[ BSP CIRCULAR LETTER, July 13, 1998 ]
BASIC GUIDELINES IN ESTABLISHING BANKS
The Monetary Board, in its Resolution No. 832 dated June 10, 1998, approved the attached "Basic Guidelines in Establishing Banks".
This Circular-Letter shall take effect immediately.
Adopted: 13 July 1998
(SGD.) ALBERTO V. REYES
Officer-in-Charge
Basic Guidelines in Establishing Banks1/
A
Guiding Principle
The new banking organization must have suitable shareholders, adequate financial strength, a legal structure in line with its operational structure, and a management with sufficient expertise and integrity to operate the bank in a sound and prudent manner. Where the proposed owner or parent organization is a foreign bank, the prior consent of its home country supervisor should be obtained.
B
The Application
1. The Application for Authority to Establish a Bank (Form No. 1) shall be accomplished in triplicate. The original copy and duplicate copy shall be submitted to the Supervisory Reports and Studies Office, Bangko Sentral ng Pilipinas (BSP). The third copy shall be retained by the organizers.
2. The required papers/documents and other information in support of the application are, as follows:
a. "Agreement to Organize a Bank" (Form No. 2).
b. Accomplished bio-data sheet of each of the incorporators, proposed directors and officers, and subscribers (Form No. 3).
c. Evidence of Filipino citizenship of each of the incorporators, proposed directors and officers, and subscribers if he/she claims to be a Filipino citizen.
1. In case of a natural-born Filipino citizen, original or certified true copy of birth certificate from issuing office. In case the birth certificate cannot be produced by reason of destruction or otherwise, an affidavit to that effect by the civil registrar concerned should be submitted accompanied by an affidavit by the incorporator, director, officer or subscriber himself stating, among other things, the date and place of his birth and the names of his parents and their citizenship at the time of the affiant's birth; and joint affidavit of two (2) disinterested/unrelated persons stating, among other things, the date and place of the subject's birth and the names of his parents and their citizenship at the time of the subject's birth; or
2. In case of a naturalized citizen of the Philippines, the naturalization certificate, certificate of registration thereof with the civil registrar and other pertinent papers; or
3. In the absence of the abovementioned documents, a photo-copy of the passport (with original to be presented for verification).
d. Statement of Assets and Liabilities as of a date not earlier than ninety (90) days prior to the filing of application of each of the subscribers, sworn to by the subscriber himself and duly notarized, or certified by a Certified Public Accountant, with supporting schedules showing the following information:
1. In the case of cash in banks: (a) name of depository bank, (b) nature of deposit, and (c) amount of deposit with each bank as of balance sheet date;
2. In the case of securities: (a) name and address of issuing corporation/entity, (b) number of shares owned as of balance sheet date; (c) par value, (d) date and cost of acquisition, and (e) information as to whether the securities are actively traded in the stock market and, if so, their current market price;
3. In the case of land: (a) description (agricultural, etc.); (b) area; (c) location; (d) date and cost of acquisition; (e) transfer certificate of title or tax declaration number; (f) amount of encumbrance or lien, if any; (g) assessed value; and (h) current market value (state basis of valuation);
4. In the case of real estate improvements: (a) description of improvement (residential house, etc.), (b) location, (c) date and cost of acquisition/construction, (d) assessed value, and (e) current market value (state basis of valuation);
5. In the case of accounts receivable, state the name and address of each debtor and the amount due from each; and
6. In the case of accounts payable or other liabilities, state the name and address of each creditor and the amount owed to each.
f. Certified photocopies of Income Tax Returns for the last three (3) calendar years of each of the incorporators, proposed directors and officers, and subscribers.
g. Clearances from the National Bureau of Investigation (NBI) and Bureau of Internal Revenue (BIR) of each of the incorporators, proposed directors and officers, and subscribers.
h. For corporate subscribers:
1. Copy of the Board Resolution authorizing the corporation to invest in such bank; and designating the person who will represent the corporation in connection therewith;
2. Copy of the latest Articles of Incorporation and By-Laws;
3. List of directors and principal officers;
4. List of major stockholders, indicating the citizenship and the number, amount and percentage of the voting and non-voting shares held by them;
5. A copy of the corporation's audited financial statements for the last two (2) years prior to the filing of application;
6. A copy of the corporation's annual report to the stockholders for the year immediately preceding the date of filing of application;
7. Certified photocopies of Income Tax Returns for the last two (2) calendar years; and
8. BIR clearance.
i. For foreign bank subscribers:
1. A copy of the Board Resolution authorizing the bank to invest in a bank in the Philippines, and designating the person who will represent the bank in connection therewith;
2. Historical background of the bank, as follows:
4. List of the bank's directors and their citizenships;
5. List of principal officers of the bank's head office;
6. List of major stockholders, indicating the citizenship and the number, amount and percentage of the voting and non-voting shares held by them;
7. A copy of the bank's audited financial statements for the last two (2) years prior to the filing of application;
8. A copy of the bank's annual report to the stockholders for the year immediately preceding the date of filing of application; and
9. A certification from the bank's home country supervisory authority that the bank's home country supervisory authority has no objection to the bank's investment in a bank in the Philippines, and that adequate information on the bank and its subsidiaries will be provided to the Bangko Sentral ng Pilipinas to the extent allowed under existing laws.
j. Detailed Plan of Operation and Economic Justification for Establishing the Bank. (The plan of operation should describe and analyze the market area from which the bank expects to draw the majority of its business and establish a strategy for the bank's ongoing operations. It should also describe how the bank will be organized and controlled internally. The economic justification for establishing the bank should provide information on the economic profile of the region, e.g., population, agricultural/industrial/service projects to be financed).
k. Projected monthly financial statements for the first twelve (12) months of operations, together with assumptions. (The financial projections should be consistent and realistic in relation to the bank's proposed strategic plan, and should show sufficient capital to support the bank's strategy, specially in the light of start-up costs and possible operational losses in the early stages. See suggested forms.)
l. Proposal by each of the subscribers on how they will raise the amount to pay for their proposed paid-up capitalization in the bank.
3. The application shall be considered filed on a first-come, first-served basis, provided all the required documents are complete and properly accomplished.
4. Pursuant to Section 26 of R.A. No. 7653, approval of application shall be subject, among others, to the condition that any director, officer or stockholder who, together with his related interest, contracts a loan or any term of financial accommodation from: (1) his bank; or (2) from a bank (a) which is a subsidiary of a bank holding company of which both his bank and the lending bank are subsidiaries or (b) in which a controlling proportion of the shares is owned by the same interest that owns a controlling proportion of the shares of his bank, in excess of five percent (5%) of the capital and surplus of the bank, or in the maximum amount permitted by law, whichever is lower, shall be required by the lending bank to waive the secrecy of his deposits of whatever nature in all banks in the Philippines. Any information obtained from an examination of his deposits shall be held strictly confidential and may be used by the examiners only in connection with their supervisory and examination responsibility or by the Bangko Sentral in an appropriate legal action it has initiated involving the deposit account.
5. Prescribed application form, together with other forms, is available at the Studies and Chartering Group Supervisory Reports and Studies Office.
C
Capital Requirement/Stockholdings
1. Banks to be established shall comply with the required minimum capital enumerated below or as may be prescribed by the Monetary Board:
2. 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 the paid-up capital be less than the minimum required capital stated in Item 1 above.
3. Stockholdings of any person or persons related to each other within the 3rd degree of consanguinity or affinity, or one (1) or more corporations wholly-owned or majority of the voting stock of which is owned by such person or persons shall not exceed 20% of the voting stock of the bank; while stockholdings of any other corporation, or two (2) or more corporations wholly-owned or majority of the voting stock of which is owned by the same group of persons shall not exceed 30% of the voting stock of the bank. (Temporarily waived for a period of 10 years from the effectivity of R.A. No. 7906, i.e., 17 March 1995 for thrift banks; and from the date of approval of R.A. No. 7353, i.e., 2 April 1992 for rural banks).
4. At least 70% of voting stock of any commercial bank shall be owned by Filipino citizens, provided, that such percentage may be lowered to 60% with approval of the President of the Philippines. For any thrift bank, at least 40% of its voting stock shall be owned by Filipino citizens. Subject to Section 4 of Republic Act No. 7353, all of the capital stock of any rural bank shall be fully owned and held, directly or indirectly, by Filipino citizens or corporations, associations or cooperatives qualified under Philippine laws to own and hold such capital stock.
D
Incorporators/Subscribers, Directors and Officers
1. The incorporators/subscribers and proposed directors and officers must be persons of integrity and of good credit standing in the business community. The subscribers must have adequate financial strength to pay for their proposed subscriptions in the bank.
2. The incorporators/subscribers and proposed directors and officers must not have been convicted of any crime involving moral turpitude, and unless otherwise allowed under the provisions of existing laws are not officers or employees of a government agency, instrumentality, department or office charged with the supervision of, or the granting of loans to banks.
3. A bank may be organized with not less than five (5) nor more than fifteen (15) incorporators. In case there are more than fifteen (15) persons initially interested in organizing and investing in the proposed bank, the excess may be listed among the original subscribers in the Articles of Incorporation.
4. The number of members of the board of directors of the bank shall not be less than five (5) nor more than fifteen (15) and shall always be in odd numbers.
5. At least two-thirds (2/3) of the members of the board of directors of any commercial bank shall be Filipino citizens; at least a majority of the members of the board of directors of any thrift bank shall be Filipino citizens; and all members of the board of directors of a rural bank shall be Filipino citizens.
6. No appointive or elective public official, whether full-time or part-time shall at the same time serve as officer of a commercial bank or a thrift bank except in cases where such service is incident to financial assistance provided by the government or a government-owned or -controlled corporation to the bank.
7. The proposed directors and officers of the bank shall be subject to qualifications and other requirements of existing laws and rules and regulations of the BSP, as follows:
a. Qualifications of a director. - A director shall have the following minimum qualifications:
E
Requirements for the Issuance of Authority to Operate
1. Within sixty (60) days from receipt of advice of approval by the Monetary Board/Governor of their application for authority to establish the bank, the organizers shall:
a. Submit the Articles of Incorporation, Treasurer's Sworn Statement and By-Laws in seven (7) copies; and
b. Deposit with any commercial bank (for commercial banks and thrift banks) and any bank (for rural banks) the initial paid-up capital of the proposed bank.
2. Within thirty (30) days after the Articles of Incorporation and By-Laws had been passed upon by the Office of the General Counsel and the corresponding certificates of Authority to Register had been issued, the organizers shall effect the filing and registration of said documents with the Securities and Exchange Commission.
3. Within six (6) months (for commercial banks and thrift banks) and eight (8) months (for rural banks) from receipt of advice of approval by the Monetary Board/Governor of their application for authority to establish the bank, the organizers shall:
a. Complete the construction and furnishing of the bank building, which shall be equipped with vault and appropriate security devices such as lighting system, time delay device, tamper-resistant locks, alarm system, etc., and provided with furniture, fixtures, equipment and bank forms;
b. Effect and complete the recruitment and hiring of officers and employees of the bank;
c. Submit the following documentary requirements at least thirty (30) days before the scheduled start of operations:
F
Inauguration/Opening of the Bank for Business After the Certificate of Authority to Operate has been Issued.
G
Requirements Within 30 Days After First Day of Operations
1. Inform the BSP of the first day of operation and the banking hours and days; and
2. Submit a Statement of Condition as of the first day of operation.
H
Revocation of Authority to Establish a Bank
The authority to establish a bank shall be automatically revoked if the bank is not organized and opened for business within six (6) months (for commercial banks and thrift banks) and eight (8) months (for rural banks) after receipt by the organizers of the notice of approval by the Monetary Board/Governor of their application. Extension may be granted upon presentation of justifiable reason for failure to open the bank within the prescribed period, and proof that the bank can be opened within the extension period.
1/ Except those to be established under R.A. No. 7721 which shall continue to be governed by circular No. 51 dated 14 October 1994, as amended. The authority to operate as an expanded commercial bank, on the other hand, may be granted only to a non-expanded commercial bank with satisfactory performance for the last two (2) years preceding its application for such authority.
This Circular-Letter shall take effect immediately.
Adopted: 13 July 1998
(SGD.) ALBERTO V. REYES
Officer-in-Charge
A
Guiding Principle
The new banking organization must have suitable shareholders, adequate financial strength, a legal structure in line with its operational structure, and a management with sufficient expertise and integrity to operate the bank in a sound and prudent manner. Where the proposed owner or parent organization is a foreign bank, the prior consent of its home country supervisor should be obtained.
B
The Application
1. The Application for Authority to Establish a Bank (Form No. 1) shall be accomplished in triplicate. The original copy and duplicate copy shall be submitted to the Supervisory Reports and Studies Office, Bangko Sentral ng Pilipinas (BSP). The third copy shall be retained by the organizers.
2. The required papers/documents and other information in support of the application are, as follows:
a. "Agreement to Organize a Bank" (Form No. 2).
b. Accomplished bio-data sheet of each of the incorporators, proposed directors and officers, and subscribers (Form No. 3).
c. Evidence of Filipino citizenship of each of the incorporators, proposed directors and officers, and subscribers if he/she claims to be a Filipino citizen.
1. In case of a natural-born Filipino citizen, original or certified true copy of birth certificate from issuing office. In case the birth certificate cannot be produced by reason of destruction or otherwise, an affidavit to that effect by the civil registrar concerned should be submitted accompanied by an affidavit by the incorporator, director, officer or subscriber himself stating, among other things, the date and place of his birth and the names of his parents and their citizenship at the time of the affiant's birth; and joint affidavit of two (2) disinterested/unrelated persons stating, among other things, the date and place of the subject's birth and the names of his parents and their citizenship at the time of the subject's birth; or
2. In case of a naturalized citizen of the Philippines, the naturalization certificate, certificate of registration thereof with the civil registrar and other pertinent papers; or
3. In the absence of the abovementioned documents, a photo-copy of the passport (with original to be presented for verification).
d. Statement of Assets and Liabilities as of a date not earlier than ninety (90) days prior to the filing of application of each of the subscribers, sworn to by the subscriber himself and duly notarized, or certified by a Certified Public Accountant, with supporting schedules showing the following information:
1. In the case of cash in banks: (a) name of depository bank, (b) nature of deposit, and (c) amount of deposit with each bank as of balance sheet date;
2. In the case of securities: (a) name and address of issuing corporation/entity, (b) number of shares owned as of balance sheet date; (c) par value, (d) date and cost of acquisition, and (e) information as to whether the securities are actively traded in the stock market and, if so, their current market price;
3. In the case of land: (a) description (agricultural, etc.); (b) area; (c) location; (d) date and cost of acquisition; (e) transfer certificate of title or tax declaration number; (f) amount of encumbrance or lien, if any; (g) assessed value; and (h) current market value (state basis of valuation);
4. In the case of real estate improvements: (a) description of improvement (residential house, etc.), (b) location, (c) date and cost of acquisition/construction, (d) assessed value, and (e) current market value (state basis of valuation);
5. In the case of accounts receivable, state the name and address of each debtor and the amount due from each; and
6. In the case of accounts payable or other liabilities, state the name and address of each creditor and the amount owed to each.
(Evidences of asset ownership such as bank certification/statement, savings passbook, certificate of time deposit, bond or stock certificate, transfer certificate of title, tax declaration, etc. and waiver of rights under Republic Act No. 1405, as amended, shall be submitted/presented for verification).e. Statement of Income and Expense for the last three (3) calendar years of each of the subscribers, sworn to by the subscriber himself and duly notarized, or certified by a Certified Public Accountant.
f. Certified photocopies of Income Tax Returns for the last three (3) calendar years of each of the incorporators, proposed directors and officers, and subscribers.
g. Clearances from the National Bureau of Investigation (NBI) and Bureau of Internal Revenue (BIR) of each of the incorporators, proposed directors and officers, and subscribers.
h. For corporate subscribers:
1. Copy of the Board Resolution authorizing the corporation to invest in such bank; and designating the person who will represent the corporation in connection therewith;
2. Copy of the latest Articles of Incorporation and By-Laws;
3. List of directors and principal officers;
4. List of major stockholders, indicating the citizenship and the number, amount and percentage of the voting and non-voting shares held by them;
5. A copy of the corporation's audited financial statements for the last two (2) years prior to the filing of application;
6. A copy of the corporation's annual report to the stockholders for the year immediately preceding the date of filing of application;
7. Certified photocopies of Income Tax Returns for the last two (2) calendar years; and
8. BIR clearance.
i. For foreign bank subscribers:
1. A copy of the Board Resolution authorizing the bank to invest in a bank in the Philippines, and designating the person who will represent the bank in connection therewith;
2. Historical background of the bank, as follows:
a. Date and place of incorporation;3. A copy each of the bank's latest amended Articles of Incorporation and By-Laws;
b. List of domestic branches, agencies, other offices, subsidiaries and affiliates and their line of business (if different from banking) in the home country;
c. List of foreign branches, agencies, other offices, subsidiaries and affiliates, and their location and line of business (if different from banking);
d. Range of banking services offered; and
e. Financial and commercial relationship with the Philippine Government, local banks, business entities and residents, past or present;
4. List of the bank's directors and their citizenships;
5. List of principal officers of the bank's head office;
6. List of major stockholders, indicating the citizenship and the number, amount and percentage of the voting and non-voting shares held by them;
7. A copy of the bank's audited financial statements for the last two (2) years prior to the filing of application;
8. A copy of the bank's annual report to the stockholders for the year immediately preceding the date of filing of application; and
9. A certification from the bank's home country supervisory authority that the bank's home country supervisory authority has no objection to the bank's investment in a bank in the Philippines, and that adequate information on the bank and its subsidiaries will be provided to the Bangko Sentral ng Pilipinas to the extent allowed under existing laws.
j. Detailed Plan of Operation and Economic Justification for Establishing the Bank. (The plan of operation should describe and analyze the market area from which the bank expects to draw the majority of its business and establish a strategy for the bank's ongoing operations. It should also describe how the bank will be organized and controlled internally. The economic justification for establishing the bank should provide information on the economic profile of the region, e.g., population, agricultural/industrial/service projects to be financed).
k. Projected monthly financial statements for the first twelve (12) months of operations, together with assumptions. (The financial projections should be consistent and realistic in relation to the bank's proposed strategic plan, and should show sufficient capital to support the bank's strategy, specially in the light of start-up costs and possible operational losses in the early stages. See suggested forms.)
l. Proposal by each of the subscribers on how they will raise the amount to pay for their proposed paid-up capitalization in the bank.
3. The application shall be considered filed on a first-come, first-served basis, provided all the required documents are complete and properly accomplished.
4. Pursuant to Section 26 of R.A. No. 7653, approval of application shall be subject, among others, to the condition that any director, officer or stockholder who, together with his related interest, contracts a loan or any term of financial accommodation from: (1) his bank; or (2) from a bank (a) which is a subsidiary of a bank holding company of which both his bank and the lending bank are subsidiaries or (b) in which a controlling proportion of the shares is owned by the same interest that owns a controlling proportion of the shares of his bank, in excess of five percent (5%) of the capital and surplus of the bank, or in the maximum amount permitted by law, whichever is lower, shall be required by the lending bank to waive the secrecy of his deposits of whatever nature in all banks in the Philippines. Any information obtained from an examination of his deposits shall be held strictly confidential and may be used by the examiners only in connection with their supervisory and examination responsibility or by the Bangko Sentral in an appropriate legal action it has initiated involving the deposit account.
5. Prescribed application form, together with other forms, is available at the Studies and Chartering Group Supervisory Reports and Studies Office.
C
Capital Requirement/Stockholdings
1. Banks to be established shall comply with the required minimum capital enumerated below or as may be prescribed by the Monetary Board:
| Type of Bank | Revised Amounts (in million pesos) |
| a. Expanded commercial banks | 5,400.00 |
| b. Commercial banks | 2,800.00 |
| c. Thrift banks | |
| - With head office within Metro Manila | 400.00 |
| - With head office outside Metro Manila | 64.00 |
| d. Rural banks | |
| - In 1st, 2nd & 3rd, class cities and 1st class municipalities | 8.0 |
| - In 4th, 5th & 6th class cities and in 2nd, 3rd & 4th class municipalities | 4.8 |
| - In 5th & 6th class municipalities | 3.2 |
2. 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 the paid-up capital be less than the minimum required capital stated in Item 1 above.
3. Stockholdings of any person or persons related to each other within the 3rd degree of consanguinity or affinity, or one (1) or more corporations wholly-owned or majority of the voting stock of which is owned by such person or persons shall not exceed 20% of the voting stock of the bank; while stockholdings of any other corporation, or two (2) or more corporations wholly-owned or majority of the voting stock of which is owned by the same group of persons shall not exceed 30% of the voting stock of the bank. (Temporarily waived for a period of 10 years from the effectivity of R.A. No. 7906, i.e., 17 March 1995 for thrift banks; and from the date of approval of R.A. No. 7353, i.e., 2 April 1992 for rural banks).
4. At least 70% of voting stock of any commercial bank shall be owned by Filipino citizens, provided, that such percentage may be lowered to 60% with approval of the President of the Philippines. For any thrift bank, at least 40% of its voting stock shall be owned by Filipino citizens. Subject to Section 4 of Republic Act No. 7353, all of the capital stock of any rural bank shall be fully owned and held, directly or indirectly, by Filipino citizens or corporations, associations or cooperatives qualified under Philippine laws to own and hold such capital stock.
D
Incorporators/Subscribers, Directors and Officers
1. The incorporators/subscribers and proposed directors and officers must be persons of integrity and of good credit standing in the business community. The subscribers must have adequate financial strength to pay for their proposed subscriptions in the bank.
2. The incorporators/subscribers and proposed directors and officers must not have been convicted of any crime involving moral turpitude, and unless otherwise allowed under the provisions of existing laws are not officers or employees of a government agency, instrumentality, department or office charged with the supervision of, or the granting of loans to banks.
3. A bank may be organized with not less than five (5) nor more than fifteen (15) incorporators. In case there are more than fifteen (15) persons initially interested in organizing and investing in the proposed bank, the excess may be listed among the original subscribers in the Articles of Incorporation.
4. The number of members of the board of directors of the bank shall not be less than five (5) nor more than fifteen (15) and shall always be in odd numbers.
5. At least two-thirds (2/3) of the members of the board of directors of any commercial bank shall be Filipino citizens; at least a majority of the members of the board of directors of any thrift bank shall be Filipino citizens; and all members of the board of directors of a rural bank shall be Filipino citizens.
6. No appointive or elective public official, whether full-time or part-time shall at the same time serve as officer of a commercial bank or a thrift bank except in cases where such service is incident to financial assistance provided by the government or a government-owned or -controlled corporation to the bank.
7. The proposed directors and officers of the bank shall be subject to qualifications and other requirements of existing laws and rules and regulations of the BSP, as follows:
a. Qualifications of a director. - A director shall have the following minimum qualifications:
1. He shall be at least twenty-five (25) years of age at the time of his election or appointment; andb. Qualifications of an officer. An officer shall have the following minimum qualifications:
2. He shall be at least a college graduate or have at least five (5) years experience in business, or have undergone training in banking acceptable to the appropriate supervision and examination department of the BSP.
For thrift banks and rural banks, at least one (1) of the members of the Board of Directors must, in addition to the abovementioned minimum qualifications, have at least one (1) year experience in banking and/or finance, provided that this requirement may be waived if the thrift bank or rural bank is to be established in a municipality or city where there is no existing bank.
The foregoing qualifications for directors shall be in addition to those already required or prescribed under existing laws.
1. He shall be at least twenty-one (21) years of age; andc. Disqualifications of a director. Without prejudice to specific provisions of law prescribing disqualifications for directors, the following are disqualified from becoming directors:
2. He shall be at least a college graduate, or have at least five (5) years experience in banking or trust operations or related activities or in a field related to his position and responsibilities, or have undergone training in banking or trust operations acceptable to the appropriate supervision and examination department of the BSP, provided, however, that trust officers shall have at least two (2) years of actual experience or training in trust operations or fund management or other related fields.
For commercial banks, the President must, in addition to the abovementioned minimum qualifications, have at least 2 years experience in banking and/or finance. For thrift banks and rural banks, any one of the President, Chief Operating Officer or General Manager must, in addition to the abovementioned minimum qualifications, have at least two (2) years experience in banking and/or finance.
The foregoing qualifications for officers shall be in addition to those already required or prescribed under existing laws.
1. Persons who have been convicted judicially or administratively of an offense involving moral turpitude, or judicially declared insolvent, spendthrift or incapacitated to contract;d. Disqualification of an Officer
2. Persons who shall refuse to disclose the extent of their business interest to the appropriate supervision and examination department of the BSP when required for the proper implementation of a provision of law or of a circular, memorandum or rule or regulation of the BSP. This disqualification shall be in effect as long as the refusal persists;
3. Those who are delinquent in the payment of their obligations as defined hereunder:
a. Delinquency in the payment of obligations means that an obligation of a person with a bank where he is a director or officer or where he may be elected or appointed to said position, or at least two (2) obligations with other banks and with non-bank financial intermediaries performing quasi-banking functions under different credit lines or loan contracts, are past due for at least three (3) months.
b. Obligations shall include all borrowings from a bank or from a non-bank financial intermediary performing quasi-banking functions obtained by:
i. A director or officer for his own account or as the representative or agent of others or where he acts as a guarantor, endorser, or surety for loans from such financial institutions;
ii. The spouse or child under the parental authority of the director or officer;
iii. Any person whose borrowings or loan proceeds were credited to the account of, or used for the benefit of a director or officer;
iv. A partnership of which a director or officer, or his spouse is the managing partner or a general partner owning a controlling interest in the partnership; and
v. A corporation, association or firm wholly-owned or majority of the capital of which is owned by any or a group of persons mentioned in the foregoing items (i), (ii) and (iv);
4. Persons found by the Monetary Board to have willfully failed or refused to comply with any banking law, order, instruction or regulation issued by the Monetary Board or by the Governor, or to have committed irregularities or to have conducted business in an unlawful, unsafe or unsound manner as determined by the Monetary Board in any institution supervised by the BSP; and
5. Persons who have been dismissed for cause from any institution under the regulation or supervision of the BSP.
The foregoing disqualifications for directors shall be in addition to those already required or prescribed under existing laws.
1. The disqualifications for directors mentioned above shall likewise apply to officers.
2. Except as may be authorized by the Monetary Board or the Governor, the spouse or a relative within the 2nd degree of consanguinity or affinity of any person holding the position of Chairman, President, Executive Vice President or any position of equivalent rank, General Manager, Treasurer, Chief Cashier or Chief Accountant is disqualified from holding or being elected or appointed to any of said positions in the same bank.
3. Except in the case of technical personnel whose employment may be specially authorized by the Secretary of Justice, foreigners cannot be officers of banks, except thrift banks. Institutions concerned shall file with the Department of Justice the necessary request for authority to employ any foreign technical personnel, in accordance with the procedure prescribed in Office Circular of the Department of Justice dated May 18, 1976.
The foregoing disqualifications for officers shall be in addition to those already required or prescribed under existing laws.
Requirements for the Issuance of Authority to Operate
1. Within sixty (60) days from receipt of advice of approval by the Monetary Board/Governor of their application for authority to establish the bank, the organizers shall:
a. Submit the Articles of Incorporation, Treasurer's Sworn Statement and By-Laws in seven (7) copies; and
b. Deposit with any commercial bank (for commercial banks and thrift banks) and any bank (for rural banks) the initial paid-up capital of the proposed bank.
2. Within thirty (30) days after the Articles of Incorporation and By-Laws had been passed upon by the Office of the General Counsel and the corresponding certificates of Authority to Register had been issued, the organizers shall effect the filing and registration of said documents with the Securities and Exchange Commission.
3. Within six (6) months (for commercial banks and thrift banks) and eight (8) months (for rural banks) from receipt of advice of approval by the Monetary Board/Governor of their application for authority to establish the bank, the organizers shall:
a. Complete the construction and furnishing of the bank building, which shall be equipped with vault and appropriate security devices such as lighting system, time delay device, tamper-resistant locks, alarm system, etc., and provided with furniture, fixtures, equipment and bank forms;
b. Effect and complete the recruitment and hiring of officers and employees of the bank;
c. Submit the following documentary requirements at least thirty (30) days before the scheduled start of operations:
1. Proof of registration of Articles of Incorporation and By-Laws;d. File with Supervisory Reports and Studies Office a request for ocular inspection of the bank premises at least thirty (30) days before the scheduled start of operation; and
2. Certification of compliance with the conditions of approval duly signed by the incorporators;
3. List of principal and junior officers and their respective designations and salaries;
4. Bio-data sheet, evidence of citizenship and NBI and BIR clearances of each of the officers (who have not had the previous approval of the Monetary Board/Governor) which are needed for the evaluation of their qualifications as officers;
5. Chart of Organization (The chart should show the names of departments/units/offices with their respective functions and responsibilities, and the designations of positions in each department/unit/office with their respective duties and responsibilities. The internal organization should provide for a management structure with clear accountability, a board of directors with ability to provide independent check on management, and independent audit and compliance functions, and should follow the ''four eyes" principle, e.g., segregation of various functions, cross-checking, dual control of assets, double signatures, etc.);
6. Manual of Operations embodying the policies and operating procedures of each department/unit/office, covering such areas as signing/delegated authorities, etc. (for commercial banks and thrift banks);
7. Plantilla showing the positions with corresponding salaries, the total of which should more or less conform with the amount of salaries shown in the submitted projected statement of earnings and expenses;
8. Two (2) sets of specimens of principal bank accounting and other forms;
9. Bond policy on officers and custodial employees;
10. Insurance policy on bank properties required to be insured;
11. Blueprint of floor layout of bank premises;
12. Contract of lease on bank's premises, if the same are to be leased;
13. Excerpts of the minutes of the organizational meetings confirming all organizational and pre-opening transactions relative to activities undertaken to prepare the bank to operate (such as appointment of officers, contract of lease, etc.);
14. An alphabetical list of stockholders with the number and percentage of voting stocks owned by them;
15. A separate list containing the names of persons who own voting stocks in banks and who are related to each other within the 3rd degree of consanguinity or affinity, with proper indication of the combined percentage of voting stocks held by them in the particular bank, as well as corporations which are wholly-owned or a majority of the stock of which is owned by any of such persons, including their wholly or majority-owned subsidiaries;
16. Certification by the President that no person who is the spouse or relative within the 2nd degree of consanguinity or affinity of any person holding the position of Chairman, President, Executive Vice-President or any position of equivalent rank, General Manager, Treasurer, Chief Cashier or Chief Accountant will be appointed to any of said positions in the bank;
17. Appointment of an officer of the proposed bank who shall have undergone orientation on the reportorial requirements with the Department of Thrift Banks and Non-Bank Financial Institutions (DTBNBFI), and a certification by the Manager that he is fully aware of said reportorial requirements and the respective deadlines for submission to the DTBNBFI (for thrift banks);
18. Other documents/papers which may be required.
F
Inauguration/Opening of the Bank for Business After the Certificate of Authority to Operate has been Issued.
G
Requirements Within 30 Days After First Day of Operations
1. Inform the BSP of the first day of operation and the banking hours and days; and
2. Submit a Statement of Condition as of the first day of operation.
Revocation of Authority to Establish a Bank
The authority to establish a bank shall be automatically revoked if the bank is not organized and opened for business within six (6) months (for commercial banks and thrift banks) and eight (8) months (for rural banks) after receipt by the organizers of the notice of approval by the Monetary Board/Governor of their application. Extension may be granted upon presentation of justifiable reason for failure to open the bank within the prescribed period, and proof that the bank can be opened within the extension period.
1/ Except those to be established under R.A. No. 7721 which shall continue to be governed by circular No. 51 dated 14 October 1994, as amended. The authority to operate as an expanded commercial bank, on the other hand, may be granted only to a non-expanded commercial bank with satisfactory performance for the last two (2) years preceding its application for such authority.