Research On UB, TB and RB
Research On UB, TB and RB
Research On UB, TB and RB
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SECTION 24. Equity Investments of a Universal Bank – A universal bank may, subject to the
conditions stated in the succeeding paragraph, invest in the equities of allied and non-allied enterprises
as may be determined by the Monetary Board. Allied enterprises may either be financial or non-financial.
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The acquisition of such equity or equities is subject to the prior approval of the Monetary Board
which shall promulgate appropriate guidelines to govern such investments.
A publicly-listed universal or commercial bank may own up to one hundred percent (100%) of the
voting stock of only one other universal or commercial bank. (21-B; 21-Ca)
SECTION 30. Equity Investments of a Commercial Bank. – A commercial bank may, subject to
the conditions stated in the succeeding paragraphs, invest only in the equities of allied enterprises as may
be determined by the Monetary Board. Allied enterprises may either be financial or non-financial.
The acquisition of such equity or equities is subject to the prior approval of the Monetary Board
which shall promulgate appropriate guidelines to govern such investments.
With prior Bangko Sentral approval, banks may invest in equities of the following financial allied
undertakings, subject to the limits prescribed under Sec. X378:
The Monetary Board may declare such other activities as financial allied undertakings of banks.
The determination of whether the corporation is engaged in a financial allied undertaking shall be based
on its primary purpose as stated in its articles of incorporation and the volume of its principal business.
The equity investment of a bank in a single financial allied undertaking shall be within the
following ratios in relation to the total subscribed capital stock and to the total voting stock of the allied
undertaking:
To promote competitive conditions, the Monetary Board may further limit the equity investments
in QBs of UBs and KBs to forty percent (40%).
A publicly-listed UB or KB may own up to 100% of the voting stock of only one (1) other UB
or KB. Otherwise, it shall be limited to a minority holding. The guidelines in determining compliance with
ceilings on equity investments in financial allied undertakings are shown in Appendix 79. (As amended by
Circular Nos. 858 dated 21 November 2014, 710 dated 19 January 2011, 671 dated 27 November 2009, 581
dated 14 September 2007 and 530 dated 19 May 2006)
Sec. X383 Other Limitations and Restrictions. The following limitations and restrictions shall
also apply regarding equity investments of banks.
a. In any single enterprise. The equity investments of UBs and KBs in any single enterprise shall
not exceed at any time twenty-five percent (25%) of the net worth of the investing banks as
defined in Sec. X111 and Subsec. X105.4.b.
b. Aggregate limits. The total amount of investments in equities in all enterprises shall not exceed
the following ratios in relation to the net worth of the investing bank:
UB KB TB RB Coop Bank
LIMIT 50% 35% 25% 25% 25%
CLASSIFICATIONS AND POWERS OF BANKS (Section X101 of MORB)
a. Classifications of banks. Banks are classified into the following subject to the power of the
Monetary Board to create other classes or kinds of banks:
(1) Universal banks (UBs);
(2) Commercial banks (KBs);
(3) Thrift banks (TBs), as defined in Republic Act (R.A.) No. 7906, which shall be composed of:
(a) savings and mortgage banks,
(b) stock savings and loan associations, and
(c) private development banks;
(4) Rural banks (RBs), as defined in R. A. No. 7353;
(5) Cooperative banks (Coop Banks); and
(6) Islamic banks (IBs), as defined in R.A. No. 6848.
A UB shall have the authority to exercise, in In addition to the general powers incident to
addition to the powers and services authorized for corporations and those provided in other laws, a
a KB as enumerated in Item “b(2)” and those KB shall have the authority to exercise all such
provided by other laws, the following: powers as may be necessary to carry on the
(a) the powers of an investment house (IH) as business of commercial banking, xxx xxx.
provided under existing laws; It may also exercise or perform any or all of
(b) the power to invest in non-allied the following:
enterprises; (a) invest in the equities of allied enterprises as
(c) the power to own up to one hundred provided in Sections 31 and 32 of R.A. No.
percent (100%) of the equity in a TB, an 8791;
RB, a financial allied enterprise, or a (b) purchase, hold and convey real estate as
non-financial allied enterprise; and specified under Sections 51 and 52 of R.A.
(d)in case of publicly-listed UBs, the power No. 8791;
to own up to one hundred percent (c) receive in custody funds, documents and
(100%) of the voting stock of only one valuable objects;
(1) other UB or KB. (d) act as financial agent and buy and sell, by
order of and for the account of their
Xxx xxx. customers, shares, evidences of
indebtedness and all types of securities;
(e) make collections and payments for the
account of others and perform such other
services for their customers as are not
incompatible with banking business;
(f) upon prior approval of the Monetary Board,
act as managing agent, adviser, consultant
or administrator of investment
management/advisory/consultancy
accounts;
(g) rent out safety deposit boxes; and
(h) engage in quasi-banking functions.
REPUBLIC ACT NO. 7906 REPUBLIC ACT NO. 7353, as amended by
Thrift Banks Act of 1995 REPUBLIC ACT NO. 10574
Rural Bank Act of 1992
Purposes of Thrift Banks: Purposes of Rural Banks:
(1) Accumulating the savings of depositors (1) providing adequate credit facilities to
and investing them, together with capital farmers and merchants, or to cooperatives
loans xxx xxx; of such farmers and merchants; and,
(2) Providing short-term working capital, (2) in general, the people of the rural
medium- and long-term financing, to communities, and to supervise the
businesses engaged in agriculture, services, operation of such banks.2
industry and housing; and
(a) Accept savings and time deposits; (a) Accept saving and time deposit;
(b) Open current or checking accounts: Xxx (b) Open current or checking accounts,
xxx; provided the rural bank has net assets of at
(c) Act as correspondent for other financial least Five million (P5,000,000) subject to
institutions; such guidelines as may be established by the
(d) Act as collection agent for government Monetary Board:
entities; (c) Act as correspondent for other financial
(e) Act as official depository of national institutions;
agencies and of municipal, city or (d) Act as a collection agent;
provincial funds in the municipality, city (e) Act as official depositary of municipal, city
or province where the thrift bank is or provincial funds in the municipality, city
located; or province where it is located, subject to
(f) Rediscount paper with the PNB, LBP, DBP, such guidelines as may be established by the
and other GOCC.; and Monetary Board;
(g) Issue mortgage and chattel mortgage (f) Rediscount paper with the PNB, LBP, DBP,
certificates, buy and sell them for its own or any other banking institution, including
account or for the account of others, or its branches and agencies. Said institution
accept and receive them in payment or as shall specify the nature of paper deemed
amortization of its loan. acceptable for rediscount, as well as the
(h) Purchase, hold and convey real estate under rediscount rate to be charged by any of
the same conditions as those governing these institutions;
commercial banks as specified under (g) Offer other banking service as provided in
Section 25 of Republic Act No. 337; Section 72 of Republic Act No. 337, as
(i) Engage in quasi-banking and money market amended, and
operations; (h) Extend financial assistance to public and
(j) Open domestic letters of credit; private employees in accordance with the
(k) Extend credit facilities to private and provisions of Section 5 of Republic Act No.
1
Section 3 of Republic Act No. 7906, Thrift Banks Act of 1995.
2
Section 3 of Republic Act No. 7353, Rural Banks Act of 1992.
government employees; 3779, as amended.
(l) Extend credit against the security of jewelry,
precious stones and articles of similar NOTE: Nothing in this section shall be construed as
nature, subject to such rules and precluding a rural bank from performing, with
regulations as the Monetary Board may prior approval of the Monetary Board, all the
prescribe; and services authorized and mortgage banks, of for
(m) Offer other banking services as provided in commercial banks, under an expanded banking
Section 72 of Republic Act No. 337 and authority as provided in Section 21-B of the same
Republic Act No. 6426, as amended. Act.
NOTE: Nothing in this Section shall be In addition to the powers provided above,
construed as precluding a thrift bank from Section X101 par. 4 of the MORB authorizes RB to
performing, with prior approval of the perform any or all of the following services:
Monetary Board, commercial banking services, (a) extend loans and advances primarily for the
or from operating under an expanded banking purpose of meeting the normal credit needs
authority, nor from exercising, whenever of farmers, fishermen or farm families as
applicable and not inconsistent with the well as cooperatives, merchants, private and
provisions of this Act and Bangko Sentral public employees;
regulations, and such other powers incident to a (b) accept savings and time deposits;
corporation. (c) act as correspondent of other FIs;
(d) rediscount paper with the LBP, DBP or any
In addition to the powers provided above, Section or any other bank, including its branches
X101 par. 3 of the MORB authorizes TB to perform and agencies. Said banks shall specify the
any or all of the following services: nature of paper deemed acceptable for
(a) grant loans, whether secured or rediscount, as well as the rediscount rate to
unsecured; be charged by any of these banks;
(b) invest in readily marketable bonds and (e) act as collection agent;
other debt securities, commercial papers (f) offer other banking services as
and accounts receivable, drafts, bills of provided in Section 53 of R.A. No. 8791; and
exchange, acceptances or notes arising out (g) buy and sell foreign exchange.
of commercial transactions; With prior approval of the Monetary
(c) issue domestic letters of credit; Board, an RB may perform any or all of the
(d) extend credit facilities to private and following services:
government employees; (h) accept current or checking
(e) extend credit against the security of accounts: Provided, That such RB has net
jewelry, precious stones and articles of assets of at least P5.0 million;
similar nature, subject to such rules and (i) accept negotiable order of
regulations as the Monetary Board may withdrawal (NOW) accounts;
prescribe; (j) act as trustee over estates or
(f) accept savings and time deposits; properties of farmers and merchants;
(g) rediscount paper with the Land Bank of (k) act as official depository of
the Philippines (LBP), Development Bank municipal, city or provincial funds in the
of the Philippines (DBP), and other municipality, city or province where it is
government-owned or -controlled located;
corporations; (l) sell domestic drafts; and
(h) accept foreign currency deposits as (a) (m) invest in allied undertakings. other
provided under R.A. No. 6426, as bank, including its branches
amended; and agencies. Said banks shall specify the
(i) act as correspondent for other financial nature of paper deemed acceptable for
institutions (FIs); rediscount, as well as the rediscount rate to
(j) purchase, hold and convey real estate as be charged by any of these banks;
specified under Sections 51 and 52 of R.A. (e) act as collection agent;
No. 8791; (f) offer other banking services as provided in
(k) offer other banking services as provided in Section 53 of R.A. No. 8791; and
Section 53 of R.A. No. 8791; and (g) buy and sell foreign exchange.
(l) buy and sell foreign exchange. With prior approval of the Monetary Board, an
RB may perform any or all of the following
With prior approval of the Monetary Board, services:
and subject to such guidelines as may be (h) accept current or checking accounts:
established by it, TBs may also perform the Provided, That such RB has net assets of at
following services: least P5.0 million;
(i) accept negotiable order of withdrawal
(m) open current or checking accounts; (NOW) accounts;
(n) engage in trust, quasi-banking functions (j) act as trustee over estates or properties of
and money market operations; farmers and merchants;
(o) act as collection agent for government (k) act as official depository of municipal, city or
entities, including but not limited to, the provincial funds in the municipality, city or
Bureau of Internal Revenue (BIR), Social province where it is located;
Security System (SSS) and the Bureau of (l) sell domestic drafts; and
Customs (BOC); (m) invest in allied undertakings.
(p) act as official depository of national
agencies and of municipal, city or
provincial funds in the municipality, city or
province where the TB is located;
(q) issue mortgage and chattel mortgage
certificates, buy and sell them for its own
account or for the account of others, or
accept and receive them in payment or as
amortization of its loan;
(r) invest in the equity of allied undertakings;
(s) issue foreign letters of credit; and
(t) pay/accept/negotiate
import/export draft/bills of
exchange.
Sec. 11. Limitations on Lending Authority. — Sec. 6. Loans or advances extended by rural
Except as the Monetary Board may otherwise banks organized and operated under this Act shall
prescribe, the direct indebtedness to thrift banks of be primarily for the purpose of meeting the normal
any person, company, corporation, or firm, credit needs of farmers, fishermen or farm families
including the indebtedness of members of a owning or cultivating land dedicated to agricultural
partnership and association, for money borrowed, production as well as the normal credit needs of
excluding: cooperatives and merchants. In granting of loans,
(a) loans secured by obligations of the Bangko the rural bank shall give preference to the
Sentral; application of farmers and merchant whose cash
(b) loans fully guaranteed by the government as requirements are small.
to the payment of principal and interest;
(c) loans to the extent covered by the hold-out
on, or assignment of, deposits maintained in the
lending bank and held in the Philippines; and
(d) other loans or credits as the Monetary
Board may, from time to time, specify as non-
risk assets, which shall in no time exceed fifteen
percent (15%) of unimpaired capital and
surplus of the bank.
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