the carrying amount of ROPA exceeds PHP 5 million, the appraisal of the foreclosed/purchased asset must be conducted by an independent appraiser acceptable to the BSP.
Effectivity and publication rule
- BSP Circular No. 555 takes effect fifteen (15) calendar days after its publication.
- Publication must be made either in the Official Gazette or in a newspaper of general circulation.