Other Salient General Banking Concepts.pdf

OTHER SALIENT POINTS OF THE GENERAL BANKING LAW FIN 100 1ST SEM, AY 2024-2025 FOREIGN STOCKHOLDINGS ¡ Foreign individuals and non-bank corporations may own or control up to forty percent (40%) of the voting stock of a domestic bank. This rule shall apply to Filipinos and domestic non-bank corp...

OTHER SALIENT POINTS OF THE GENERAL BANKING LAW FIN 100 1ST SEM, AY 2024-2025 FOREIGN STOCKHOLDINGS ¡ Foreign individuals and non-bank corporations may own or control up to forty percent (40%) of the voting stock of a domestic bank. This rule shall apply to Filipinos and domestic non-bank corporations. ¡ The percentage of foreign-owned voting stocks in a bank shall be determined by the citizenship of the individual stockholders in that bank. The citizenship of the corporation which is a stockholder in a bank shall follow the citizenship of the controlling stockholders of the corporation, irrespective of the place of incorporation. STOCKHOLDINGS OF FAMILY GROUPS ¡ Stockholdings of individuals related to each other within the fourth degree of consanguinity or affinity, legitimate or common-law, shall be considered family groups or related interests and must be fully disclosed in all transactions by such an individual with the bank. CORPORATE STOCKHOLDINGS ¡ Two or more corporations owned or controlled by the same family group or same group of persons shall be considered related interests and must be fully disclosed in all transactions by such corporations or related groups of persons with the bank. PROHIBITION ON PUBLIC OFFICIALS ¡ Except as otherwise provided in the Rural Banks Act, no appointive or elective public official, whether full-time or part-time shall at the same time serve as officer of any private bank, save in cases where such service is incident to financial assistance provided by the government or a government-owned or controlled corporation to the bank or unless otherwise provided under existing laws. BANK BRANCHES ¡ Universal or commercial banks may open branches or other offices within or outside the Philippines upon prior approval of the Bangko Sentral. ¡ Branching by all other banks shall be governed by pertinent laws. ¡ A bank may, subject to prior approval of the Monetary Board, use any or all of its branches as outlets for the presentation and/or sale of the financial products of its allied undertaking or of its investment house units. ¡ A bank authorized to establish branches or other offices shall be responsible for all business conducted in such branches and offices to the same extent and in the same manner as though such business had all been conducted in the head office. A bank and its branches and offices shall be treated as one unit. BANKING DAYS AND HOURS ¡ Unless otherwise authorized by the Bangko Sentral in the interest of the banking public, all banks including their branches and offices shall transact business on all working days for at least six (6) hours a day. In addition, banks or any of their branches or offices may open for business on Saturdays, Sundays or holidays for at least three (3) hours a day: Provided, That banks which opt to open on days other than working days shall report to the Bangko Sentral the additional days during which they or their branches or offices shall transact business. ¡ Working days shall mean Mondays to Fridays, except if such days are holidays. OTHER BANKING SERVICES 1. Receive in custody funds, documents and valuable objects; 2. Act as financial agent and buy and sell, by order of and for the account of their customers, shares, evidences of indebtedness and all types of securities; 3. Make collections and payments for the account of others and perform such other services for their customers as are not incompatible with banking business; 4. Upon prior approval of the Monetary Board, act as managing agent, adviser, consultant or administrator of investment management/advisory/consultancy accounts; and 5. Rent out safety deposit boxes. PROHIBITION TO ACT AS INSURER ¡ A bank shall not directly engage in insurance business as the insurer. PROHIBITED TRANSACTIONS FOR DIRECTORS, OFFICERS, EMPLOYEE OR AGENT ¡ Make false entries in any bank report or statement or participate in any fraudulent transaction, thereby affecting the financial interest of, or causing damage to, the bank or any person; ¡ Without order of a court of competent jurisdiction, disclose to any unauthorized person any information relative to the funds or properties in the custody of the bank belonging to private individuals, corporations, or any other entity: Provided, That with respect to bank deposits, the provisions of existing laws shall prevail; ¡ Accept gifts, fees or commissions or any other form of remuneration in connection with the approval of a loan or other credit accommodation from said bank; ¡ Overvalue or aid in overvaluing any security for the purpose of influencing in any way the actions of the bank or any bank; or ¡ Outsource inherent banking functions. PROHIBITED TRANSACTIONS FOR BORROWERS ¡ Fraudulently overvalue property offered as security for a loan or other credit accommodation from the bank; ¡ Furnish false or make misrepresentation or suppression of material facts for the purpose of obtaining, renewing, or increasing a loan or other credit accommodation or extending the period thereof; ¡ Attempt to defraud the said bank in the event of a court action to recover a loan or other credit accommodation; or ¡ Offer any director, officer, employee or agent of a bank any gift, fee, commission, or any other form of compensation in order to influence such persons into approving a loan or other credit accommodation application. PROHIBITION AGAINST EMPLOYMENT OF CASUAL OR NON- REGULAR BANK PERSONNEL ¡ Consistent with the provisions of Republic Act No. 1405, otherwise known as the Banks Secrecy Law, no bank shall employ casual or nonregular personnel or too lengthy probationary personnel in the conduct of its business involving bank deposits. TRUST OPERATIONS ¡ Only a stock corporation or a person duly authorized by the Monetary Board to engage in trust business shall act as a trustee or administer any trust or hold property in trust or on deposit for the use, benefit, or behoof of others. For purposes of this Act, such a corporation shall be referred to as a trust entity. ¡ A trust entity shall administer the funds or property under its custody with the diligence that a prudent man would exercise in the conduct of an enterprise of a like character and with similar aims. TRUST OPERATIONS (POWERS) 1. Act as trustee on any mortgage or bond issued by any municipality, corporation, or any body politic and to accept and execute any trust consistent with law; 2. Act under the order or appointment of any court as guardian, receiver, trustee, or depositary of the estate of any minor or other incompetent person, and as receiver and depositary of any moneys paid into court by parties to any legal proceedings and of property of any kind which may be brought under the jurisdiction of the court; 3. Act as the executor of any will when it is named the executor thereof; 4. Act as administrator of the estate of any deceased person, with the will annexed, or as administrator of the estate of any deceased person when there is no will; 5. Accept and execute any trust for the holding, management, and administration of any estate, real or personal, and the rents, issues and profits thereof; and 6. Establish and manage common trust funds, subject to such rules and regulations as may be prescribed by the Monetary Board. CONSERVATORSHIP AND RECEIVERSHIP PROVISIONS FROM THE NEW CENTRAL BANK ACT OF 1993 CONSERVATORSHIP ¡ Conservatorship is a form of temporary management and control of a problem bank, with the conservator taking over all the powers of the bank’s shareholders, directors, and officers. ¡ “in a state of continuing inability or unwillingness to maintain a condition of liquidity deemed adequate to protect the interest of depositors and creditors” (Sec 29) ¡ The Bangko Sentral ng Pilipinas appoints the conservator. ¡ Conservatorship shall not exceed one (1) year. RECEIVERSHIP ¡ A ”bank declared insolvent or placed under receivership by Monetary Board” shall refer to a banking institution that has been forbidden from doing business in the Philippines by the Monetary Board under the applicable grounds provided for under Section 30 of RA 7653 and placed under receivership of the PDIC. RECEIVERSHIP ¡ Unable to pay its liabilities as they become due in the ordinary course of business; ¡ Insufficient realizable assets, as determined by Bangko Sentral, to meet its liabilities; ¡ Cannot continue in business without involving probable losses to its depositors or creditors; or ¡ Willfully violated a cease and desist order under Section 37 that has become final, involving acts or transactions which amount to fraud or a dissipation of the assets of the institution.