285 EMERGENCY LOANS OR ADVANCES TO BANKING INSTITUTIONS
a. In periods of national and/or local emergency or of imminent financial panic which directly threaten monetary and banking stability, i.e., situations involving bank runs, massive movements by depositors of their funds from certain banks to other banks, bank holidays and voluntary cessation of business, or when there are movements which endanger the economy, or when the international stability of the peso is threatened, or when there is an exchange crisis.
b. During normal periods for the purpose of assisting a bank in a precarious financial condition or under serious financial pressures brought about by unforeseen events or events which though foreseeable, cannot be prevented by the bank concerned.
a. Certified Statement of Condition (under oath) as of the last banking day of the month preceding the date of emergency loan application.
b. A duly notarized secretary’s certificate (EL Form No. 2) together with a resolution of the board of directors of the bank:
(1) Authorizing the availment by the bank of an emergency loan or advance from the Bangko Sentral.
(2) Signifying the bank’s commitment to comply with the guidelines set forth herein and the terms and conditions that may be imposed by the Monetary Board.
(3) Designating the chairman and the president or in their absence, any of the next two (2) highest officers, as duly authorized signatories for the emergency loan or advance application, promissory notes, and all undertakings. Designated authorized officers not lower than senior vice president, or equivalent position, may be authorized to execute all accessory documents for the emergency loan or advance.
(4) Authorizing the Bangko Sentral to evaluate other assets of the bank certified by its auditors to be good and available for collateral purposes should the grant of subsequent tranches be applied for.
a. Validation of the eligibility of applicant bank.
b. Financial condition of applicant bank.
c. Volume of deposits and expected withdrawals of deposits.
d. Amount and terms of the loan.
e. Whenever applicable, circumstances that warrant the grant of the first tranche greater than twenty-five percent (25%) of the total deposits and deposit substitutes as provided by law.
a. Listing of assets that are good and available for collateral purposes as certified by the bank’s duly appointed external auditor (EL Form No. 3).
b. Listing of collaterals in the prescribed formats (EL Form Nos. 4/4a/4b) as well as a 3.5” diskette containing the database, (in MS Excel format), together with the documents of title and/or evidences of ownership of the collaterals offered including the following documents:
(1) Appraisal reports of not more than one (1) year conducted by an independent appraiser acceptable to the Bangko Sentral in accordance with Bangko Sentral’s terms of reference.
(2) Latest tax declarations.
(3) Current tax receipts, tax clearances and other documents needed for registration of mortgages and deeds of assignment.
(4) Current insurance policies covering improvements and official receipts of premium payments.
(5) Department of Agrarian Reform (DAR) certification that agricultural properties offered as collaterals are not covered by the Comprehensive Agrarian Reform Program (CARP).
(6) Current original promissory notes of bank’s borrowers duly endorsed in favor of the Bangko Sentral.
(7) Special power of attorney or stockholder’s resolution, when appropriate.
c. Notarized Deed of Undertaking executed by the above-mentioned officers of the bank to: (1) register with the Registry of Deeds all the covering legal documents before loan release at the expense of the bank and that, in the event the Bangko Sentral agrees to release the proceeds of the loan before said documents are registered, the same shall be registered by the bank at its own expense; and (2) submit the documents needed to complete the requirements of the tranche not later than fifteen (15) days from release of the emergency loan or advance (EL Form No. 5).
d. Notarized Joint and Several Undertaking executed by all the controlling stockholders [owning more than fifty percent (50%) of the voting stocks] of the bank and every person or a group of persons whose stockholdings are sufficient to elect at least one (1) director to indemnify and hold harmless from suit the Bangko Sentral, its Monetary Board members, Governor, officers and personnel, and the conservator whose appointment the Monetary Board may find necessary at any time. The Department of Finance or stockholder of record will sign the joint and several undertaking if the government is a stockholder (EL Form No. 6).
e. Notarized Deed of Undertaking with waiver of secrecy of deposits and commitment by the directors, principal officers with the equivalent rank of vice-president and up, all the controlling stockholders, and every person or group of persons and their respective spouses, whose stockholdings are sufficient to elect at least one (1) director not to withdraw any portion of their deposits and deposit substitutes as of date of release of the first tranche while the emergency loan remains outstanding. In the event of a compelling reason to withdraw, payment of the emergency loan or advance in an amount equivalent to the deposits to be withdrawn shall be made (EL Form No. 7).
f. Notarized Surety Agreement executed by the controlling stockholders and every person or group of persons whose stockholdings are sufficient to elect at least one (1) director obligating themselves jointly and severally with the bank to pay promptly on maturity, or when due, the Bangko Sentral, its successors or assigns, all promissory notes covering the emergency loan or advance. (The Government, its subdivisions, instrumentalities and agencies, and government entities are exempted from this requirement) (EL Form No. 8).
g. Notarized Deed of Negative Pledge executed by the controlling stockholders and every person or group of persons whose stockholdings are sufficient to elect at least one (1) director, together with their respective certificates of stock. (The Government, its subdivisions, instrumentalities and agencies, and government entities are exempted from this requirement.) (EL Form No. 9).
h. Certification under oath executed by the chairman and president of the bank that the bank or any of its stockholders does not fall within the prohibition under Section 16, Article XI of the Constitution (EL Form No. 10).
| ACCEPTABLE COLLATERALS | With Surety Agreement And Negative Pledge | With Surety Pledge but no Negative Pledge | With Negative Pledge but no Surety Agreement | No Surety Agreement and no Negative Pledge |
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a. Government securities – based on the current market value of the securities |
80% | 80% | 80% | 80% |
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b. Unencumbered real estate properties in the name of the bank |
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(1) Initial rate – based on the appraised value (AV) of the land and insured improvements |
40% | 35% | 30% | 25% |
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(2) Final rate – based on the AV of the land and insured improvements determined by a licensed and independent appraiser acceptable to the Bangko Sentral in accordance with Bangko Sentral’s terms of reference |
70% | 65% | 60% | 55% |
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c. Hold-outs on foreign currency deposits with the Bangko Sentral based on current market value |
80% | 80% | 80% | 80% |
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d. Mortgage credits (with remaining maturities of not more than 360 days) |
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(1) Initial rate – based on the AV of the property securing the loan evidenced by negotiable instruments or the outstanding balance of such loan whichever is lower |
40% of AV or 50% of the outstanding balance | 35% of AV or 40% of the outstanding balance | 30% of AV or 40% of the outstanding balance | 25% of AV or 40% of the outstanding balance |
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(2) Final rate – based on the AV of the property securing the loan evidenced by negotiable instruments as determined by a licensed and independent appraiser acceptable to the Bangko Sentral in accordance with Bangko Sentral’s terms of reference or the outstanding balance of such loan whichever is lower. |
70% of AV or 80% of the outstanding balance | 65% of AV or 75% of the outstanding balance | 60% of AV or 70% of the outstanding balance | 55% of AV or 65% of the outstanding balance |
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e. Commercial papers (“AAA”) |
80% | 80% | 80% | 80% |
| ACCEPTABLE COLLATERALS | With Surety Agreement And Negative Pledge | With Surety Pledge but no Negative Pledge | With Negative Pledge but no Surety Agreement | No Surety Agreement and no Negative Pledge |
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a. Unencumbered real estate |
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(1) Initial rate – based on the AV of the land and insured improvements |
35% | 30% | 25% | 20% |
|
(2) Final rate – based on the AV of the land and insured improvements determined by a licensed and independent appraiser acceptable to the Bangko Sentral in accordance with Bangko Sentral’s terms of reference |
60% | 55% | 50% | 45% |
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b. Government Securities |
80% | 80% | 80% | 80% |
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c. Commercial papers (“AAA”) |
80% | 80% | 80% | 80% |
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a. Unencumbered real estate |
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(1) Initial rate – based on the AV of the land and insured improvements |
30% | 25% | 20% | 15% |
|
(2) Final rate – based on the AV of the land and insured improvements determined by a licensed and independent appraiser acceptable to the Bangko Sentral in accordance with Bangko Sentral’s terms of reference |
50% | 45% | 40% | 35% |
|
b. Government securities |
80% | 80% | 80% | 80% |
|
c. Commercial papers (“AAA”) |
80% | 80% | 80% | 80% |
a. The grant of emergency loan or advance shall bear the concurrent vote of at least five (5) members of the Monetary Board.
b. The emergency loan or advance shall have a ninety (90)-day availability period from date of Monetary Board approval, non-renewable, non-extensible. Request for extension or renewal shall be treated as new loan application to be evaluated by the appropriate supervising department of the Bangko Sentral if qualified under this Section on when an emergency loan or advance may be availed of.
c. The amount approved by the Monetary Board may be disbursed in one (1) or more releases as dictated by the needs of the bank and availability of first class collateral.
d. The proceeds of the emergency loan or advance shall be applied first to the advance interest, and then to any outstanding overdrawings that may have been incurred by the bank in its demand deposit with the Bangko Sentral.
e. The bank shall submit to the DLC a board resolution confirming every receipt of proceeds of emergency loan or advance. Likewise, the bank shall submit a board resolution confirming the undertakings executed by the officers under this Section on Application procedures.
a. The bank shall not, without the prior authorization of the Monetary Board, expand its outstanding loans or investments as of the date of application for emergency loan, except for investment in government securities;
b. The bank shall not declare cash dividends;
c. The bank shall not grant new loans to DOSRI or to affiliates and subsidiaries;
d. The bank shall accept the Bangko Sentral designated Comptroller to be assisted by examiners recommended by the appropriate supervising department of the Bangko Sentral and the DLC to monitor the operations of the bank under the Terms of Reference as determined by the Monetary Board;
e. The bank shall not be allowed to avail of the Bangko Sentral rediscounting facility; and
f. The bank shall comply with any other terms and conditions that may be imposed by the Monetary Board.
a. All the requirements of the previous tranche/s;
b. Remittance of collections/proceeds of sales under this Section on Remittance of collections/ repayments/arrearages;
c. Payment of advance interest;
d. Submission of a duly notarized promissory note in favor of the Bangko Sentral; and
e. Other requirements that may be imposed by the Monetary Board on the borrowing bank.
a. Total collections received on loan accounts assigned to the Bangko Sentral shall be held in trust for, and remitted to the Bangko Sentral not later than five (5) banking days following the date of receipt in payment of the bank’s outstanding emergency loan or advance, net of refund of interests, if any.
b. Proceeds from the sale of properties assigned/mortgaged to the Bangko Sentral shall be held in trust for, and remitted to the Bangko Sentral not later than five (5) banking days following the date of receipt in payment of the bank’s outstanding emergency loan or advance, net of refund of interests, if any.
(1) Total collections shall pertain to total collections from the mortgaged credits, i.e. principal plus interest and penalty.
(2) Proceeds from the sale shall pertain to net proceeds from the sale of assigned/mortgaged properties or the total Bangko Sentral claims pertaining to the sold properties, i.e., loan value plus interest and penalty, whichever is higher.
c. Increases in the deposit level of the borrowing bank equivalent to the recovery of the net withdrawal of deposits, shall be remitted to the Bangko Sentral or debited against the bank’s demand deposit account in payment of the emergency loan or advance, net of refund of interest.
d. The loan value of the collaterals of the emergency loan or advance, i.e., mortgaged credits and properties, discovered by the Bangko Sentral falling short of its criteria of first class collaterals, shall be debited against the bank’s DDA with the Bangko Sentral, net of refund of interest.
e. The Bangko Sentral shall undertake all necessary collection measures allowed by law, such as foreclosure proceedings against banks, whether operating or closed, with past due loans.
a. Insolvency or bankruptcy of the bank.
b. Appointment of a receiver for the bank.
c. The bank’s property and business is taken possession of or its business suspended or closed by the lawfully authorized governmental agency or authority.
d. Violation of any of the terms and conditions of all loan and collateral documents.
e. Non-compliance with the undertakings executed by the borrowing bank.
(As amended by Circular No. 1008 dated 14 June 2018)