MORNBFI Vol. 1 - Planters Development Bank

APP. Q-4811.12.31investment policies that may affect the client’sdecision to continue the services of the TE shallbe disclosed to the client.In the case of non-discretionary publicinterest accounts such as employee benefit/retirement or pension funds, due diligencereview of the investment portfolio by theTE shall include providing investors withappropriate information needed to make aninformed investment decision and avoidpossible conflict of interest and self-dealingsituations.The TE should be able to show (inaddition to the specific written directivefrom the client) what it has done in theexercise of due diligence and prudence onits part to protect the interest of the clientand/or beneficiaries, especially foraccounts of public interest like retirement/pension fund accounts.The TE shall keep its clients informedof the investment and related activities byrendering periodic reports and financialstatements prescribed under Subsec.X425.1 and as necessary. The types ofreports and statements and the frequencyof their submission must be clearlyspecified in the TE’s written policies andprocedures.The TE shall also establish a system thatenables a trust account representative orofficer to periodically contact clientsand/or beneficiaries to determine whethertheir financial objectives and circumstanceshave changed.(2) Credit processEach trust entity shall define its creditprocess in relation to the discharge of theTE’s investment function. The processensures credit worthiness of investmentundertakings including dealings andrelationship with counterparties. It alsoserves to institutionalize the independenceof the credit process of the TE. The creditprocess must at least cover the following:a. Credit policies. Trust entities mustclearly define its credit policies andprocesses, including the use of internal andexternal credit rating and approval processrelative to the delivery of its instrumentfunction. The TE can share credit informationwith the bank proper subject to properdelineation and documentation. The creditprocess shall show the following at theminimum:i. Clear credit process flow, frominitiation of the lending activitiesenvisioned by the TE up to the executionof actual investment;ii. Credit criteria and rating used;iii. Manner by which the TE handlesthe information, including confidential andmaterial data, which is shared between andamong the departments, subsidiaries oraffiliates of the TE; andiv. Clear delineation of duties andresponsibilities of each of the departments,subsidiaries and affiliates of the TE, wheresuch groups or entities share the creditprocess.b. Counterparty accreditation process.The TE must clearly define the policies andthe processes it will undertake to accreditcounterparties, including the bank proper,and its subsidiaries and affiliates, for theirinvestment trading functions. It may use oravail itself of the accreditation process of itsbank proper provided there is properdelineation of functions. The counterpartyaccreditation process shall show thefollowing at the minimum:i. Clear accreditation process flowfrom the initiation of credit activities up tothe actual usage of lines;ii. Credit criteria and rating used;iii. Manner by which the TE handlesthe information, including confidential andmaterial data, which are shared betweenand among the departments, subsidiariesor affiliates of the TE;iv. Usage, duties and responsibilitiesof each of the department, subsidiaries andaffiliates of the TE, where there is sharing ofcredit lines between and among theseManual of Regulations for Non-Bank Financial Institutions App. Q-48 - Page 7