AUTHORITY OF THRIFT BANKS TO ISSUE FOREIGN LETTERS OF CREDIT (LCS) AND PAY/ACCEPT/NEGOTIATE IMPORT/EXPORT DRAFTS/BILLS OF EXCHANGE

SECTION 1. Subsec. 2101.7 on authority of thrift banks to
issue foreign letters of credit (LCs) and pay/accept/negotiate
import/export drafts/bills of exchange is hereby added and shall read,
as follows:

“Subsec. X2101.7 Authority of thrift banks to issue
foreign letters of credit (LCs)) and pay/accept/negotiate import/export
drafts/bills of exchange. With prior Monetary Board approval,
thrift banks may be authorized to issue foreign letters of credit (LCs)
and pay/accept/negotiate import/export drafts/bills of exchange, subject
to compliance with the following conditions (at the time of application
unless otherwise indicated):

a. Minimum capital requirement of P1.0 billion;

b. Ten percent (10%) risk-based capital adequacy ratio (CAR);

c. CAMELS composite rating not lower than “3”, with Management
component score not lower than “3” in the latest examination of the
bank;

d. Risk management system appropriate to its operations,
characterized by clear delineation of responsibility for risk
management, adequate risk measurement system, appropriately structured
risk limits, effective internal control system and complete, timely and
efficient risk reporting system;

e. Articles of incorporation which shall include among its
powers or purposes, the issuance of foreign LCs and
payment/acceptance/negotiation of import/export drafts/bills of exchange
(which may be submitted any time prior to engaging in said activities);

f. Correspondent banking relationship or arrangement with
reputable foreign banks (which should be in place prior to engaging in
said activities);

g. Appointment of the officer with actual experience of at
least two (2) years as in-charge or at least as assistant in-charge of
import and export financing operations in a universal/commercial bank
who will be in-charge of the said operations (prior to engaging in said
activities);

h. Appointment of bank personnel with actual experience and/or
training of at least six (6) months in import and export financing
operations in a universal/commercial bank who will handle the said
operations (prior to engaging in said activities);

i. No net weekly regular and liquidity reserve deficiencies
during the twelve (12) week period immediately preceding the date of
application;

j. No deficiency in asset and liquid asset cover for FCDU
liabilities for three (3) months immediately preceding the date of
application;

k. No deficiency in liquidity floor requirement for government
funds held during the twelve (12) week period immediately preceding the
date of application;

l. No float items outstanding for more than sixty (60) calendar
days in the “Due From/To Head Office/Branches/Offices” and “Due from
BSP” accounts exceeding 1% of the total resources as of end of month
preceding the date of application;

m. No unbooked valuation reserves:

n. Compliant with ceilings on loans, other credit
accommodations and guarantees to directors, officers, stockholders, and
their related interests (DOSRI) for the quarter immediately preceding
the date of application;

o. Compliant with the single borrower’s loan limit (SBL);

p. Compliant with the limit on real estate and improvements, including bank equipment;

q. No uncorrected findings of unsafe and unsound banking practices;

r. Generally compliant with banking laws, rules and
regulations, orders or instructions of the Monetary Board and/or BSP
Management; and

s. No past due obligations with the BSP or with any financial institution.

SECTION 2. Subsec. 2101.8 on application for authority to
issue foreign letters of credit and pay/accept/negotiate import/export
drafts/bills of exchange is hereby added, and shall read as follows:

“Subsec. 2101.8 Application for authority to issue foreign letters of credit (LCs) and pay/accept/negotiate import/export drafts/bills of exchange.
An application for authority to issue foreign LCs and
pay/accept/negotiate import/ export drafts/bills of exchange shall be
signed by the president of the bank or officer of equivalent rank and
shall be accompanied by a certified true copy of the resolution of the
bank’s board of directors authorizing the application.”

This Circular shall take effect fifteen (15) days following its
publication either in the Official Gazette or in a newspaper of general
circulation.

Adopted: 9 March 2009

FOR THE MONETARY BOARD:

(SGD.) AMANDO M. TETANGCO, JR.
Governor