Application Procedure for Authority to Operate an FCDU
- Thrift banks must file an application with the Department of Thrift Banks and Non-Bank Financial Institutions (DTBNBFI).
- Application must be signed by the bank president or an equivalent officer.
- Accompanying documents include:
- Certified true copy of the board of directors' resolution authorizing the application.
- Certification signed by the president or equivalent officer affirming compliance with all prerequisites.
Prerequisites for Granting Authority to Operate an FCDU
- The bank must demonstrate profitability in the previous calendar year and immediately before application.
- Minimum risk-based capital adequacy ratio of 12% at the time of application.
- The officer in charge of FCDU operations should have at least one year of relevant banking experience.
- No net weekly reserve deficiencies in the eight weeks prior to application.
- Compliance with banking laws, Monetary Board rules, and BSP management directives based on the last two examinations, including:
- Election of at least two independent directors.
- Board members’ attendance at BSP-accredited special seminars.
- Adherence to ceilings on loans to directors, officers, stockholders, and related interests (DOSRI).
- Compliance with liquidity floor requirements for government deposits.
- Observance of single borrower’s loan limits.
- Regulation on investment in bank premises and fixed assets.
- Maintenance of adequate loss provisions aligned with asset portfolio quality and BSP valuation reserve requirements.
- Absence of float items over 60 days in specific accounts, with a cap of 1% of total resources.
- No overdue obligations to BSP or any government financial institution.
- Establishment of an appropriate risk management system featuring:
- Clear responsibility delineation.
- Adequate risk measurement systems.
- Structured risk limits.
- Effective internal controls.
- Timely and efficient risk reporting.
- A CAMELS Composite Rating of at least 3 in the last regular examination, with management rating not below 3.
- Being a member in good standing of the Philippine Deposit Insurance Corporation (PDIC).
Transitional Provisions for Existing Thrift Banks Operating an FCDU
- Existing authorized FCDUs have two years from the Circular's date to meet minimum capital requirements.
- A capital build-up program approved by the Monetary Board can substitute immediate compliance.
- Such a program must be submitted within three months from the Circular's date.
- Failure to comply with capitalization requirements or an approved capital program within two years mandates liquidation of the FCDU business within one year.
- Licenses must be surrendered to Bangko Sentral ng Pilipinas upon liquidation.
- Authorized thrift banks not yet operating an FCDU but failing to meet capital requirements will have their licenses automatically revoked.
Effectivity
- The provisions of this Circular take effect immediately upon issuance.
This detailed summary encapsulates the critical elements governing the operation of Foreign Currency Deposit Units by thrift banks, highlighting eligibility, application and approval procedures, operational prerequisites, compliance monitoring, transitional arrangements, and penalties for non-compliance.