1.

Universal Bank
Powers (Sec 23, GBL) 1. KB Sec 29, see KB 2. Powers of an investment house 3. Power to invest in non-allied enterprise Sec (24) investment in the equities of allied and non allied enterprises. Allied may either be financial or non-financial GR: total investment not to exceed 50% of net worth of the bank (in equities of allied and non-allied ent) not to exceed 25% in any one enterprise Net worth(def) = total of the unimpaired paid in capital including paid in surplus, retained earnings and undivided profit, net of valuation reserves and other ads Xpn: as otherwise prescribed by Monetary Board

2. Commercial Bank
1. 2. 3. 4. 5. Same KB powers with UB No IH power No power to invest in non-allied Same power with UB to invest in Allied Ent Same governed by GBL

Sec. 30 Equity Investment in Allied Enterprise GR: total investment not to exceed 35% of net worth of the bank (in equities of allied, whether financial or non financial) not to exceed 25% in any one enterprise

Xpn: as otherwise prescribed by Monetary Board

Sec. 25 Equity Investment in Financial Allied Ent. May own up to 100% equity of TB, RB or a financial allied enterprise Publicly listed UB or KB may own up to 100% of voting stock of only 1 other UB or KB. Sec 26 Equity Investment in Non Financial Allied Ent. UB in non-financial allied enterprise may own up to 100% of equity Sec 27 Equity Investment in Non Allied Ent. UB in non-allied enterprise shall not exceed 35% of total equity Not to exceed 35% of voting stock Sec 28 Equity Investment UB in quasi banks limit of 40%of equity investment of universal bank

Sec. 31 Equity Investment in Financial Allied Ent. May own up to 100% of equity of a TB or RB If other allied ent. Like another KB, such investment shall remain a minority Sec. 32 Equity investment in Non Financial Allied Ent. KB in non-financial allied enterprise may own up to 100% of equity
No power Enterprise to invest in Non Allied

Sec 28 Equity Investment KB in quasi banks limit of 40%of equity investment. Same with universal bank

2.Commercial Bank (KB) powers same with UB

Sec. 29 Powers of KB
(a) Powers In addition to the general powers incident to corporations and those provided in other laws, a KB shall have the authority to exercise all such powers as may be necessary to carry on the business of commercial banking, such as 1. accepting drafts and issuing letters of credit; 2. discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; 3. accepting or creating demand deposits; 4. receiving other types of deposits and deposit substitutes; 5. buying and selling foreign exchange and gold or silver bullion; 6. acquiring marketable bonds and other debt securities; 7. and extending credit, subject to such rules as the Monetary Board may promulgate. It may also exercise or perform any or all of the following: (a) Invest in the equities of allied enterprises as provided in Sections 31 and 32of R.A.No.8791; (b) Purchase, hold and convey real estate as specified under Sections51and52ofR.A.No.8791; (c) Receive in custody funds, documents and valuable objects; (d) 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; (e) Make collections and payments for the account of others And perform such other services for their customer s as are not incompatible with banking business; (f) Upon prior approval of the Monetary Board, act as managing agent, adviser, consultant or administrator of investment management/advisory/consulta ncy accounts; (g) Rent out safety deposit boxes;

and (h) Engage in quasi-banking functions.

What is Allied Financial? Function is almost similar to a bank Ex. Investment House, credit card coy. What is allied non-financial enterprise? Based on purpose Ex. Warehouses, safety deposit, life insurance What is non- allied enterprise? Not related at all in banking Ex. Real property, mining What is investment house? Underwriting company by guaranteeing a sale of stocks For every time, needs approval of MB 1. Net worth 2. Limit 3. Ownership requirement

3. Thrift Bank
1. Capitalization is 1Bn 2. Can it invest? Yes 25% total 15% sole enterprise 3. Cannot engage in foreign exchange 4. Can discount papers with government banks 5. Can extend loans with personal property as collateral 6. Ownership In case of shares, 40% Filipino / 60% foreign (reverse) 7. In case of board of directors

4. Rural bank
1. not allowed to extend credit to employees

2. Cannot extend loans with personal property as collateral 3. Ownership 100% Filipino owned 4. Boards seat No foreign seat allowed in board Allowed government officials to be part of the board

Does not allow govt person as official of board unless allowed by law 8. As to taxes Exempt from income and prop. taxes for first 5 years

5. Can be established in urban or Manila 6. can avail of a loan with untitled land provided at least 5 years OCEN

5. Cooperative Bank
1. Established only by coop Can non-coop member avail? Yes, they can perform services with non-member or 3rd person. The only difference they can exempt from taxes coop members but not the non-members.

6. Islamic
interest prohibited in shorias law As to investment aggregate- 25% Other 30% They can invest in allied but non-allied

Foreign banks- banks not organized under Phil. law

Is foreign bank allowed in RP? Yes How? 1. Investing in voting stock 2. subsidiary 3. branch Only 1 mode of entry is allowed among the 3 Gen. Requirements-- prior approval by MB (sec 3 RA 772) Requirements: 1. Reputation 2. stability 3. reciprocity 4. will to share technology

-[

Voting share-- allowed to vote Non voting share no control - receiving only economic benefits Mode I 60% - max. voting of existing domestic 1. License needed? No coz investing is not doing business and the domestic bank is already licensed 2. Must be listed in PSE. Why? coz members can be monitored by PSE, SEC, BSP How much can invest? UB KB TR RB Coop Islamic A foreign bank 60 (max) 40 60 60 none only A foreigner -- 40% (max) 40 40 40 Only fil. members Separate entity from mother company Diff. bet II and III forms part of mother company Ex. BPI and its diff. branches Mode II 1. Licensed required? no coz it is already incorporated in the Philippines 2. prior MB authority required 3. listed in PSE 4. max 60% investment 5. top 150 or top 5 6. that company should be publicly listed in their country, if not govt owned bank Mode III 1. Obtain license 2. which law governs if operation GBL -- if internal foreign law 3. sworn undertaking in case of insolvency HO is ultimate liable. debts here will be preferred here than its own obligation 4. publicly listed 5. 210 M for the first 3 branches / 35 M per succeeding branch (6 branches max) (ex. BPI and BPI Family)

6. assigned a resident agent (for summon purposes) if none, summon will be served to governor of CB Instances CB can suspend license of foreign bank 1. In case of insolvency that it will affect domestic bank industry

OBU is any bank other than domestic banks engage in foreign currency transaction
Requirement? Criteria for selection the ff factors shall serve as basis for the issuance of certificate of authority to operate an offshore banking unit: (1) liquidity and solvency positions; (2) networth and resources base; (3) managerial and international banking expertise of applicant bank (4) contribution to the Philippine economy; and (5) other relevant factors, such a participation in the equity of local commercial banks and appropriate geographic representations. Why law allow OBUs? a. Can OBUs transact with domestic? Yes b. Can OBUs transact with foreign? Yes Is there a difference with a and b? With A usual tax applies With B income is tax exempt In terms of law application? Yes coz some laws does not apply like: 1. Foreign currency law 2. Usury law (does not apply to foreign bank) 3. PDIC applies 4. Bank secrecy applies also to foreign act.