Dear All,
On May 10, 2018, the Bangko Sentral ng Pilipinas (BSP) released Circular 1002 which discuss the “Amendments to the Guidelines on Proposed Investments from Third Party Investors and the Requirements on Transactions Requiring prior Monetary Board approval involving Additional Subscription of Shares of Stock”.
| Under Manual of Regulations for Banks (MORB) as of Sept 2017 | Amendments under Circular 1002 |
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| X111.4 Guidelines on proposed investments from third party investors (TPIs) for purposes of complying with the minimum capital requirements. The following are the guidelines for capital deficient banks with proposed investments from TPIs for purposes of addressing the capital deficiency: xxx | X111.4 Guidelines on proposed investments from third party investors (TPIs) for purposes of complying with the minimum capital requirements. The Bangko Sentral recognizes the indispensable role of banks in providing financial services to the public and their significant role in attaining sustainable economic development, while adhering to its mandate to safeguard and promote the stability of the financial system by ensuring that banks operate in a safe and sound manner. Hence, the Banko Sentral sets forth the following guidelines on proposed investments from TPIs for purposes of addressing the capital deficiency and restoring the viability of banks: xxx |
| (2) A certified copy of the Escrow Agreement between the bank, TPI and escrow agent, and a certificate of escrow deposit issued by the escrow agent equivalent to at least the amount of the proposed investment. | (2) Certified copies of documents showing that the amount of proposed investment of TPI is deposited/placed in an independent bank (third party bank), such as certificate of escrow deposit or certificate of deposits with hold-out agreement showing the availability/hold-out of funds for the said purpose, together with the corresponding waiver of secrecy of deposits/investments. |
| d. In case a bank has a pending application with PDIC under SPRB Plus/SPCB Plus, the bank and the TPI shall submit a joint certification signed by the President or officer of equivalent rank of the bank and the TPI concerned that there is a pending application with PDIC, together with the acknowledgment receipt by PDIC of said application. The investment of the TPI would not be considered for purposes of addressing the capital deficiency if the aforementioned documentary requirements are not complied with. In this regard, it is understood that mere submission to Bangko Sentral of a TPI’s Letter of Intent (LOI) to invest in the bank shall not be considered sufficient action to address the bank’s capital deficiency. If the above requirements are not submitted within the given period, the appropriate department of the Banko Sentral may proceed in recommending appropriate supervisory action/s on the bank, if applicable. | d. In case a bank has a pending application with PDIC under the Consolidation Program for Rural Banks (CPRB) or other similar programs, the bank and the TPI shall submit a joint certification signed by the President or officer of equivalent rank of the bank and the TPI concerned that there is a pending application with PDIC, together with the acknowledgment receipt by PDIC of said application. In this regard, it is understood that mere submission to Banko Sentral of a TPI’s LOI to invest in the bank shall not be considered sufficient action to address the bank’s capital deficiency. Moreover, the investment of the TPI would not be considered for purposes of addressing the capital deficiency if the aforementioned requirements are not complied with, except in cases when the TPI exhibits strong financial capacity and firm commitment to address the capital deficiency of a bank based on assessment, taking into consideration the submitted documents and other available pertinent information. If the above requirements are not submitted within the given period, the appropriate department of the Banko Sentral may proceed in recommending appropriate supervisory action/s on the bank, if applicable. |
| X126.2 Transactions involving voting shares of stock. b. transactions requiring prior Monetary Board Approval (3) In the case of additional subscription, the bank shall not recognize the fund infused by the subscriber in its book as asset and liability or equity unless prior Monetary Board approval is obtained. Pending approval by Monetary Board, the fund infused by the subscriber shall be placed in an escrow in another bank. | X126.2 Transactions involving voting shares of stock. b. transactions requiring prior Monetary Board Approval (3) In the case of additional subscription, the bank shall not recognize the fund infused by the subscriber in its book as asset and liability or equity unless prior Monetary Board approval is obtained. Pending approval by Monetary Board, the fund infused by the subscriber shall be placed in an independent bank, such as, in the form of escrow deposit or deposit with hold-out agreement showing availability/hold-out of funds for the said purpose. |
Please see attached SEC Memorandum Circular No. 7 Series of 2018 for your reading.