MORNBFI Vol. 1 - Planters Development Bank

APP. Q-4611.12.318. Gross income, for the purpose ofcomputing for operational risk capitalcharge, is defined as net interest incomeplus non-interest income. This measureshould:a) be gross of any provisions forlosses on accrued interest income fromfinancial assets;b) be gross of operating expenses,including fees paid to outsourcing serviceproviders;c) include fees and commissions;d) exclude gains/(losses) from thesale/redemption/derecognition of nontradingfinancial assets and liabilities;e) exclude gains/(losses) from sale/derecognition of non-financial assets; andf) include other income (i.e., rentalincome, miscellaneous income, etc.)C. Measurement of risk-weighted assets9. The resultant operational riskcapital charge is to be multiplied by 125%before multiplying by ten (10) [i.e., thereciprocal of the minimum capital ratio often percent (10%)].(As amended by M-2007-019 dated 21 June 2007)Part VIII. Disclosures in the AnnualReports and Published Statement ofCondition1. This section lists the specificinformation that banks have to disclose, ata minimum, in their Annual Reports, exceptItem "h", paragraph 4 which should alsobe disclosed in banks’ quarterly PublishedStatement of Condition. These enhanceddisclosures shall commence with AnnualReports for financial year 2007 andquarterly published statement of conditionfrom end-September 2007.2. Full compliance of these disclosurerequirements is a prerequisite before bankscan obtain any capital relief (i.e.,adjustments in the risk weights ofcollateralized or guaranteed exposures) inrespect of any credit risk mitigationtechniques.A. Capital structure and capital adequacy3. The following information withregard to banks’ capital structure and capitaladequacy shall be disclosed in banks’Annual Reports, except Item "h" belowwhich should also be disclosed in banks’quarterly published statement of condition:a) Tier 1 capital and a breakdown ofits components (including deductions solelyfrom Tier 1);b) Tier 2 capital and a breakdown ofits components;c) Deductions from Tier 1 fifty percent(50%) and Tier 2 fifty percent (50%) capital;d) Total qualifying capital;e) Capital requirements for credit risk(including securitization exposures);f) Capital requirements for marketrisk;g) Capital requirements foroperational risk; andh) Total and Tier 1 CAR on both soloand consolidated bases.B. Risk exposures and assessments4. For each separate risk area (credit,market, operational, interest rate risk in thebanking book), banks must describe theirrisk management objectives and policies,including:a) Strategies and processes;b) The structure and organization of therelevant risk management function;c) The scope and nature of riskreporting and/or measurement systems;andd) Policies for hedging and/ormitigating risk, and strategies and processesfor monitoring the continuing effectivenessof hedges/mitigants.Q RegulationsAppendix Q-46 - Page 38Manual of Regulations for Non-Bank Financial Institutions