MORNBFI Vol. 1 - Planters Development Bank

APP. Q-46b08.12.31estate, export finance, trade finance,factoring, leasing, guarantees, bills ofexchange, etc.(5) Payment and settlement - Thisincludes activities relating to payments andcollections, inter-bank funds transfer,clearing and settlement.(6) Agency services - This refers toactivities of QBs acting as issuing and payingagents for corporate clients, providingcustodial services, etc.(7) Asset management - This includesmanaging funds of clients on a pooled,segregated, retail, institutional, open orclosed basis under a mandate.(8) Retail brokerage - This includesbrokering services provided to customersthat are retail investors rather thaninstitutional investors.(a) Any activity or product whichcannot be readily mapped into one (1) ofthe standardized business lines but whichis ancillary 1 to a business line shall beallocated to the business line to which it isancillary. If the activity is ancillary to two(2) or more business lines, an objectivecriteria or qualification must be made toallocate the annual gross income derivedfrom that activity to the relevant businesslines.(b) Any activity that cannot be mappedinto a particular business line and is not anancillary 1 activity to a business line shall bemapped into one (1) of the business lineswith the highest associated beta factoreighteen percent (18%). Any ancillaryactivity to that activity will follow the samebusiness line treatment.(c) QBs may use internal pricingmethods to allocate gross income betweenbusiness lines: Provided, That the sum ofgross income for the eight business linesmust still be equal to the gross income aswould be recorded if the QB uses the BasicIndicator Approach (BIA).(d) The process by which QBs maptheir business activities into thestandardized business lines must beregularly reviewed by party independentfrom that process.7. In computing the gross income ofthe QB, the amounts of the incomeaccounts reported in the operational risktemplate 2 must be equal to the year-endbalance reported in the FRP. Anydiscrepancy must be properly accountedand supported by a reconciliationstatement.Application Process for the Use of TSA8. QBs applying for the use of TSAshould submit the following documents totheir respective Central Points of Contact(CPCs) of the BSP:(a) An application letter signed by thepresident/CEO of the QB signifying itsintention to use TSA in computing thecapital charge for operational risk;(b) Written documentation of theBoard-approved operational riskmanagement framework as described inparagraph 3.(c) Written policies and criteria formapping business activities and theircorresponding gross income into thestandard business lines as described inparagraphs 5 to 7.(d) An overall roll-out plan of the QBincluding project plans and executionprocesses, with the appropriate time lines.Initial Monitoring Period9. The BSP may require a six (6)-monthperiod of initial monitoring of a QB’s TSAbefore it is used for supervisory capitalpurposes.Reversion from TSA to BIA10. A QB which has been approved touse TSA in computing its capital charge1Ancillary function is an activity/function that is not the main activity of a given business line but only as a support activity2Part V of the revised CAR report templateQ Regulations Manual of Regulations for Non-Bank Financial InstitutionsAppendix Q-46b - Page 2