THE Monetary Board has released the guidelines for banks to make use of the Japanese yen/Philippine peso (JPY/PHP) Swap Facility that the Bangko Sentral ng Pilipinas (BSP) and the Bank of Japan (BOJ) created last year under a cross-border liquidity agreement.
The Resolution No. 1281of the Monetary Board states that a bank can avail of the JPY/PHP Swap Facility provided it has established the presence of an “emergency situation;” it has yen holdings that can be delivered and deposited to the Bangko Sentral’s account at the BOJ; it has CAMELS/ROCA composite rating of at least “3” and a Management/Risk Management component rating of at least “3” in the latest Report of Examination; it has no unsaf e or unsound banking practice cited in the latest Report of Examination; and it has complied with the minimum capital requirement and risk-based capital ratio as provided under applicable and existing capital adequacy framework.
“For purposes of this facility, an emergency situation is when a bank is under a state of severe shortage of PHP liquidity or under serious financial pressures brought about by unforeseen events or events which though foreseeable, cannot be prevented by the bank concerned,” it stated.
The Monetary Board said a bank shall submit an application to the appropriate department of the supervision and examination sector, and a copy furnished with the Treasury Department (TD), as well a certification under oath that the applicant bank meets the eligibility requirements and a declaration that there is an emergency situation in the bank; and a duly notarized secretary’s certificate together with a resolution of the board of directors of the bank.