MORNBFI Vol. 1 - Planters Development Bank

APP. Q-4009.12.31bank. This likewise lays down measures toprovide an acceptable level of financialtransparency to all stakeholders. Suchactions could include, but are not limitedto, any one (1), or a combination of thefollowing:1. A change in the composition of theboard of directors or any of the mandatorycommittees (under the MORNBFI);2. An enhancement to the frequencyand/or depth of reporting to the board ofdirectors;3. A reduction in exposures to and/ora termination or reduction of businessrelationships with affiliates that poseexcessive risk or are inherentlydisadvantageous to the supervised FI; and4. A change of external auditor.A bank may be subject to PCAwhenever any or all of the followingconditions obtain:(1) When either of the Total Risk-BasedRatio 1 , Tier 1 Risk-Based Ratio, or LeverageRatio 2 falls below ten percent (10%), sixpercent (6%) and five percent (5%),respectively, or such other minimum levelsthat may be prescribed for the said ratiosunder relevant regulations, and/or thecombined capital account falls below theminimum capital requirement prescribedunder Sec. 4111Q;(2) CAMELS composite rating is less than“3” or a Management component rating of lessthan “3”;(3) A serious supervisory concern hasbeen identified that places a bank at morethan-normalrisk of failure in the opinionof the director of the ExaminationDepartment concerned, which opinion isconfirmed by the Monetary Board. Suchconcerns could include, but are notlimited, to any one (1) or a combinationof the following:a. Finding of unsafe and unsoundactivities that could adversely affect theinterest of depositors and/or creditors;b. A finding of repeat violations of lawor the continuing failure to comply withMonetary Board directives; andc. Significant reporting errors thatmaterially misrepresent the bank’sfinancial condition.The initiation of PCA shall berecommended by the Deputy Governor,SES to the Monetary Board for approval.Any initiation of PCA shall be reported tothe PDIC for notation. Upon PCA initiation,the BSP shall require the bank to enter intoa MOU committing to the PCA plan. TheMOU shall be subject to approval by theMonetary Board.In order to monitor compliance withthe PCA, quarterly progress reports shallbe made. The BSP reserves the right toconduct periodic on-site visits outside ofregular examination to validatecompliance with the PCA plan.Subject to Monetary Board approval,sanctions may be imposed on any banksubject to PCA whenever there isunreasonable delay in entering into a PCAplan or when PCA is not being compliedwith. These may include any or all of thefollowing:(1) monetary penalty on or curtailmentor suspension of privileges enjoyed bythe board of directors or responsibleofficers;(2) restriction on existing activities thatthe supervised FI may undertake;(3) denial of application for branchingand other special authorities;(4) denial or restriction of access toBSP credit facilities; and(5) restriction on declaration ofdividends.On the other hand, if the bank subject toPCA promptly implements a PCA plan andsubstantially complies with its conditions, itmay continue to have access to BSP creditfacilities notwithstanding non-compliancewith standard conditions of access to such1Otherwise known as CAR2Total Capital / Total AssetsQ RegulationsAppendix Q-40 - Page 2Manual of Regulations for Non-Bank Financial Institutions