MORNBFI Vol. 1 - Planters Development Bank

APP. Q-4611.12.31other assets, including bank premises,furniture, fixtures and equipment, will be100%, except in the following cases:a) Cash on hand and gold, which shallbe risk-weighted at zero percent (0%); andb) Checks and other cash items, whichshall be risk-weighted at twenty percent(20%).Accruals on a claim shall be classifiedand risk-weighted in the same way as theclaim. Bills purchased shall be classifiedand risk-weighted as claims on the draweebank. The treatments of credit derivativesand securitization exposures are presentedseparately in Parts IV and V, respectively.Investments in equity or other regulatorycapital instruments issued by banks or otherfinancial/non-financial allied/non-alliedundertakings will be risk-weighted at 100%,unless deductible from the capital base asrequired in Part II.Off-balance sheet items17. For off-balance sheet items, the riskweightedamount shall be calculated usinga two-step process. First, the creditequivalent amount of an off-balance sheetitem shall be determined by multiplying itsnotional principal amount by the appropriatecredit conversion factor, as follows:a) 100% credit conversion factor - thisshall apply to direct credit substitutes, e.g.,general guarantees of indebtedness(including standby letters of credit servingas financial guarantees for loans andsecurities) and acceptances (includingendorsements with the character ofacceptances), and shall include:i. Guarantees issued other thanshipside bonds/airway bills;ii. Financial standby letters of creditb) Fifty percent (50%) creditconversion factor – this shall apply to certaintransaction-related contingent items, e.g.,performance bonds, bid bonds, warrantiesand standby letters of credit related toparticular transactions, and shall include:i. Performance standby letters ofcredit (net of margin deposit), establishedas a guarantee that a business transactionwill be performed;This shall also apply to –i. Note issuance facilities andrevolving underwriting facilities; andii. Other commitments, e.g., formalstandby facilities and credit lines with anoriginal maturity of more than one (1) year,and this shall also include UnderwrittenAccounts Unsold.c) Twenty percent (20%) creditconversion factor – this shall apply to shortterm,self-liquidating trade-relatedcontingencies arising from movement ofgoods, e.g., documentary creditscollateralized by the underlying shipments,and shall include:i. Trade-related guarantees:- Shipside bonds/airway bills- Letters of credit – confirmedii. Sight letters of credit outstanding (netof margin deposit);iii. Usance letters of credit outstanding(net of margin deposit);iv. Deferred letters of credit (net ofmargin deposit); andv. Revolving letters of credit (net ofmargin deposit) arising from movement ofgoods and/or services;This shall also apply to commitmentswith an original maturity of up to one (1)year, and shall include Committed CreditLine for Commercial Paper Issued.d) Zero percent (0%) credit conversionfactor – this shall apply to commitmentswhich can be unconditionally cancelled atany time by the bank without prior notice,and shall include Credit Card Lines.This shall also apply to those notinvolving credit risk, and shall include:i. Late deposits/payments received;Manual of Regulations for Non-Bank Financial InstitutionsQ RegulationsAppendix Q-46 - Page 13