In accordance with BSP Circular No. 156, March 19, 1998, otherwise known as the combined capital accounts of each saving and mortgage bank, shall not be less than 325 million by December 31, 1999 as in total assets minus the following assets:

a. Cash on hand

b. Amounts due from the Central Bank

c. Evidence of indebtedness of the Republic of the Philippines and of the Central Bank, and any other evidence of indebtedness or obligations the servicing and repayment of which are fully guaranteed by the Republic of the Philippines. Loans to the extent covered by the hold-out on or assignment of, deposits maintained in the Philippines

d. Other non-risk items as the Monetary Board may, from time to time, authorized to be deducted from total assets.

In this connection, the Monetary Board shall prescribed the manner of determining the total assets of banking institutions . However, contingent accounts shall not be defined as being included among the total assets.

Moreover, wherever the capitalization accounts of a bank are deficient with respect to the requirements enumerated in the foregoing, the Monetary Board, after considering a report of the appropriate supervising department on the state of solvency of the institution concerned, shall limit or prohibit the distribution of net profit and shall moreover require that the part or all of net profits to be used to increase the capital accounts of the institution until the minimum requirements has been met.

The Monetary Board may, after considering the aforesaid report of the appropriates supervising department and if the amount of the deficiency justifies it, restrict or prohibit the making of new investment of any sort by the bank, with the exception of purchased of the evidence of indebtedness included under the subsection above until the minimum required capita ratio has been restored.

As provided under BSP Circular No. 16, where , in the process of a bank merger or consolidation, the merged or constituent bank may not be able to comply fully with the net worth to risk assets as prescribed in the regulation, the Monetary board may, at its discretion, temporarily relieve the bank from full compliance with this requirement under such condition as it may prescribed.

Circular No. 156, March 19, 1998, increase the minimum capitalization of new bank by 20% for universal bank, 40% for regular commercial bank and 60% for rural and thrift bank from mandated banks capitalization requirements for 1998.

The existing bank are given two years (up to year 2000) within which to comply with the minimum capital build-up. The provision granting banks listed or in the process of being listed in six months to comply with the capitalization requirements was cancelled through Circular No. 168 dated July 1998.

THRIFT BANK (TB) RURAL BANK (RB)

A. Governing Law RA 7906 (THRIFT BANK ACT OF 1995)

RA7353, (RURAL BANK ACT OF 1992)

B. Definition/ Function These banks are primarily concerned

with the mobilization of savings inloans, and provide short-term

workingcapital, medium and long-termfinancing and diversified financial

andallied services for its chosen

marketand constituencies especially forsmall and medium enterprises andindividual.

All types of thrift banks may perform any or all of the following:

a. Accept savings and time deposits

b. Open current or checking accounts

provided that it has net assets of at

least 20 million subject to suchguidelines as may be established

bythe MB, allowed to directly clear itsdemand deposit operation with theBSP and the PCHC subject to suchguidelines that may be issued on

thematter. Note: Thrift banks are required tocomply with the minimum capitalaccount of 150 million if H.Q. islocated within M.M., 40 million ifoutside M.M as a pre –requisite.

Banks that provide adequate credit facilities to farmers and merchants, or to cooperatives of such farmers and merchants, and to people of rural communities in general.

An RB may :

a. Accept savings and time deposits.

b. Open current or checkingaccounts, provided the rural bank

hasnet assets of at least 5 million

subjectto such guidelines as may beestablished by the MB.c. Act as a correspondent for otherfinancial institution.d. Act as a collection agent.e. Act as official depositors ofmunicipal, city or province fund in

themunicipality, city or province

where itis located, subject to such

guidelinesas may established by MB.

c. Act as correspondent for other financial institution.

d. Act as collecting agent for government entities including but not limited to, the Bureau of Internal Revenue, Social Security System, and the Bureau of Customs, upon prior approval by the MB.

e. Act as official depository of national agencies and of municipal, city or provincial funds in the municipality, city or province where the thrift bank is located subject to such guidelines as may be established by the MB.

f. Rediscount paper with the PNB, LBP and DBP and the other GOCC’s.

h. Purchase, hold an d convey real estate under the same conditions as those governing commercial banks under Section 25 of RA 337 (General Banking Act).

i. Engage in quasi-banking and money market operations.

j. Open domestic letters of credit.

k. Extend credit facilities to private.

f. Rediscount paper with the PNB, the LBP, the DBP or any other banking institution, including its branches and agencies.

g. Offer other banking services as provided in section 72 or RA 337, as amended.

i. With MB approval, act as trustee over estate or properties of farmers or merchants.

Existing Compliance Period

Requirement 12/24/98 12/31/99 12/31/2000

Expanded Commercial Banks 3,500 4,500 4,950 5,400

Commercial Bank 1,625 2,000 2,400 2,800

Thrift Banks

Within Metro Manila

Outside Metro Manila

200 250

40 40

325 400

52 64

Rural Banks

Within Metro Manila 1

Cities of Cebu and Davao 1

1st /2nd/3rd class cities & 1st class Municipalities

20 20

10 10

5 5

26 32

13 16

6.5 8

4th/5th/6th municipalities & 2nd/3rd/4th class municipalities

3 3

3.9 4.8

5th/6th class municipalities

1/for existing banks only. No new banks are presently allowed

2 2

2.6 3.2

a. Individual Account - Such account is held in the name of the individual depositor and as such is subject to his sole control. For many banks, this is the most popular form of savings account.

b. Joint Survivorship – Accounts held in the name of the two depositor with the right of survivorship. Either person may deposit or withdraw funds from this account on the individual basis. Upon the death of the joint co-owners, the balance in the account becomes the sole property of the surviving depositor.

c. Young Person’s Account – Many banks accept the savings accounts of persons who have not yet reached the age of majority. Normally, such accounts are opened only with the parent’s consent and are restricted to children who have “reached the age of reason,” that is, 12 or 13 years of age.

d. Trustee Account for Adult – are commonly called self-appointed trusteeship since no formal trust agreement is required. The trustee controls the fund during his lifetime and upon his death the funds are paid to the named beneficiary. The trusteeship may be terminated at any time by the trustee without recourse on the part of the beneficiary.

e. Trustee Account for Minor Child – is virtually identical to the trustee account for an adult except that the beneficiary is by definition a person who has not attained his majority age. Upon the death of the trustee, the funds in the account are directly to the beneficiary, if he has then reached majority, or to a legally appointed guardian if the beneficiary is still minor at that time. The account may be terminated any time upon the unilateral action of the trustee.

f. Estate Accounts – Other fiduciaries, such as executors, administrators, conservators, or guardians can establish accounts in their fiduciary capacity. The documentation provided through the savings account records are of particular advantage to the fiduciary in the execution of his duties. A copy of the trustee appointment or agreement shall be filled with the bank or at least reviewed by the bank.

American Express Bank Citibank GE Consumer Finance HSBC JPMorgan Chase & Co. United Oversease Bank