MORNBFI Vol. 1 - Planters Development Bank

APP. Q-3909.12.31In determining the acts or omissions included under the unsafe or unsound bankingpractice, an analysis of the impact thereof on the banks/quasi-banks/trust entities’operations and financial condition must be undertaken, including evaluation ofcapital position, asset condition, management, earnings posture and liquidityposition. The following circumstances shall be considered:(a)(b)(c)(d)The act or omission has resulted or may result in material loss or damage, orabnormal risk or danger to the safety, stability, liquidity or solvency of theinstitution;The act or omission has resulted or may result in material loss or damage orabnormal risk to the institution’s depositors, creditors, investors, stockholders orto the Bangko Sentral or to the public in general;The act or omission has caused any undue injury, or has given unwarrantedbenefits, advantage or preference to the quasi-bank or any party in the dischargeby the director or officer of his duties and responsibilities through manifestpartiality, evident bad faith or gross inexcusable negligence; orThe act or omission involves entering into any contract or transaction manifestlyand grossly disadvantageous to the bank, quasi-bank or trust entity, whether ornot the director or officer profited or will profit thereby.Certain acts or omissions as falling under this classification maybe determinedbased on the guidelines provided under Appendix Q-24.2. Less Serious Offense - These include major acts or omissions defined as quasi-bank/individual’s failure to comply with the requirements of banking laws, rules andregulations, provisions of Manual of Regulations(MOR)/Circulars/Memorandum as wellas Monetary Board directives/instructions having material 1/ impact on quasi-bank’ssolvency, liquidity or profitability and/or those violations classified as major offensesunder the Report of Examination, except those classified under unsafe or unsoundbanking practice.3. Minor Offense - These include acts or omissions which are procedural in nature, canbe corrected immediately and do not have material impact on the solvency, liquidityand profitability of the quasi-bank. All other acts or omissions that cannot be classifiedunder the major offenses/violations will be classified under this category.4. Minimum refers to the range of penalties to be imposed if the mitigating factor(s)outweigh the aggravating circumstances.5. Medium refers to the penalty to be imposed in the absence of any mitigating andaggravating circumstances or if the mitigating factor(s) offset the aggravating factor(s).1/SFAS/IAS defines materiality as any information, which if omitted or misstated, could influence the economic decisions ofusers taken on the basis of the financial statements. Per Financial Accounting Standard Board (FASB), it is defined as themagnitude of an omission or misstatement of accounting information.Q RegulationsAppendix Q-39 - Page 2Manual of Regulations for Non-Bank Financial Institutions