Legal basis and incentive connection
- The procedures are designed for banks/NBQBs seeking a Certificate of Eligibility (COE) to avail incentives under Republic Act No. 9182.
- Only NPAs that meet the definition of NPA, NPL, and Real and Other Properties Owned or Acquired (ROPOA) under Republic Act No. 9182 may qualify for the COE.
Purpose of the procedures
- Banks/NBQBs must follow the procedures to obtain a COE for transfer/sale of NPAs to an SPV, or to an individual involving a single family residential unit, including dacion en pago arrangements.
- The process is structured to ensure BSP evaluation of the proposed transaction and eligibility of the asset set.
Asset eligibility coordination with BSP
- Before filing any application, a bank/NBQB must coordinate with the BSP through the Supervisory Reports and Studies Office (SRSO) and the appropriate Supervision and Examination Department (SED) to develop a reconciled and finalized master list of eligible NPAs.
- Banks/NBQBs must submit a complete inventory of their NPAs using the format under BSP Circular Letter dated January 7, 2003 (Attachments 1-1 to 1-6).
- Banks/NBQBs may qualify for a COE only for NPAs included in the master list that meet the Republic Act No. 9182 definitions of NPA, NPL, and ROPOA.
- BSP will provide each bank/NBQB a copy of its reconciled and finalized master list for guidance.
Filing and content of COE applications
- A bank/NBQB must file a written (hard copy) application for eligibility of specific NPAs with the BSP through the appropriate SED for each proposed transfer of asset/s.
- No specific form is prescribed for the application, but the applicant must describe the proposed transaction with sufficient detail, including:
- its proposed transaction description,
- identification of its counterparty/ies, and
- disclosure of the terms, conditions, and all material commitments related to the transaction.
- For applications involving more than ten (10) NPA accounts, the applicant must submit the list of NPAs to be transferred/sold in soft copy (by electronic mail or diskette) in Excel format using the prescribed data structure/format for NPLs and ROPOAs (Attachments 2-1 to 2-4).
- The soft-copy submission must be sent to the appropriate SED email addresses:
- For applications involving ten (10) NPA accounts or less, submission in soft copy is preferable, but submission in hard copy is allowed if the hard copy includes all necessary information shown in the prescribed data structure (Attachments 2-1 to 2-4) relevant to each NPL or ROPOA to be transferred/sold.
Required certification and supporting documents
- Each application must be accompanied by a written certification signed by a senior officer with a rank of at least Senior Vice President or equivalent, authorized by the board of directors, or by the country head for foreign banks.
- The certification must state that:
- the assets to be sold/transferred are NPAs as defined under the SPV Act of 2002;
- the proposed sale/transfer of the NPAs is under a true sale;
- the notification requirement to the borrowers has been complied with; and
- the maximum 90-day period for renegotiation and restructuring has been complied with.
- The certification requirements for the “notification” and the “maximum 90-day period for renegotiation and restructuring” do not apply if the NPL has become a ROPOA after June 30, 2002.
- For dacion en pago by the borrower or a third party to a bank/NBQB, the COE application on the NPL being settled must be accompanied by a Deed of Dacion executed by the borrower, the third party, the registered owner of the property, and the bank/NBQB.
BSP review, approval, and COE issuance
- The appropriate SED may conduct an on-site review of the NPLs and ROPOAs proposed to be transferred/sold.
- After the on-site review, the application for transfer/sale must be submitted to the Deputy Governor, Supervision and Examination Sector (SES) for approval and for issuance of the corresponding Certificate of Eligibility (COE).
- For the issuance of COEs, BSP collects and processes the applications based on the transaction and eligibility data submitted by the applicant.
Processing fees and who pays
- For each COE issued, a processing fee is charged equivalent to 1/100 of 1% of the transfer price.
- The processing fee must not be below PHP 10,000 if the transfer is made to an SPV.
- The processing fee must not be below PHP 3,000 if the transfer is made to an individual, or in the case of a dacion en pago arrangement by an individual or corporate borrower.
- BSP charges/collects the processing fee upon issuance of the COE.
Transactions involving SPVs and individuals
- An SPV that intends to transfer/sell to a third party an NPA covered by a COE previously issued by BSP must file an application for that transfer/sale with the Securities and Exchange Commission (SEC).
- The SEC issues the corresponding COE based on the database of COEs maintained at BSP.
- An individual who intends to transfer/sell an NPA involving a single family residential unit he acquired and covered by a COE must file an application for another COE with BSP through the bank/NBQB from which the NPA was acquired.
- The individual’s application must indicate:
- the previous COE issued for the NPA he acquired, and
- the name, address, and Taxpayer’s Identification Number (TIN) of the transferee/buyer.
- BSP collects a PHP 3,000 processing fee upon issuance of the COE for the individual’s subsequent transfer/sale.