Thrift Bank Branch Capital Requirements

The Circular amends Subsections 2151.3 (4) of the Manual of Regulations for Banks and Other Financial Intermediaries (Book II).
The Circular is implemented by amending/repealing the prior wording of Subsections 2151.3 (4) to reduce the required equivalent capital for each branch established by a thrift bank.
The amendment is expressly tied to Circular No. 1390 and is approved for adoption by Monetary Board Resolution No. 797 (August 17, 1994).

The Circular reduces the required equivalent capital for each branch that a thrift bank establishes.
The operative change centers on the additional capital that must be put up for each branch established by a thrift bank, with amounts varying by location category.

Subsection 2151.3 (4) requires that for each branch to be established by a thrift bank, an additional capital shall be put up as follows:
- In the National Capital Region and the Cities of Cebu and Davao: P10 million
- In other cities and first class municipalities: P5 million
- In second, third and fourth class municipalities: P3 million
- In fifth and sixth class municipalities: None
The additional capital formula also applies where the thrift bank’s capital is less than a computed amount based on existing and proposed additional branches by location category.
The framework also applies where the thrift bank’s capital is greater than the computed sum based on the same location categories and branch counts.

Where a thrift bank’s capital is lower than the sum of:
- (1) P10 million times the number of existing branch/es and proposed additional branch/es located/to be located in the NCR and the Cities of Cebu and Davao;
- (2) P5 million times the number of existing branch/es and proposed additional branch/es located/to be located in other cities and first class municipalities; and
- (3) P3 million times the number of existing branch/es and proposed additional branch/es located/to be located in second, third and fourth class municipalities,
  the thrift bank shall not be allowed to branch out.
In that case, the thrift bank must increase its capital at least to the sum of (1), (2), and (3) above before branching out is permitted.

Where a thrift bank’s capital is greater than the sum of the computed amounts in the referenced items (1), (2), and (3), the thrift bank need not put up an additional capital for each additional branch to be established if the excess is greater than the applicable threshold.
The excess threshold is determined by the proposed branch site category:
- P10 million for branches in the NCR and the Cities of Cebu and Davao
- P5 million for branches in other cities and first class municipalities
- P3 million for branches in second, third and fourth class municipalities
Where the excess is less than the applicable threshold (P10 million, P5 million, or P3 million, as the case may be), only an amount to cover the deficiency is required as additional capital for the establishment of the additional branch.

The capital computation and branching restriction apply to the thrift bank’s existing branches and proposed additional branches.
The location categories control both the per-branch capital amounts (P10 million, P5 million, P3 million, or None) and the excess/deficiency treatment (P10 million, P5 million, P3 million).
The rule treats the thrift bank’s capital as a basis for whether additional capital is required for each additional branch, depending on whether the capital is less than, equal to, or greater than the computed sum.