Specific Conditions for "Blue Chip" Stocks as Collateral
- The issuer of the "blue chip" stocks must be a listed corporation.
- Such corporation must have a net worth of at least PHP 1 billion.
- It must have a track record of at least five consecutive years of earnings based on the immediately preceding five years.
- The loan value secured by the "blue chip" stocks should be limited to 50% of their market value.
Applicability to Different Financial Institutions
- The provisions amend relevant subsections across Books I to IV of the Manual of Regulations for Banks and Other Financial Intermediaries.
- Book I covers banks; Book II covers non-bank financial intermediaries; Book III includes other quasi-banking institutions; Book IV involves non-banks performing quasi-banking functions.
- Each book incorporates the same definition and parameters for secured loans to DOSRI with identical conditions regarding collaterals.
Additional Provisions in Book IV
- For loans secured by receivables arising from financial leases, the guaranty deposit plus 60% of the remaining value of leased equipment may be considered as security.
Immediate Effectivity and Regulatory Authority
- The circular was adopted on January 26, 1999, by the Governor of the Bangko Sentral ng Pilipinas.
- The amendments take effect immediately upon issuance.
Legal and Regulatory Intent
- The regulations ensure strict prudential standards on secured loans extended to DOSRI to safeguard financial stability.
- They impose stringent collateral requirements to mitigate credit risk.
- They specify valuation rules especially for stocks considered as collateral, thereby promoting transparent and conservative lending practices within banking and quasi-banking entities.