Pursuant to Monetary Board Resolution No. 1266 dated September 2, 1998, the following sanctions for non-compliance with minimum capital requirements are hereby prescribed:

Monetary Penalty:

For delayed or non-submission of the capital build-up program reckoned from the time the bank was notified in writing up to the time program has been submitted per banking day of delay, a monetary penalty of:

Type of Bank	Amount of Penalty
Expanded & Non-Expanded Commercial Banks	P 10,000.00
Thrift Banks	P 5,000.00
Rural Banks	P 1,000.00

Non-Monetary Penalty:

Non-monetary penalties shall depend on the degree of capital deficiency incurred by the bank, as follows:

For COMMERCIAL BANKS:

% of Capital Deficiency	Penalty
Up to 20%	- Suspension of authority to invest in non-allied undertakings (for EKBs only)
	- Suspension of authority to invest in allied undertakings
	- Suspension of securities and dealership functions (for EKBs only)
	- Suspension of branching privileges
	- Suspension of declaration of cash dividends
Up to 40%	- Suspension of authority to invest in non-allied undertakings (for EKBs only)
	- Suspension of authority to invest in allied undertakings
	- Suspension of securities and dealership functions (for EKBs only)
	- Suspension of branching privileges
	- Suspension of declaration of cash dividends
	- Restrictions on overall loan growth/investments (new loans to the extent of collections only)
	- Restrictions on lending affiliates
	- Denial of access to BSP rediscounting facilities
	- Suspension of authority to accept or handle government deposits
Up to 60%	- Suspension of authority to invest in non-allied undertakings (for EKBs only)
	- Suspension of authority to invest in allied undertakings
	- Suspension of securities and dealership functions (for EKBs only)
	- Suspension of branching privileges
	- Suspension of declaration of cash dividends
	- Restrictions on overall loan growth/investments (new loans to the extent of collections only)
	- Restrictions on lending affiliates
	- Denial of access to BSP rediscounting facilities
	- Suspension of authority to accept or handle government deposits
	- Suspension of authority to engage in quasi-banking activities
	- Suspension of authority to engage in derivative activities
	- Suspension of FCDU/EFCDU activities
	- Suspension of trust operations
Up to 80%	- Suspension of authority to invest in non-allied undertakings (for EKBs only)
	- Suspension of authority to invest in allied undertakings
	- Suspension of securities and dealership functions (for EKBs only)
	- Suspension of branching privileges
	- Suspension of declaration of cash dividends
	- Denial of access to BSP rediscounting facilities
	- Suspension of authority to accept or handle government deposits
	- Suspension of authority to engage in quasi-banking activities
	- Suspension of authority to engage in derivative activities
	- Suspension of FCDU/EFCDU activities
	- Suspension of trust operations
	- Suspension of international banking activities
	- Suspension of lending activities
More than 80%	- Suspension of clearing privileges
	- Suspension of granting of bonuses/profit-sharing not covered by existing contracts or By-Laws
	- Cease and desist

For THRIFT BANKS

% of Capital Deficiency	Penalty
Up to 20%	- Suspension of branching privileges
	- Suspension of declaration of cash dividends
Up to 40%	- Suspension of branching privileges
	- Suspension of declaration of cash dividends
	- Restrictions on overall loan growth/investments (new loans to the extent of collections only)
	- Restrictions on lending to affiliates
	- Denial of access to BSP rediscounting facilities
	- Suspension of authority to accept or create demand deposits or operate NOW accounts
	- Suspension of authority to accept government deposits
Up to 60%	- Suspension of branching privileges
	- Suspension of declaration of cash dividends
	- Restrictions on overall loan growth/investments (new loans to the extent of collections only)
	- Restrictions on lending to affiliates
	- Denial of access to BSP rediscounting facilities
	- Suspension of authority to accept or create demand deposits or operate NOW accounts
	- Suspension of authority to accept government deposits
	- Suspension of authority to engage in quasi-banking activities
	- Suspension of FCDU activities
	- Suspension of authority to invest in allied undertakings
	- Suspension of trust operations
Up to 80%	- Suspension of branching privileges
	- Suspension of declaration of cash dividends
	- Denial of access to BSP rediscounting facilities
	- Suspension of authority to accept or create demand deposits or operate NOW accounts
	- Suspension of authority to accept government deposits
	- Suspension of authority to engage in quasi-banking activities
	- Suspension of FCDU activities
	- Suspension of authority to invest in allied undertakings
	- Suspension of trust operations
	- Suspension of lending activities
	- Suspension of issuance of domestic LCs
More than 80%	- Suspension of clearing privileges
	- Suspension of granting of bonuses/profit-sharing not covered by existing contracts or By-Laws
	- Cease and desist

For RURAL BANKS

Up to 20 %	- Suspension of branching privileges
	- Suspension of declaration of cash dividends
Up to 40%	- Suspension of branching privileges
	- Suspension of declaration of cash dividends
	- Restrictions on overall loan growth/investments (new loans to the extent of collections only)
	- Denial of access to BSP rediscounting facilities
	- Suspension of authority to accept or create demand deposits or operate NOW accounts
	- Suspension of authority to accept government deposits
Up to 60%	- Suspension of branching privileges
	- Suspension of declaration of cash dividends
	- Restrictions on overall loan growth/investments (new loans to the extent of collections only)
	- Denial of access to BSP rediscounting facilities
	- Suspension of authority to accept or create demand deposits or operate NOW accounts
	- Suspension of authority to accept government deposits
	- Suspension of authority to invest in allied undertakings
Up to 80%	- Suspension of branching privileges
	- Suspension of declaration of cash dividends
	- Denial of access to BSP rediscounting facilities
	- Suspension of authority to accept or create demand deposits or operate NOW accounts
	- Suspension of authority to accept government deposits
	- Suspension of authority to invest in allied undertakings
	- Suspension of lending/investment activities
More than 80%	- Suspension of clearing privileges
	- Suspension of granting of bonuses/profit-sharing not covered by existing contracts or By-Laws
	- Cease and desist

This Circular shall take effect immediately.

Adopted: 7 Sept. 1998

(SGD.) GABRIEL C. SINGSON
Governor