Académique Documents
Professionnel Documents
Culture Documents
AND REGULATORY
FRAMEWORK
OF BANKING
BUSINESS
IMPORTANCE OF BANKS TO
ECONOMY
The banking system is an indispensable institution in the
modern world and plays a vital role in the economic life of
every civilized nation. Whether as mere passive entities for
the safekeeping and saving of money or as active instruments
of business and commerce, banks have become an ubiquitous
presence among the people, who have come to regard them
with respect and even gratitude and, most of all, confidence.
Thus, even the humble wage-earner has not hesitated to
entrust his life's savings to the bank of his choice, knowing
that they will be safe in its custody and will even earn some
interest for him.
Simex International (Manila), Inc. vs. CA 183 SCRA 360 (1990)
BANKS
DEPOSIT
QUASI-BANKS
DEPOSIT
SUBSTITUTES
CLASSES OF BANKS
Banks
Universal
Banks
General
Banking Law
(RA 8791)
Commercial
Banks
Thrift
Banks
General
Banking Law
(RA 8791)
Thrift Banks
Act
(RA 7906)
Savings and
Mortgage
Banks
Stock Savings
And Loan
Associations
Rural Banks
Rural
Banking Act
(RA 7353)
Private
Development
Banks
Cooperative
Banks
Cooperative
Act
(RA 6938)
Islamic
Banks
Charter of
Al Amanah
Islamic
Investment
Bank of the
Philippines
(RA 6848)
Importance of
Banks to
Economy
Protection of
Depositors
Capitalization
Minimum capitalization
Risk-based capital
Reserves
Reserve requirements
5. Loan Restrictions
Minimum
Capitalization
P 5.4 Billion
P 2.8 Billion
P 650 Million
P 64 Million
P 2.6-20 Million
P 2.6-20 Million
2. Investments
+ INVESTMENT HOUSE
by Universal Bank
by Commercial Bank
Quasi-bank
prohibited
total investment 1) in allied and nonallied enterprises shall not exceed fifty
percent (50%) of the net worth of the
bank, and 2) the equity investment in
any one enterprise, whether allied or
non-allied, shall not exceed twenty-five
percent (25%) of the net worth of the
bank.
Allied Enterprises
4. Reserves
Reserve requirements
Provision for losses and write offs
5.Loan Restrictions
Single Borrowers
Limit (SBL)
(b)
(c)
(d)
5.LOAN RESTRICTIONS:
DOSRI
Loans, other credit accommodations and guarantees shall
refer to transactions of the bank which involve the grant
of any loan, advance or other credit accommodation in
any form whatsoever, whether renewal, extension or
increase, to:
Its own directors;
Its own officers;
Its own shareholders;
And their related interests, including:
5.LOAN RESTRICTIONS:
DOSRI
DOSRI LOANS
(4) Corporation, association, or firm of which a director or officer of the bank, or his spouse is also a director
or officer of such corporation, association or firm, except (a) where the securities of such corporation,
association or firm are listed and traded in the big board or commercial and industrial board of domestic stock
exchanges and less than fifty percent (50%) of the voting stock thereof is owned by any one person or by
persons related to each other within the first degree of consanguinity or affinity; or (b) where the director,
officer or stockholder of the bank sits as a representative of the bank in the board of directors of such
corporation: Provided, That the bank representative shall not have any equity interest in the borrower
corporation except for the minimum shares required by law, rules and regulations, or by the by-laws of the
corporation: Provided, further, that the borrowing corporation is not among those mentioned in items e(5),
e(6), e(7) and e(8) of this Section;
(5) Corporation, association or firm of which any or a group of directors, officers, stockholders of the lending
bank and/or their spouses or relatives within the first degree of consanguinity or affinity, or relative by legal
adoption, hold or own at least twenty percent (20%) of the subscribed capital of such corporation, or of the
equity of such association or firm;
(6) Corporation, association or firm wholly or majority-owned or controlled by any related entity or a group
of related entities mentioned in Items e(2), e(4) and e(5) of this Section.
(7) Corporation, association or firm which owns or controls directly or indirectly whether singly or as part of
a group of related interest at least twenty percent (20%) of the subscribed capital of a substantial stockholder
of the lending bank or which controls majority interest of the bank pursuant to Subsection X303.1 of the
MOR.
(8) Corporation, association or firm in which the lending bank and/or its parent/subsidiary holds or owns at
least twenty percent (20%) of the subscribed capital of such corporation, or in the equity of such association or
firm, or has an existing management contract or any similar arrangement with the lending bank or its
parent/subsidiary.
Subsidiary shall refer to a corporation or firm more than fifty percent (50%) of the outstanding voting stock of
which is directly or indirectly owned, controlled or held with power to vote by its parent corporation.
BANKS IN DISTRESS
How do we know that a bank is in
distress?
Examination
Order
the
placement of bank
under
conservatorship
(Sec. 29, RA 7653)
Order
the
placement
of
bank
under
receivership (Sec.
30, RA 7653)
Resumption
of Business
Receivership
Rehabilitation
Liquidation
THE REMEDY OF
CONSERVATORSHIP
2. Reorganize management
Conservator
cannot
transactions post facto
repudiate
perfected
When MB is satisfied
that the institution
can continue to
operate on its own
and the conservatorship is no longer
necessary. (Sec. 29,
R.A. 7653)
When MB determines
that the continuance in
business of the bank
would involve probable
loss to its depositors or
creditors. In which
case, bank will be
placed
under
receivership. (Sec. 29,
R.A. 7653)
Bank/QB willfully violated a final cease-anddesist order for a violation involving fraud or
dissipation of assets.
Procedural rights of the bank should not take precedence over the
substantive interests of depositors, creditors, and stockholders over
the assets of the bank, as well as interest of the public and even the
bank itself. (Central Bank v. CA and Triumph Savings Bank, G.R. No. 76118 March 30,
1993)
Rationale
The
EFFECT OF RECEIVERSHIP
EFFECT OF RECEIVERSHIP
Forbidding a bank from doing
Fomeaning:
it cannot accept new deposits
it cannot grant new loans
EFFECT OF RECEIVERSHIP
are
7.
8.
place
the
funds
in
non-speculative
investments
pay for administrative expenses of liquidation
pay accrued utilities, rentals and salaries of
closed bank from available funds for up to 3
months
EFFECTS OF RECEIVERSHIP
On unpaid time deposit in the bank
An
to receive deposits as
well payments from banks debtors
Paid a favored supplier from funds
of the bank
Transferred to his sons name title to
a car owned by the bank
Asked an officer of the bank to
perform any of the foregoing acts
OUTCOME OF RECEIVERSHIP
Receiver
recommends to
the MB the
liquidation of
the bank. (Sec. 30,
R.A. 7653)
REHABILITATION REMEDY
Nature of rehabilitation
REHABILITATION REMEDY
LIQUIDATION STEPS
Petition for Assistance in
Liquidation
Adjudication of disputed
claims
Approval of Project of
Distribution of Assets
Payment of claims and
distribution of assets
Termination of
proceedings
4.
MANDATE OF PDIC
UNDER R.A. 3591 AS AMENDED
BY R.A. 9576
Insurer of deposits
Receiver of banks
MANDATE OF PDIC
AS INSURER OF DEPOSITS
SEC. 3. Section 4 (g) :
"(g) The term insured deposit means the
amount due to any bona fide depositor for
legitimate deposits in an insured bank net of any
obligation of the depositor to the insured bank as
of the date of closure, but not to exceed Five
hundred thousand pesos (P500,000.00). Such net
amount shall be determined according to such
regulations as the Board of Directors may
prescribe.
SINGLE ACCOUNT
o All the four deposit accounts (i.e., Account Nos. 1 to 4) are owned by the same
person, Juan Dela Cruz, and maintained in the same Bank (Head Office and all
its Branches), thus, the balance of the accounts will be added together, as they
are maintained in the same right and capacity, regardless of account type and
banking unit/branch.
oTotal amount of insured deposit cannot exceed P 500,000.00, the Maximum
Deposit Insurance Coverage (MDIC).
oOf the total balance of P 900,000.00, the amount insured is P 500,000.00 and
the uninsured amount is P 400,000.00.
The first three deposit accounts (i.e., Account Nos. 1 to 3) are owned by the
same person, Juan Dela Cruz, hence, the balance of the accounts will be added
together.
A sole proprietor is wholly owned by the owner, hence, the Dela Cruz Flower
Shop (Account No. 4) owned by Juan Dela Cruz will be added to his first three
accounts as all of them (Account Nos. 1 to 4) are maintained in the same right
and capacity. The total amount insured cannot exceed P500,000.00.
Of the total balance of P 900,000.00, the amount insured is P 500,000.00 and
the uninsured amount is P 400,000.00.
Juan Dela Cruz is the principal owner of three accounts (i.e., Account Nos. 1, 3 & 4). As these
are maintained in the same right and capacity, these accounts will be consolidated.
The single account (Account No. 1) is under his name alone and the other two are By accounts
(Account Nos. 3 and 4) which are owned by him as the PRINCIPAL DEPOSITOR or
BENEFICIAL OWNER while Maria Dela Cruz and Pedro Dela Cruz ACTED AS HIS AGENTS
only. Thus, the total insured amount payable to Juan Dela Cruz is P 500,000.00 and the
uninsured amount is P700,000.00.
Antonio Dela Cruz on the other hand has only one account (Account No. 2), an ITF account in
which Antonio is the PRINCIPAL OR BENEFICIAL OWNER and Juan acted as AGENT. Thus,
Antonio Dela Cruz is entitled to a separate deposit insurance of P 400,000.00 for his savings
deposit.
JOINT ACCOUNTS
Deposi Deposit
t
Share
Balanc
e
PALUGI BANK
Maximum Joses
Insurance Share in
max.
Cover
Insurance
cover
Pilars
Anitas
Share in
max.
Insurance
cover
Share in
max.
Insurance
cover
600
600
500
500
n/a
n/a
500
250
500
250
250
800
400
500
250
250
600
300
500
250
250
1. Jose
Individual
2. Jose Joint
Accounts
Total DEPOSIT
2,500
1,250
650
300
1,750
1,000
500
250
750
250
150
50
Share in
Insurance
Cover
Insured
Deposit
Uninsured
Deposit
Jose
1550
1250
1000
250
Pilar
650
500
500
150
Anita
300
250
250
50
______
_____
______
2,500
1750
450
Total
OVERVIEW OF ANTI-MONEY
LAUNDERING ACT
RA 9160 as amended by RA 9194, RA 10167 and
most recently RA 10365 (signed into law 15
February 2013)
Republic Act No. 9160 otherwise known as The AntiMoney Laundering Act of 2001 was signed into law on
September 29, 2001 and took effect on October 17,
2001 . The Implementing Rules and Regulations took
effect on April 2, 2002 . On March 7, 2003 , R.A. No.
9194 (An Act Amending R.A. No. 9160) was signed
into law and took effect on March 23, 2003 . The
revised Implementing Rules and Regulations took
effect on September 7, 2003.
Two additional amendatory laws have been enacted:
Republic Act No. 10167 and most recently, Republic
Act No. 10365. It is one of the most dynamic statutes
in Philippine history, constantly reviewed and
updated in order to cover emerging trends and
patterns in financial crimes.
SIGNIFICANT AMENDMENTS
TO THE ORIGINAL LAW
SIGNIFICANT AMENDMENTS
TO THE ORIGINAL LAW
PREDICATE CRIMES/UNLAWFUL
ACTIVITIES (EXPANDED UNDER RA 10365)
PREDICATE CRIMES/UNLAWFUL
ACTIVITIES (EXPANDED UNDER RA 10365)
PREDICATE CRIMES/UNLAWFUL
ACTIVITIES (EXPANDED UNDER RA 10365)
OTHER OFFENSES/PENALTIES
BREACH OF CONFIDENTIALITY.
PURPOSES (SEC. 1)
SCOPE
The
The
E XCEPTIONS:
When there is written permission of the depositor
or investor;
Impeachment cases;
Upon the order of competent court in cases of
bribery or dereliction of duty of public officials;
Upon order of competent court in cases where the
money deposited or invested is the subject of
litigation;
Upon the order of competent court or tribunal in
cases involving unexplained wealth under the
Anti-Graft and Corrupt Practices Act, R.A No.
3019
E XCEPTIONS:
PRIVILEGES
ABSOLUTE CONFIDENTIALITY
GSIS v. CA, 8 June 2011
China Banking v. CA, 511 S 110
Intengan v. CA, 377 S 63
NUMBERED ACCOUNTS
RATE OF INTEREST
TAXES
EXEMPTION FROM COURT ORDER OR
PROCESS
EXCEPTIONS TO ABSOLUTE
CONFIDENTIALITY
When there is written consent of depositor under Sec.
8 of the Foreign Currency deposit Act, and:
Under Sec. 11 of the Anti- Money Laundering Act;
Under sec. 27 and 28 of the Human Security Act.