RLBG OTP Module 07 - Special Topics in Credit PDF

MODULE 7: SPECIAL TOPICS IN CREDIT December 4, 2024 Kevin C. Jimeno Admin and Controls Head Retail Credit THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  TOPICS: Lending Coverage for Retail Lending Products AML Profiling UBO...

MODULE 7: SPECIAL TOPICS IN CREDIT December 4, 2024 Kevin C. Jimeno Admin and Controls Head Retail Credit THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  TOPICS: Lending Coverage for Retail Lending Products AML Profiling UBOs for Corporate Borrowers Related Party Transactions When and How to Present to Retail Sub- Crecom Special Cases THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  LENDING COVERAGE FOR RETAIL PRODUCTS THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Lending Coverage for Retail Products No geographical limit as long as the borrower maintains an active BPI deposit account All approved loan accounts are required to have a deposit account with BPI which shall be enrolled in Automatic Debit Arrangement (ADA) for loan repayment purposes. Waiver of ADA shall require the approval of the Division Head and Retail Loans Group Head provided the borrower's residence is situated within: a. 50-km radius from Head Office; or b. 20-km radius from the Retail Loans Center; or c. specific towns/cities approved by Management. THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. AML PROFILING THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. AML Risk Rating and Profiling Blacklisted Reject application and report to Applicants Compliance Office High Risk Conduct enhanced due diligence Applicants and elevate for approval Normal Risk Applicants THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. AML Risk Rating and Profiling Who should be rated? All individual borrowers, sureties, co-mortgagors For corporate borrowers, includes their: a. Any beneficial owner; b. Chairman of the Board of Directors/Trustees; c. Authorized signatories; d. President and Treasurer or their equivalent. THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. AML Risk Rating BLACKLISTED Applicants – Customer Denial THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. AML Risk Rating BLACKLISTED Applicants Question – give examples of blacklisted industries THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. AML Risk Rating BLACKLISTED Applicants THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. AML Risk Rating BLACKLISTED Applicants THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. AML Risk Rating HIGH RISK applicants THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. AML Risk Rating HIGH RISK applicants THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. AML Risk Rating HIGH RISK applicants THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. AML Risk Rating HIGH RISK applicants THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. AML Risk Rating HIGH RISK applicants Question – give examples of High Risk countries THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. AML Risk Rating HIGH RISK applicants · Afghanistan · Palestine · Botswana · Russia · Cuba · Somalia · Donetsk (Region of Ukraine) · Sudan · Ghana · Ukraine · Iraq · Venezuela · Jamaica · Yemen · Libya · Zimbabwe · Luhansk (Region of Ukraine) THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. What is the risk rating? Profile Risk Rating 1. Employed Unibank officer with rank of SVP 2. Employed as a cashier in City of Dreams Manila 3. Employed in a BPO in BGC 4. Self-employed operating 3 lotto outlets 5. Self-employed operating Czarina Money Changers 6. Iranian born in the US, currently employed and living in PH 7. Cousin-in-law of Vice President Sarah Duterte 8. Councilor in Quezon City THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. What is the risk rating? Profile Risk Rating 1. Employed Unibank officer with rank of SVP Normal 2. Employed as a cashier in City of Dreams Manila Normal 3. Employed in a BPO in BGC Normal 4. Self-employed operating 3 lotto outlets Normal 5. Self-employed operating Czarina Money Changers High 6. Iranian born in the US, currently employed and living in PH Blacklist 7. Cousin-in-law of Vice President Sarah Duterte Normal 8. Councilor in Quezon City Normal THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  Enhanced Due Diligence (EDD) Mandatory KYC Information A) Individual Applicants -- applicant, spouse, B) Corporate Borrowers: CB, CM, CB/CM 1. Registered business name; 1. Full name of customer; 2. Official address; 2. Date and place of birth; 3. Contact numbers or information; 3. Address; 4. Nature of business; and 4. Contact number or information; 5. Name, address and citizenship or 5. Citizenship or Nationality; nationality of 6. Nature of work, name of employer or i. Beneficial Owner, if applicable; nature of self-employment/business; ii. President (or equivalent); 7. Source/s of income; iii. Treasurer (or equivalent); and 8. Gender; iv. Authorized signatories 6. Specimen signatures or biometrics of authorized signatory/signatories (prior booking, not during credit eval) THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Enhanced Due Diligence (EDD) Additional KYC Information A) Individual Applicants -- applicant, spouse, CB, CM, CB/CM Supporting information on the intended nature of the business relationship, source of funds, or source of wealth of the customer (ITR, audited financial statement, loan application, deed of donation, deed of sale, etc); Reason or purpose for applying for a loan and other products to be availed of; List of banks where client has accounts; List of companies where he is a director, officer, stockholder, or authorized signatory; Other relevant information available through public databases or the internet. THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Enhanced Due Diligence (EDD) Additional KYC Information B) Corporate Borrowers Prior or existing bank references Name, address, nationality or citizenship, date of birth, nature of work, contact number and source of funds of each of the primary officers (i.e. President and Treasurer, or equivalent) Volume of assets, other information available through public databases or internet and supporting information on the intended nature of the business relationship, source of funds or source of wealth of the customer (ITR, audited financial statement, loan application, deed of donation, deed of sale, etc); Reason or purpose for applying for a loan and other products to be availed of THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. UBO’S FOR CORPORATE BORROWERS THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Ultimate Beneficial Owner (UBO) Why do we need to identify the UBO? Money launderers and terrorists routinely use the They also seek to avoid cloak of anonymity to freezing and forfeiture of prevent the AMLC and law their assets obtained enforcement agencies to through criminal activities. track them down. THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Ultimate Beneficial Owner (UBO) How do we identify the Beneficial Owner? Beneficial owner refers to any NATURAL PERSON who: Has ultimate controlling ownership interest in a corporate entity; Has ultimate effective control over an entity; or Holds the position of President and Treasurer Question: What is the opposite of a natural person? THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Ultimate Beneficial Owner How do we identify the Beneficial Owner? THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Ultimate Beneficial Owner STEP 1: Check if the company is listed in the Philippine Stock Exchange (PSE) THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Ultimate Beneficial Owner STEP 2: If the company is not listed in PSE, determine the type of ownership THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Ultimate Beneficial Owner STEP 2: If the company is not listed in PSE, determine the type of ownership Ms. A is a Beneficial Owner, with 50% direct Ownership of Y Corp. Ms. B is a Beneficial Owner, with 40% indirect Ownership of Y Corp. (B owns 80% of Z Corp., who owns 50% of Y Corp.) Ms. C is not a Beneficial Owner, with only 10% indirect Ownership of Y Corp. THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  Ultimate Beneficial Owner STEP 2: If the company is not listed in PSE, determine the type of ownership Y Corp Ms. A Ms. B Ms. C Z Corp (30%) (20%) (10%) (40%) Ms. C Ms. D Ms. E (25%) (50%) (25%) Ms. A is a Beneficial Owner, with 30% direct ownership of Y Corp. Ms. B is a Beneficial Owner, with 20% direct ownership of Y Corp. THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  Ultimate Beneficial Owner STEP 2: If the company is not listed in PSE, determine the type of ownership Y Corp 40% Z Corp 10% 25% Ms. C Question: Who are the ultimate beneficial owners of Y Corp? THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Ultimate Beneficial Owner STEP 3: When in doubt using Step 2, determine who exercises actual control THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Ultimate Beneficial Owner STEP 3: When in doubt using Step 3, determine who holds the position THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Ultimate Beneficial Owner (UBO) Perform KYC and AML Risk Rating on the UBO 1. Obtain minimum information – name, address, nationality / citizenship 2. Conduct sanctions screening and assess customer risk profile If the Beneficial Owner is high risk, the corporation should be treated as high risk. Conduct Enhanced Due Diligence and obtain necessary approvals. If the Beneficial Owner is blacklisted, the corporation should also be blacklisted. Account should be closed, and loan application should be rejected. 3. Indicate the results of sanctions screening and AML Risk Rating in the notepad. THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. AML Risk Rating THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  RELATED PARTY TRANSACTIONS (RPTS) THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  Related Party Transactions (RPTs) A Related Party refers to a party that the bank has a direct or indirect control over or that which has direct or indirect control over the bank Related party transactions are not prohibited provided that these are approved by the appropriate authority and conducted at arm’s length basis. Vetted to ensure that they are conducted on an arm’s length basis. Approved by the appropriate approving authority. Monitored to comply with set limits. Reported to the Board, Stockholders and Regulator. THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  Related Party Transactions (RPTs) These are transactions or dealings with related parties of the Bank, including its trust department (credit and non-credit related party transaction), regardless whether a price is charged or not. These cover all types of transactions both on- and off-balance sheet, regardless of which side of the transaction/deal the Bank is acting. THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  Related Party Transactions (RPTs) Three buckets of Related Parties: 1. DOSRI 2. Subsidiaries and Affiliates (SA) 3. Other Related Parties (ORP) In cases where the borrowing entity is linked to BPI both as DOSRI and as a subsidiary or affiliate, DOSRI rules apply. THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  DOSRI Directors – based on the General Information Sheet Officers – of BPI, any rank, from AM up to President Stockholders – any stockholder, natural or juridical person, owning at least 1% or more of the subscribed capital - Individually owned or collectively with spouse, 1st degree relatives, partnership where any of the aforementioned is a general partner, or a corporation of which the aforementioned collectively hold more than 50% of the total subscribed capital of that corporation Related Interest 1) Spouse or relative within the 1st degree of consanguinity or affinity or relative by legal adoption of a DOS Question – who are your first degree relatives? 1st degree relatives: Parent, child, parent-in-law, son/daughter-in-law THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. DOSRI Parents / Parents-in-Law BPI OFFICER / SPOUSE Children / Children in Law THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. DOSRI 2) Partnership of which the DOS, his/her spouse or relative within 1st degree is a general partner 3) Co-owner with DOS or his/her spouse or relative within 1st degree of the property or interest or right mortgaged, pledged or assigned to secure the loan (except when it covers only the co-owner’s undivided interest) 4) Corporation, association or firm of which any DOS or his/her spouse or relative within 1st degree hold or own at least 20% of the subscribed capital 5) Corporation, association or firm wholly or majority-owned or controlled by any related entity or a group of related entities in items (2) and (4) THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. DOSRI 6) Corporation, association or firm which owns or controls directly or indirectly whether singly or as part of a group of related interest at least 20% of subscribed capital of a substantial stockholder of the lending bank, or which controls majority interest of the bank - Substantial defined as owning shares that will allow at least 1 Board seat, or beneficial owner of more than 10% of any class of its security THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  Example The borrower is Tubbyland, Inc. How much is Po is a Senior Vice President in BPI. ownership of DOS & 1st degree? Name Position Relationship % share 15% (Po) + 4% (Sun Tinky-Winky President Po’s brother 51% Baby) = 19% total Dipsy Vice President Po’s brother 15% Laa-Laa Treasurer Po’s sister 15% DOS & 1st degree does NOT own at Po Corp. Sec. BPI SVP 15% least 20%. NOT Sun Baby Member Po’s mother 4% DOSRI. THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. DOSRI 7) Corporation, association or firm which has an existing management contract or any similar arrangement with the parent of the lending Bank 8) Non-government organization (NGO)/foundations that are engaged in retail microfinance operations which are incorporated by any of the stockholders and/or directors and/or officers or related banks THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Subdiaries and Affiliates Subsidiary – a corporation more than 50% (of the voting stock) of which is directly or indirectly owned, controlled, held with power to vote by its parent corporation. Affiliates BPI’s ownership or power to vote of at least 20% Interlocking officership / directorship where officer / director owns at least 20% of the borrowing entity Common stockholder owning at least 10% of BPI and at least 20% of the borrowing entity Management Contract BPI’s voting trust of at least 20% in the borrowing entity THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Example The borrower is Spice Inc. Emma B is a BPI Director with 2% ownership in BPI. Name % share Emma B is an interlocking director between BPI and Spice Inc. Mel B 20% Emma owns at least 20% of Spice Inc. Geri H 20% Spice Inc is an affiliate. Emma B 20% Victoria B 20% Spice Inc. is also a DOSRI – at least 20% owned by Mel C 20% a BPI Director, Officer or stockholder. Final classification – DOSRI. Question – What is Spice Inc.’s Final Classification? THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  Other Related Parties 2nd degree relatives of BPI’s SVPs and up 1st to 2nd degree relatives of BPI Groups’ SVPs and up 1st to 2nd degree relatives of Key Officers of Affiliates (e.g. Ayala Group) BPI’s ownership or power to vote of at least 10% up to less than 20% Interlocking officership / directorship where officer / director owns more than 2% to less than 20% of the borrowing entity Common stockholder owning at least 10% of BPI and at least 10% to less than 20% of the borrowing entity BPI’s voting trust of at least 10% to less than 20% Entities where at least 50% of revenues is from BPI / BPI and its subsidiaries and affiliates THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  DOSRI Other Related Party GRANDPARENTS / GRANDPARENTS-IN-LAW 2 2 SIBLINGS / PARENTS / 1 SIBLINGS-IN-LAW PARENTS-IN-LAW BPI OFFICER / SPOUSE 0 1st degree relatives: Parents, children, parents-in- law, son/daughter-in-law CHILDREN / 2nddegree relatives (legitimate or common-law): 1 CHILDREN-IN-LAW Grandparents, grandparents-in-law, grandchildren, grandchildren-in-law, siblings, siblings-in-law GRANDCHILDREN / 2 GRANDCHILDREN-IN-LAW THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Summary (Individuals) *President/Chief Executive Officers (CEO)/General Manager, Chief Operating Officer (COO), Chief Financial Officer (CFO), Treasurer and Corporate Secretary THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Summary (Entities) THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Example The borrower is Wan Director Inc. Harry is a BPI Executive Vice President. Name Relationship % share Degree Harry is an interlocking officer between BPI and Wan Director Inc. Liam Harry’s brother 50% 2nd Not a DOSRI since Harry & Taylor’s Niall Harry’s nephew 20% 4th ownership is 50% of the voting rights of another entity Spouse is a general partner in the entity “Significant influence” is established >50% of voting rights by virtue of agreement with another party Governs the financial and operating policies Able to appoint / dismiss administrative / management / supervisory biodty Able to cast majority votes at meetings of Board of Directors Designation is President, Chief Executive Officer, Chief Operations Officer / Chief Financial Officer and Treasurer, or their equivalent Suretyship agreement Spouses with ownership over properties due to marriage THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Rule on Aggregation 3. All proposals involving accounts common borrower with Institutional Banking Relationship Management Group (IBG-RMG) shall require the endorsement of the RMG officer handling the credit relationship prior to routing for credit approval. THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Rule on Aggregation 4. In determining the approval level, the proposed and existing exposures of the principal and co-borrower/s to be included/considered shall be the ff: THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  Single DLO Authority Limit** DLO approval is rendered via LOS. For Auto Loans, if application is scored Auto Approve, DLOs do not exercise their authority limits, but act as Auto Approve Checkers only to ensure that scoring is correct. Deviations that can be approved by DLOs singly are deviations on age requirement, employment / business tenure, or years of professional practice. *Subject to the policy on Marital Consent for Auto Loans **based on July 2024 DLO for Retail Loans THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Retail Minor Subcrecom and Subcrecom* *based on Annex2 Retail Committee Membership and Nominal Approval Authority Limits THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  Example #1: Proposed Loan: P2,000,000 Auto Loan Collateral: 2024 Toyota Fortuner 2.8 V White Pearl Total Appraised Value / LCP: P2,300,000 Existing Loans: Auto Loans: - Housing Loans: P1,000,000 (fully secured) BB Loans: - Deviations: None Classification of Credit AUTO HOUSING BUSINESS LOANS Approval Level DLO Secured 1,000,000 Unsecured 2,000,000 Clean Approval Medium LOS Product Sub total 2,000,000 1,000,000 0 TOTAL BFSB EXPOSURE 3,000,000 THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Example #2: Proposed Loan: P2,000,000 Auto Loan Collateral: 2024 Toyota Fortuner 2.8 V White Pearl Total Appraised Value / LCP: P2,300,000 Existing Loans: Auto Loans: - Housing Loans: P1,000,000 (fully secured) BB Loans: P45,000,000 Deviations: None Classification of Credit AUTO HOUSING BUSINESS LOANS Approval Level DLO Secured 1,000,000 45,000,000 Unsecured 2,000,000 Clean Approval Medium LOS Product Sub total 2,000,000 1,000,000 45,000,000 TOTAL BFSB EXPOSURE 48,000,000 THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Example #3: Proposed Loan: P10,000,000 Housing Loan Collateral: House & Lot (non-tie-up, medium marketability) Total Appraised Value / LCP: P30,000,000 Existing Loans: Auto Loans: P500,000 1 unit Housing Loans: P1,000,000 (fully secured) BB Loans: Deviations: None Classification of Credit AUTO HOUSING BUSINESS LOANS Approval Level Retail Minor Secured 11,000,000 Unsecured 500,000 SubCrecom Clean Product Sub total 500,000 11,000,000 0 Approval Medium LOS TOTAL BFSB EXPOSURE 11,500,000 THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Example #4: Proposed Loan: P27,000,000 Housing Loan -individual Collateral: House & Lot (non-tie-up, low marketability) Total Appraised Value / LCP: P30,000,000 Existing Loans: Auto Loans: P500,000 1 unit Housing Loans: BB Loans: P2,000,000 (fully secured) Deviations: None Classification of Credit AUTO HOUSING BUSINESS LOANS Approval Level Retail Minor Secured 24,000,000 2,000,000 Unsecured 500,000 3,000,000 SubCrecom Clean Product Sub total 500,000 27,000,000 2,000,000 Approval Medium LOS TOTAL BFSB EXPOSURE 29,500,000 THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Example #5: Proposed Loan: P2,000,000 Auto Loan Collateral: 2024 Mitsubishi Montero 2.4 SPORT GT 4X4 Total Appraised Value / LCP: P2,450,000 Existing Loans: Auto Loans: Housing Loans: P60,000,000 (partially secured) BB Loans: Deviations: None Classification of Credit AUTO HOUSING BUSINESS LOANS Approval Level DLO Secured 48,000,000 Unsecured 2,000,000 12,000,000 Clean Approval Medium LOS Product Sub total 2,000,000 60,000,000 0 TOTAL BFSB EXPOSURE 62,000,000 THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Example #6: Proposed Loan: P1,000,000 Housing Loan Collateral: House & Lot (tie-up) Total Appraised Value / LCP: P2,000,000 Existing Loans: Auto Loans: P2,000,000 Housing Loans: P59,000,000 (partially secured) BB Loans: Deviations: None Classification of Credit AUTO HOUSING BUSINESS LOANS Approval Level Retail Secured 48,000,000 Unsecured 2,000,000 12,000,000 SubCrecom Clean Product Sub total 2,000,000 60,000,000 0 Approval Medium Credit TOTAL BFSB EXPOSURE 62,000,000 Offering (CO) THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. SAMPLE CASES THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Case 1 Loan Amount Php 15 Mn Applied Term 10 years What should be the correct GMIR 45% LVR 50% loan product for this Collateral Commercial Building TAV Php 30 Mn application, given the source Loan Purpose Acquisition of residential – commercial building for occupancy and of repayment and loan investment (same as collateral). Collateral is currently registered purpose? under parents, for transfer to the corporation. Pay-off of existing HL of the parents How will you package this Excess proceeds for renovation of the dormitory. application? Borrower Type Corporation with individual co-borrowers Deposit Since 2010, ADB of ~ 150K, BECC with 225K CL How should the cashflow from Relationship the business be computed? What checking will you Loan Relationship None request? Source of Family-owned dormitory and eatery operating for > 10 years with repayment monthly income of Php335K. Income was computed from field Originally requested term is 10 verification of dormitory & canteen. Business was previously under a sole prop by the parents. years, however, based on the Corp is now handled by children and their spouses. Eldest child simulated cashflows, the loan (Chairman / President) & his spouse to act as CB. can be repaid in 7 years. The Deviations Business newly incorporated (1 year) clients are insisting on a 10- One of the shareholders with cancelled cards dated year term to manage their 75 2008/2005/2017 with total OB of Php 102K. expenses. What will be your THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  Case 2 Loan Amount Php 686K Term 5 years GMIR 45% (based on 39K) Down payment 20% 48% (based on 36K) How will you compute 30% (based on 58K) for income and GMIR? Collateral Suzuki Ertiga Selling Price Php 858K Which income will you use – derived income Loan Purpose For personal use based on PS list, or Borrower Type Individual borrower (single) actual income based on COE? Deposit Relationship Depositor, minimum balance; BECC with 36K CL, excellent Loan Relationship None Source of repayment Pre-Selected Depositor with derived income of P58K What is your credit Based on submitted COE: IT Operations Analyst at decision? Accenture for 4 years with GMI of 33K + fixed allowance of 3K + ave monthly OT of 3K; BPI payroll client Deviations None Other Information With previously approved and unavailed auto loan for the same unit under a different dealer 76 THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Case 3 Loan Amount Php 800 K Applied Term 10 years What is your credit GMIR 30% LVR 64% decision? Collateral Residential H & L TAV Php 9.88 Mn Loan Purpose PEL – for travel to Europe. Client initially Re-availment of paid-up portion on existing HL, collateral with HL. requested for 10 Borrower Type Individual borrowers (spouses) years. Given the purpose of the Deposit Relationship Since 2009, ADB of ~ Php 425K, BECC with 657K CL loan, what is your Loan Relationship 1 closed auto, excellent; 1 closed HL – excellent; 1 existing HL – recommended excellent; 1 existing BDO HL and 1 existing SBC Auto – unverified. Aggregate exposure: Secured – 5.928Mn, Unsec – 407K term? Source of repayment PB employed as President of a consultancy firm with income of If not via a Php400K / month, with verified COE, ITR and payslips. Property Equity Deviations None Loan (PEL), how Other Information Client initially requested term of 10 years. else can BPI grant Existing HL was for the acquisition of the collateral H&L under tie- the client’s up agreement with a local developer. Spouse with cancelled BECC in 2008, OB 8 years, with P164K monthly salary based on COE verified via EV phone daughter’s source of Daughter is 26 y/o, claimed as an insurance agent income? Other Information Father is already annulled with court decision on file Both names are on the letter of endorsement from developer What is your recommendation? 78 THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  Case 5 Loan Amount Php 417K Term 1 year What are the risks GMIR 35% Downpayment 40% on the source of Collateral Chevrolet Spark Selling Price P695K repayment? Loan Purpose For personal use Borrower Type Individual borrower (spouses) How can we provide Deposit Relationship Minimal depositors for > 13 years; BECC with P293K CL further validation on Loan Relationship 2 fully paid auto loans – excellent the income received Source of repayment Both spouses are pastors. Income is from ”lovegifts” and from by the client? offerings of foundations and private donations. Subject’s income is P130K – P60K from lovegifts, and P70K from offerings & Based on the donations, validated by a COE. information Subject is the founder and Chairman of the Board of the church. provided, what is Other Information TU scores: subject – medium risk, spouse – very low risk. your Decision matrix is DLO eval. On file are bank credits: BDO credits – 2x from Feb to June, recommendation? amounting to P400K; BPI credits – 3x from Jan to April, amounting to P162K 79 THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  Case 6 Loan Amount Php 2.74 Mn Term 5 years What are the risks GMIR 47% Downpayment 30% based on the negative Collateral Toyota Fortuner Selling Price 3.92Mn results of verification Loan Purpose For personal use on the client’s Borrower Type Individual borrowers (spouses) business? Deposit Relationship None This application was Loan Relationship None submitted together Source of repayment Business established in 2017 is SEC registered under different with 3 other persons (not the client). Claimed with dummy representatives who are Filipino citizens. TRCs provided are either negative, or applications. Per AO, insufficient to generate income for the requested loan amount. other applications may Client has another business registered in DTI under a different pull-out if this account person as well. is not processed and Other Information Clients are Chinese nationals, cannot speak English and are approved. requesting for an interpreter. Per AO, client is also willing to provide his own interpreter for the Bank to interview instead. What is your credit Clients applied with Fil-Chi friends. This application was submitted together with 3 other applications. Per AO, other applications may decision for this pull-out if this account is not processed and approved. application? Details of unit to be acquired not yet80provided. THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Case 7 Loan Amount P 12.95 Mn Applied Term 5 years What checkings will you GMIR 48% LVR 60% request? Collateral Condo under Tie-Up TAV P 21.5 Mn Loan Purpose Acquisition of condo unit for occupancy of President and spouse How will you compute Borrower Type Corporate borrower (holding corporation), with President and Treasurer as sureties income? Corp – depositor since 2015, ~50K ADB Deposit President – Preferred with ~1M ADB, BECC with 400K CL, sat If the Treasurer was not Relationship handling the President’s spouse, Treasurer – joint account with Pres will you require her as Loan Relationship Pres and spouse with closed HL, excellent handling surety? Source of Corporation is a holding company for the investments of Spouses repayment President – based on COE, employed in another corporation as Chief Operating Officer >5 years, with GMI of P525K; employer is a What is your credit manufacturer of PVC pipes decision? Deviations None Other details Title will be registered under the corporation Spouses own 95% of corp Other incorporators are relatives of the Spouses TU score of Spouses is low risk 81 THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.  Case 8 Loan Amount P 3.5Mn Applied Term 10 years How do we verify GMIR 33% LVR 65% employment abroad? Collateral House & Lot Selling Price 5.41 Mn What checkings / Loan Purpose Acquisition of residential house & lot for occupancy, secondary market requirements will you Borrower Type Individual borrowers, spouses require? Deposit Relationship PB is preferred, ADB of P1.27Mn, BECC CL 129K satisfactory What is your Loan Relationship 1 closed auto, satisfactory handling recommendation? Source of repayment PB is employed in a BPO in Singapore as Associate Director, hired in March 2019, regular, GMI is P180K based in submitted payslips Other Information With reported past due credits in TU, score is low risk Spouse is stay-at-home 82 THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Let’s discuss Retail Credit Division THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY. Kevin C. Jimeno THIS DOCUMENT IS THE PROPERTY OF BANK OF THE PHILIPPINE ISLANDS. FOR INTERNAL USE ONLY.