Law Summary
Minimum Capitalization Requirements for New Banks
- New entrants to the banking system must adhere to minimum capital levels unless otherwise dictated by the Monetary Board.
- Minimum capital requirements are categorized by bank type and location:
- Universal Banks: ₱4,950 million
- Commercial Banks: ₱2,400 million
- Thrift Banks:
- Head Office within Metro Manila: ₱325 million
- Head Office outside Metro Manila: ₱52 million
- Rural Banks (Tiered by Location):
- Within Metro Manila: ₱26 million
- Cities of Cebu and Davao: ₱13 million
- 1st/2nd/3rd class cities and 1st class municipalities: ₱6.5 million
- 4th/5th/6th class cities and 2nd/3rd/4th class municipalities: ₱3.9 million
- 5th and 6th class municipalities: ₱2.6 million
Guidelines for Banks with Existing Memoranda of Understanding (MOU)
- Applies to banks that have entered into MOUs with BSP pursuant to Circular No. 181 (dated 14 November 1998).
- For banks with capital deficiency but no other significant weaknesses:
- MOU may be set aside if the bank can comply with current minimum capital requirements.
- For banks with capital deficiency and significant weaknesses (such as low capital-to-risk asset ratio, liquidity issues, or high non-performing loans):
- The executed MOU remains in full effect until mutually amended, waived, or terminated by BSP.
Compliance and Penalties
- Banks failing to meet the prescribed capital requirements will be subject to sanctions and penalties as outlined in existing banking laws and BSP regulations.
- These measures ensure adherence to financial stability norms within the banking sector.