MORNBFI Vol. 1 - Planters Development Bank

APP. Q-2011.12.31directly in equity is recognized in profit orloss in accordance with Section 3.c.1.f. If, in the rare circumstance that areliable measure of fair value is no longeravailable, it becomes appropriate to carrythe equity security at cost (i.e, INMES) ratherthan at fair value (i.e, Available-for-Sale), thefair value carrying amount of the securityon that date becomes its new cost. Anyprevious gain or loss on that equity securitythat has been recognized directly in equityin accordance with Section 3.c.1 shallremain in equity until the security is soldor otherwise disposed of, when it shall berecognized in profit or loss. If the financialasset is subsequently impaired, any previousgain or loss that has been recognizeddirectly in equity is recognized in profit orloss in accordance with Section 3.c.1.g. The following securities bookedunder the HTM category, shall be exemptedfrom the “tainting” provision for prudentialreporting purposes which prohibits FIs fromusing the HTM category and requiresreclassification of the entire HTM portfolioto the Available-for-Sale category during thereporting year and for the succeeding two(2) full financial years whenever an FI sellsor reclassifies more than an insignificantamount of HTM investments beforematurity, other than for reasons specifiedin Items “a(a)” to “a(c)” of Section 3 of thisAppendix: Provided, That securities rejectedunder Items “i” and “ii”, shall continue tobe booked under the HTM category:i. Securities offered and accepted intender offers pursuant to liabilitymanagement transactions of the Republicof the Philippines, Provided: That Flsmaintain appropriate documentation onsuch transactions;ii. Securities offered and accepted indebt exchange offerings of GOCCs whichcarry the guarantee of the PhilippineNational Government, andiii. Foreign currency denominated NG/BSP bonds/debt securities, outstanding asof 10 February 2007, which werereclassified from the HTM category in viewof the increased risk-weights of saidsecurities under Appendix Q-46 withinthirty (30) calendar days after 10 February2007. The subject securities oncereclassified shall be accounted for inaccordance with the measurementrequirements of their new category (i.e.,Available-for-Sale securities).Sec. 5. Impairment. A debt or equitysecurity is impaired and impairment lossesare incurred if, and only if, there is objectiveevidence of impairment as a result of eventthat occurred after the initial recognition ofthe security (a “loss event”) and that lossevent has impact on the estimated futurecash flows of the securities. Losses expectedas a result of future events, no matter howlikely, are not recognized. Objectiveevidence that the security is impairedincludes observable data that comes to theattention of the holder of the security aboutthe following loss events:a. significant financial difficulty of theissuer or obligor;b. a breach of contract, such as adefault or delinquency in interest orprincipal payments;c. the FI, for economic or legal reasonsrelating to the issuer’s financial difficulty,granting to the issuer a concession that theFI would not otherwise consider;d. it becoming probable that the issuerwill enter bankruptcy or other financialreorganization;e. the disappearance of an activemarket for that security because of financialdifficulties; orf. observable data indicating that thereis a measurable decrease in the estimatedfuture cash flows from a portfolio ofManual of Regulations for Non-Bank Financial InstitutionsQ RegulationsAppendix Q-20 - Page 7