The Monetary Board, in its Resolution No. 1103 dated September 30, 1991, decided on the following amendments to CB Circular No. 1281 dated April 15, 1991;

1. To amend item 4 of CB Circular No. 1281 so as to read as follows:

œ4. No bank which has any of the following violations/exceptions and unsound and unsafe banking practices noted in the latest examination of the bank shall be allowed to open a branch won thru the bidding process until after such exceptions/practices have been corrected:

a. Republic Act No. 387, as amended -

1. Sec. 21-A to Sec. 21-C and Sec. 31 - Investment in equities exceeds prescribed ceilings:

2. Sec. 23 and Sec. 32 - Loans in excess of single borrower ™s limit;

3. Sec. 25 and Sec. 34 - Investment in bank premises exceeds ceilings;

4. Sec. 76 - Loans granted without supporting financial statements and/or credit information or loans which are not justified by financial statements and/or credit information (total amount of such loans aggregates 5% of networth);

5. Sec. 78 - Loans granted in excess of maximum loan value (total excess in amount is 5% of networth); and

6. Sec. 12, 12-A. 12-B and 12-C - Limit on stockholdings.

b. Manual of Regulations for Banks and Other Financial Intermediaries - Books I and II.

1. Sec. 1326 to Sec. 1334 and Sec. 2326 to Sec. 2334 - excess loans to directors, officers, stockholders and their related interests:

2. Sec. 1106 and Sec. 2406 - does not meet minimum capital requirement;

3. Sec. 1116 and Sec. 2116 - Minimum capital-to-risk asset requirement (5 or more times deficient within a 60-day period during the last 6 months); and

4. Sec. 1253 to Sec. 1257; Sec. 1283 and Sec. 2253 to Sec. 2257; Sec. 2283 - Legal reserve for deposits and deposit substitutes (4 consecutive weeks net deficiency).

c. Unsound and unsafe banking practices -

1. Loans approved/released without authority from appropriate body/officer (aggregates to 5% of networth);

2. Loans released without complying with the terms and approval thereof (aggregates 5% of networth);

3. Loans released before full documentation of papers (PNs mortgage contracts, pledges, assignments). Aggregates to 5% of networth; and

4. When the aggregate of all loans under items (1) to (3) above is equal to 10% of networth; and

d. Unprofitable Operations 

2. To amend further item 1. (e) of CB Circular No. 1281 as amended under M.B. Res. No. 1070 dated September 20, 1991 to read as follows:

œ(e) A bank which has been awarded a branch franchise shall open and operate the branch covered by the franchise within a period of one (1) year from the date of the award; otherwise, the franchise as well as the consideration paid to the Central Bank for said franchise shall be forfeited. 

This Circular shall take effect immediately.

Adopted: 03 Oct. 1991

(SGD.) JOSE L. CUISIA, JR.
Governor