BSP hikes required capitalization of thrift banks
THE Monetary Board (MB), the policy-making body of the Bangko Sentral ng Pilipinas (BSP), approved the increase in the minimum capital requirement for thrift banks (TBs) following the recently approved increase in the minimum capital requirement for rural banks (RBs) to further strengthen the Philippine banking system.
TBs are required to meet the minimum capital requirements, depending on the location of their head office, as follows: Metro Manila, from P= 325 million to P= 1 billion; Cities of Cebu and Davao, from P= 52 million to P= 500 million; and all other areas, from P= 52 million to P= 250 million.
Similar to the hike in the minimum capital requirement for RBs, the new minimum capital requirement for TBs shall apply only (1) upon establishment of a new TB, (2) upon conversion of an existing bank to a TB, and (3) upon relocation of the head office of a TB in areas of higher classification.
In case a TB applies for the grant of special banking authorities such as authority to engage in quasi-banking, perform trust and other fiduciary business, establish foreign currency deposit unit/expanded foreign currency deposit unit (FCDU/EFCDU), issue foreign letters of credit (LCs), accept demand deposits and NOW accounts, and act as third party securities custodian/registry, the higher of (a) the new minimum capital requirement at the time of the application for the grant of special banking authority or (b) the amount specified for the grant of such special banking authority shall be the required minimum capital which shall be complied with on a continuing basis.
The new minimum capital requirement for TBs aims to further boost the capital base of the thrift banking system as well as enable new entrants to adequately take on the risks inherent in the increasingly sophisticated banking business and effectively compete with existing banks.