unibank and commercial bank handouts

8/10/2019 Unibank and Commercial Bank Handouts

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UNIVERSAL AND COMMERCIAL BANKS

Prepared by: Kevin Buyco, Joefrey Uy, Enna Trivilegio LlB III-B

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What is Universal Bank?

Are large commercial banks licensed by the Bangko Sentral ng

Pilipinas(BSP) “to do both commercial and investment bank.

What are the powers of Universal Bank?

1. The power authorized for a commercial bank;

2.

The powers of an investment house as provided in existing

laws; and

3. The power to invest in non-allied enterprise.

What are the powers of Commercial Banks?

1. The general powers incident to corporations,

2.

All such powers as may be necessary to carry on the business of

commercial banking, such as,

a)

accepting drafts and issuing letters of credit;

b)

discounting and negotiating promissory notes, drafts , bills

of exchange, and other evidences of debt;

c) accepting and creating demand deposits;

d) receiving other types of deposits and deposit substitutes;

e) buying and selling foreign exchange and gold or silver

bullion; acquiring marketable bonds and other debt

securities; and

f) extending credit, subject to such rules as the Monetary

Board may promulgate.

g) determination of bonds and other debt securities eligible

for investment, the maturities and aggregate amount of

such investments,

ORGANIZATION

The Monetary Board may authorize the organization of a bank or

quasi-banking subject to the following conditions:

1.

The entity is a STOCK corporation

The Monetary Board may prescribe rules and regulation on

the types of stock a bank may issue, including the terms

thereof and rights appurtenant thereto to determine

compliancewith laws and regulations governing capital and

equity structure of banks.

2. FUNDS are obtained from the public, which shall mean 20 or

more persons

3.

That the minimum CAPITAL requirements prescribed by theMonetary Board for each category of banks are satisfied.

CAPABILITIES

The Monetary Board shall take into considerations their capabilities

in terms of their financial resources and technical expertise and

integrity.

CAPITAL REQUIREMENTS

UNIVERSAL BANKS --------- 4,950.0 In million pesos

COMMERCIAL BANKS ------ 2, 400.0 in million pesos

At least 25% of the total authorized capital stock shall be

subscribed by the subscribers of the proposed bank, and at

least 25% of such subscription shall be paid up, provided that in

no case shall be paid-up capital be less than the minimum

required capital stated above.

INCORPORATORS and SUBSCRIBERS

1. Must be persons of integrity and of good credit standing in the

business community.

2. Must have adequate financial strength to pay for their

proposed subscription in the bank.

3. Must not have been convicted of any crime involving moral

turpitude.

4. Those person charged with the supervision of, or the granting

of loans to banks.

5. May organized with not less than 5 nor more than 15

incorporators.

BANK BRANCHES

Universal and commercial banks may open branches or other offices

within or outside the Philippines upon PRIOR approval of Bangko

Sentral.

A bank may, subject to prior approval of the Monetary Board, use

any or all its branches as outlets fo the presentation and/or sale of

the financial products of its allied undertaking or of its investment

house units.

A bank and its branches and offices shall be treated as one unit.

BOARD OF DIRECTORS

There shall be atleast 5 and a maximum of 15 members of the board

of directors of bank, 2 of whom shall be independent directors.

In case of merged or consolidated banks, they shall not exceed 21

members.

Non-Filipino Citizens may become members of the board of

directors of a bank to the extent of the foreign participation in the

equity of the said bank. SEC 7, RA 7721

Independent director means a person other than an officer or

employee of the bank, its subsidiaries or affiliates or related

interests.

1. Not an officer or employee of the bank for the past 3years from

the date of his election.

2. Not a director or officer of related company.





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3. Not a relative within 4th

civil degree of consanguinity or affinity

of any director, officer or majority of stockholder.

4.

Not acting as nominee or representative of any director or

officer

5.

Free from any business or other relationships with theinstitution or any of its major stockholders which could

materially interfere with the exercise of his judgment.

CAPITAL REQUIREMENTS

UNIVERSAL BANK (UB) COMMERCIAL BANK (CB)

P 4, 950,000, 000 P 2, 400,000, 000

EQUITY INVESTMENT

UNIVERSAL BANK (UB) COMMERCIAL BANK

(CB)

Allied (Financial or Non-Financial)or Non-Allied Enterprises.

Allied (Financial orNon-Financial)

Enterprises

Total investment in Equities shall

not exceed 50% of the net worth

of the bank.

Shall not exceed 35%

of the net worth of the

bank.

Equity investment in any one of

the enterprise shall not exceed

25% of the net worth of the bank.

Same.

Subject to approval of Monetary

Board

Same.

Financial Allied Enterprises

UB CB

Can own up to 100% equity of:

Thrift Bank

Rural Bank

Financial Allied

Enterprises

Thrift Bank

Rural Bank

Financial Allied Enterprises (If

such equity is in another CB such

investment shall remain a

minority holding.)

May own up to 100% of voting of Another UB or CB.

Provided, the former is publicly listed.

Non-Financial Allied Enterprises

May own up to 100% equity.

Equity Investments in Quasi-Banks

To promote Competitive conditions in financial markets,

the Monetary Board may further limit to 40% equity

investments of UB and CB in Quasi-Banks

Equity Investment of UB in Non Allied Enterprises

1. Shall not exceed35% of the total equity in that

enterprise nor

2.

Shall it exceed35% of the voting stock in that

enterprise.

Net Worth – Total unimpaired capital paid in capital including paid

in surplus, retained earnings and undivided profits, net valuation

reserves and other adjustments as may be required by BSP.

Allied Enterprises:

a.

Leasing companies including leasing of stalls and spaces in a

commercial establishment; Provided, that bank investment

in/acquisition of shares of such leasing company shall be

limited/applicable only in cases of conversion of outstanding

loan obligations into equity.

b. Banks;

c. Investment houses;

d. Financing companies;

e. Credit card companies;

f. Financial institutions catering to small and medium scale

industries including venture capital corporations;

g. Companies engaged in stockbrokerage/securities dealership;

and

h. Companies engaged in foreign exchange dealership/brokerage

Quasi-banks (QB)- refer to entities engaged in the borrowing of funds through the

issuance, endorsement or assignment with recourse or

acceptance of deposit substitutes (as defined in Sec. 95 RA

7653, the New Central Bank Act) for purposes of relending or

purchasing of receivables and other obligations. (last par. of

Sec. 4)

RESTRICTION ON BANK EXPOSURE TO DOSRI

Gen. Rule: A director or officer of any bank shall neither:

1. Directly or indirectly, for himself or asthe representative or

agent of others,borrow from such bank; nor

2.

Become a guarantor, indorser or suretyfor loans from suchbank to others, orin any manner be an obligor or incurany

contractual liability to the bank.

Exception –

except with the written approval of the majority of all the

directors of the bank, excluding the director concerned. The

required approval shall be entered upon the records of the

bank and a copy of such entry shall be transmitted forthwith to

the appropriate supervising and examining department of the

BSP.





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Eligible to open an account (PNB)

SAVINGS (Individual/Joint accounts)

Citizens and Resident Aliens

o Persons at least 12 years old

o Below 12 years old ITF (In Trust For) by parent, legal

guardian, trustee, administrator

Non-Resident Aliens

o Peso Savings Accounts - single account only

o Dollar Savings Accounts - individual and joint

accounts

CHECKING (Peso account)

Citizens/ Resident Aliens/Non-Resident Aliens

o Person of legal age (at least 18 years old)

For walk-in applicants:o Maintenance of savings account for at least six (6)

months before he can open a checking account

TIME DEPOSIT Peso and FX Currency

Individual/Joint Account

Citizens and Resident Aliens

o Person of legal age (at least 18 years old)

o Below 18 years old ITF by a parent, legal guardian,

trustee administrator

Non-Resident Aliens

o FX Current Deposit only

Note:

Such written approval shall not be required for loans, other

credit accommodations and advances granted to officers under a

fringe benefit plan approved by the BSP.

Dealings of a bank with any of its directors, officers orstockholders and their related interests shall be upon terms not

less favorable to the bank than those offered to others.

After due notice to the board of directors of the bank, the office

of any bank director or officer who violates the provisions of this

Section may be declared vacant and the director or officer shall

be subject to the penal provisions of the NCBA.

The MB may regulate the amount of loans, credit

accommodations and guarantees that may be extended, directly

or indirectly, by a bank to its DOSRI, as well as investments of

such bank in enterprises owned or controlled by said directors,

officers, stockholders and their related interests.

The outstanding loans, credit accommodations and guarantees

which a bank may extend to each of its DOSRI, shall be limited toan amount equivalent to their respective unencumbered

deposits and book value of their paid-in capital contribution in

the bank.

The loans, credit accommodations and guarantees secured by

assets considered as non-risk by the MB shall be excluded from

such limit.

The loans, credit accommodations and advances to officers in

the form of fringe benefits granted in accordance with rules as

may be prescribed by the Monetary Board shall not be subject to

the individual limit.

MINORS DEPOSITORS

General Rule: Minors cannot engage in commerce

exceptions:

o to continue business of deceased parents through guardian

o

court authorizes guardian to place minor and property in

business

o

minor is an alien and his national law allows him to be a

merchant

Minor depositors are also allowed in the case of Banco De Oro or

BDO with their Junior Savers Program.

In the case of UniBanks in the Philippines, such as the Philippine

National Bank, those who are eligible to open an account are as

follows:

Insurance Deposits for Foreign Accounts

PDIC Insurance Deposits for Peso Accounts and Dollar

Accounts

Foreign Currency Deposit System.

The foreign currency deposit operations of banks under R.A. No.

6426, as amended, shall be governed by the following rules and

regulations.

Qualification requirements

KBs/UBs may be authorized to operate an FCDU or EFCDU: Provided,

That they meet the minimum capital requirements.

Under the Manual of Regulations or Banks of BSP (2008

edition)

Currency composition of the cover .

FCDUs of TBs shall maintain the foreign currency cover in the

same currency as that of the corresponding foreign currency

deposit liability. FCDUs/EFCDUs of KBs/UBs shall maintain

BDO - JUNIOR SAVERS

A savings account for your children 12 years and

younger. Build up their savings and at the same time

enjoy perks and privileges from selected store

affiliates.

The parents may also open the account for their kids

(7 years and below) via an "In Trust For" account

since these younger kids can't sign yet on their own.

With the JSC variant, opening a kiddie savings

account and the opportunity of saving is now more

accessible to both kids and parents.





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not less than 70% of the foreign currency cover in the same

currency as that of the liability and 30% or less, at the option

of the FCDU/EFCDU, may be denominated.

REPUBLIC ACT NO. 3591, as amended: AN ACT ESTABLISHING THE PHILIPPINE DEPOSIT INSURANCE

CORPORATION, DEFINING ITS POWERS AND DUTIES AND

FOR OTHER PURPOSES

SECTION 5. The deposit liabilities of any bank or banking

institution, which is engaged in the business of receiving

deposits as herein defined on the effective date of this Act,

or which thereafter may engage in the business of receiving

deposits, shall be insured with the Corporation. (As amended

by R.A. 6037, 04 August 1969; renumbered from Sec. 4 by

R.A. 9302, 12 August 2004)

PDIC Insurance Deposits

Whenever an insured bank shall have been closed by the Monetary

Board

Section 4 of R.A. 9576 effective June 1, 2009, the

maximum deposit insurance coverage is P500,000 per

depositor shall be paid by the Corporation. All deposit

accounts by a depositor in a closed bank maintained in the

same right and capacity shall be added together.

Types of Deposits Insured b PDIC

Deposits of all

commercial banks

savings and mortgage banks rural banks

private development banks

cooperative banks

savings and loan associations

branches and agencies in the Philippines of foreign banks

and

all other corporations authorized to perform banking

functions in the Philippines,

are insured with PDIC.

Exclusions from deposit insurance coverage as stipulated in

R.A. No. 9576:

Investment products such as bonds, securities and trust

accounts;

Deposit accounts which are unfunded, fictitious or

fraudulent;

Deposit products constituting or emanating from unsafe

and unsound banking practices;

Deposits that are determined to be proceeds of an unlawful

activity as defined under the Anti-Money Laundering Law.

Philippine banks with branches outside the country –

RA 9576 stipulates that subject to the approval of the

Board of Directors, any insured bank with branch outside

the Philippines may elect to include for insurance itsdeposit obligations payable at such branch.

PDIC Charter provides that the deposits in branches and subsidiaries

of foreign banks licensed by the Bangko Sentral ng Pilipinas (BSP) to

perform banking functions in the Philippines are insured by the

PDIC.

Foreign currency deposits are also insured by PDIC pursuant to RA

6426 (“An act instituting a foreign currency deposit system in the

Philippines, and for other purposes”) and Central Bank (CB) Circular

No. 1389.

Depositors may receive payment in the same currency inwhich the insured deposit is denominated.

Insurance coverage.

Foreign currency deposits shall be insured under the

provisions of R.A. No. 3591, as amended.

Depositors are entitled to receive payment in the same

currency in which the insured deposits are denominated.

unibank and commercial bank handouts

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