Thrift banks want a piece of trust business

INQ7MONEY TOPSTORIES

June 23, 2006
Updated 02:24am (Mla time)
Doris Dumlao
Inquirer

THRIFT banks are asking the central bank relax capital regulations on thrift banks that want to engage in the trust business, an industry official said.

Opportunities would open for smaller banks to handle accounts from the insurance sector, said Alfonso Salcedo, president of the Chamber of Thrift Banks (CTB) and of BPI Family Bank.

The CTB has proposed lowering the minimum capital requirements on thrift banks seeking authority to engage in the trust business, particularly trusteeship and fiduciary, to P325 million for those in Metro Manila and P100 million for those elsewhere, from the present P650 million, Salcedo reported to the CTB membership meeting Thursday.

For thrift banks that intend to go into full trust business, the proposal isto maintain the P650-million minimum capital requirement.

The proposal, if approved, will allow thrift banks with capitalization of less than P650 million to accept deposits from insurance companies, Salcedo said.

The central bank, Bangko Sentral ng Pilipinas (BSP), is developing a wider category of trust products, which are differentiated in terms of the trust department’s level of fiduciary responsibility, a BSP official said in an interview.

“Rather than regulate on a per-product basis, the idea is to define very clearly the framework and the categories of the products,” said Nestor Espenilla, BSP deputy governor for bank supervision.

This will make the regulations clearer to the market, Espenilla said.

“It will also facilitate better supervision, so we will no longer have to play a cat-and-mouse game whenever there’s a new product in the market,” he said.

Salcedo said the CTB was also working with the BSP on standardizing contract-to-sell schemes for housing, in an initiative intended to result in lower risk-weighting.

On a requirement for submission of income tax returns and audited financial statements by bank borrowers, Salcedo said the BSP would release amendments to a circular on the matter.

“While the BSP accepted our proposal for the exemption of loans to small enterprises from the requirement, giving this sector a period of two years within which to comply, the BIR [Bureau of Internal Revenue] reportedly denied this request,” Salcedo said.

“In this regard, the CTB and BSP agreed to write formally to the BIR to seek its support for an information drive that will help drive the SME [small and medium-scale enterprise] sector on the new requirement,” he said.

The CTB meanwhile is supporting a proposed “Credit Information System Act” in both houses of Congress, Salcedo said.

“The measure is seen to improve the reliability of credit information lowering overall credit risk and ultimately expand credit capacity,” he said. With INQ7.net

 

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