FOREIGN EXCHANGE RULES AND REGULATIONS

1.         The existing limit on a bank’s short or oversold
foreign exchange position of 20% of its unimpaired capital remains
temporarily lifted pending further review.

The limit set on a bank’s long (overbought) position, however,
remains at 5% of its unimpaired capital or US$10 million, whichever is
lower.

2.         While it is recognized that the principal reason for
being of forex subsidiaries/affiliates of banks is to trade in foreign
exchange, they are nevertheless discouraged from taking net foreign
exchange positions and whatever net foreign exchange positions are kept
or maintained by them, are to be consolidated into the total net foreign
exchange position of the respective banks with whom they are affiliated
or are subsidiaries of;

3.         To be considered in compliance with applicable foreign
exchange rules and regulations of the Bangko Sentral ng Pilipinas (BSP)
forex corporations/subsidiaries/affiliates shall not:

a.    sell foreign exchange to non-residents;

b.    sell foreign exchange to resident financial institutions
other than Authorized Agent Banks (AABs) of the BSP and bank-affiliated
forex corporations.

4.         The monthly certification by the President/Chief
Executive Officer (CEO) or Country Manager (in case of branches of
foreign banks) and Treasurer of the banks as well as the daily
reportorial requirement on consolidated foreign exchange position of
banks as required under Circular-Letter dated 5 September 1997 (as
clarified by Circular-Letter dated 17 September 1997), as amended, shall
continue to be in effect. The Certification, as amended, by the
President/CEO or Country Manager and Treasurer in the form and language
substantially similar to the sample certification shown in ANNEX A
HERETO (IN THE CASE OF BRANCHES OF FOREIGN BANKS) AND AS SHOWN IN ANNEX B
HEREIN (IN THE CASE OF BANKS INCORPORATED AND REGISTERED UNDER
PHILIPPINE LAWS) shall be deemed to satisfy and to be in compliance with
this requirement.

Adopted: 24 August 2000

(SGD.) RAFAEL B. BUENAVENTURA
Governor