2003-08-06 Amendments to the Manual of Accounts and reportorial requirements for universal banks

and commercial banks to implement Section I (Accounting Treatment) of the Memorandum to All Banks and NBFIs Concerned dated 17 February 2003

I. Creation of new general and subsidiary ledger accounts, as follows:

Liability Account

44.a Unsecured Subordinated Debt (2-4-00-00)
Premium on Unsecured Subordinated Debt (2-4-00-01)
Discount on Unsecured Subordinated Debt (2-4-00-02)

Unsecured Subordinated Debt – Local Currency

This represents obligations arising from the issuance of unsecured subordinated debt denominated in local currency eligible as Tier 2 (supplementary) capital of the bank, subject to certain terms and conditions.

Premium on Unsecured Subordinated Deb – Local Currency
Discount on Unsecured Subordinated Deb – Local Currency

This represents unamortized premium/discount on issuance of unsecured subordinated debt denominated in local currency eligible as Tier 2 (supplementary) capital of the bank, subject to certain terms and conditions. The amortization of the premium/discount shall be made monthly by a debit/credit, respectively, to this account with the corresponding credit/debit to “Interest Expense on Unsecured Subordinated Debt – Local Currency” account.

Unsecured Subordinated Debt – Foreign Regular 1/

This represents obligations arising from the issuance of unsecured subordinated debt denominated in foreign currency eligible as Tier 2 (supplementary) capital of the bank, subject to certain terms and conditions. These debts shall be recorded at their foreign currency amounts and at their local currency equivalent at the applicable rate of exchange on transaction dates.

Premium on Unsecured Subordinated Debt – Foreign Regular 1/
Discount on Unsecured Subordinated Debt – Foreign Regular 1/

This represents unamortized premium/discount on issuance of unsecured subordinated debt denominated in foreign currency eligible as Tier 2 (supplementary) capital of the bank, subject to certain terms and conditions. The amortization of the premium/discount shall be made monthly by a debit/credit, respectively, to this account with the corresponding credit/debit to “Interest Expense on Unsecured Subordinated Debt – Foreign Regular” account. These debts shall be recorded at their foreign currency amounts and at their local currency equivalent at the applicable rate of exchange on transaction dates.

Unsecured Subordinated Debt – FCDU/EFCDU

This represents obligations arising from the issuance of unsecured subordinated debt denominated in foreign currency eligible as Tier 2 (supplementary) capital of the bank, subject to certain terms and conditions, and which the bank may record in the FCDU/EFCDU book, provided among others that they are issued only to non-residents and offshore banking units in accordance with Section 72.2.e of CB Circular No. 1389 dated 13 April 1993, as amended. These debts shall be recorded at their foreign currency amounts.

Premium on Unsecured Subordinated Debt – FCDU/EFCDU
Discount on Unsecured Subordinated Debt – FCDU/EFCDU

This represents unamortized premium/discount on issuance of unsecured subordinated debt denominated in foreign currency eligible as Tier 2 (supplementary) capital of the bank subject to certain terms and conditions, and which the bank may record in the FCDU/EFCDU book, provided among others that they are issued only to non-residents and offshore banking units in accordance with Section 72.2.e of CB Circular No. 1389 dated 13 April 1993, as amended. The amortization of the premium/discount shall be made monthly by a debit/credit, respectively, to this account with the corresponding credit/debit to “Interest Expense on Unsecured Subordinated Debt – FCDU/EFCDU” account. These debts shall be recorded at their foreign currency amounts.

Expense Accounts

85.c.1 Interest Expense on Unsecured Subordinated Debt (6-0-02-07)

Interest Expense on Unsecured Subordinated Debt – Local Currency

This represents payments and/or monthly accruals of interest on issued and outstanding unsecured subordinated debt denominated in local currency eligible as Tier 2 (supplementary) capital of the bank, subject to certain terms and conditions.

Interest Expense on Unsecured Subordinated Debt – Foreign Regular

This represents payments and/or monthly accruals of interest on issued and outstanding unsecured subordinated debt denominated in foreign currency eligible as Tier 2 (supplementary) capital of the bank, subject to certain terms and conditions. These debts shall be recorded at their foreign currency amounts and at their local currency equivalent at the applicable rate of exchange on transaction dates.

Interest Expense on Unsecured Subordinated Debt – FCDU/-EFCDU

This represents payments and/or monthly accruals of interest on issued and outstanding unsecured subordinated debt denominated in foreign currency eligible as Tier 2 (supplementary) capital of the bank, subject to certain terms and conditions, and which the bank may record in the FCDU/EFCDU book, provided among others that they are issued only to non-residents and offshore banking units in accordance with Section 72.2.e of CB Circular No. 1389 dated 13 April 1993, as amended. These debts shall be recorded at their foreign currency amounts.

II. Redefinition of the following general and subsidiary ledger accounts:

Asset Accounts

22.r Deferred Charges (1-4-40-00)

Deferred Charges

This represents expense prepayments expected to benefit the bank for a future period exceeding one (1) year such as organizational expense, goodwill, rent paid in advance, capitalized cost incurred related to the issuance of unsecured subordinated debt. Organizational expense and capitalized cost incurred related to the issuance of unsecured subordinated debt shall be amortized monthly over a period not exceeding five (5) year. Rent aid in advance and the like shall be amortized monthly or in accordance with the covering agreement, if any.

Deferred Charges - FCDU/EFCDU

This represents expense prepayments in connection with t ransactions of FCDUs/EFCDUs under Circular No. 1389, as amended, expected to benefit the bank for a future period exceeding one (1) year, including capitalized cost incurred related to the issuance of unsecured subordinated debt which the bank may record in the FCDU/EFCDU book, provided among others that they are issued only to non-residents and offshore banking units in accordance with Section 72.2.e of CB Circular No. 1389 dated 13 April 1993, as amended. These charges shall be recorded at their respective foreign currently amounts and shall be amortized monthly or in accordance with the covering agreement, if any.

Liability Accounts

37.a Accrued Interest Payable (2-3-20-02)

Accrued Interest Payable - Domestic

This represents the estimated liability for interest incurred/due but not yet paid on demand, savings, and time deposits and on domestic borrowings, including issuance of unsecured subordinated debt denominated in local currency, which shall be set up monthly against current operations.

Accrued Interest Payable – Foreign Regular 1/

This represents the estimated liability for interest incurred/due but not yet paid on foreign borrowings, including issuance of unsecured subordinated debt denominated in foreign currency, which shall be set up monthly against current operations. This account shall be recorded at their foreign currency amounts and at their local currency equivalent at the applicable rate of exchange prevailing at the end of the month

Accrued Interest Payable - FCDU/EFCDU

This represents the estimated liability for interest incurred/due but not yet paid on demand, savings, time deposits and on foreign borrowings, including issuance of unsecured subordinated debt denominated in foreign currency which the bank may record in the FCDU/EFCDU book, provided among others that they are issued only to non-residents and offshore banking units in accordance with Section 72.2.e of CB Circular No. 1389 dated 13 April 1993, as amended, which shall be set up monthly against current operations. This account shall be recorded at their foreign currency amounts. Sub-control accounts shall be maintained for interest due foreign banks not yet paid but covered with forward contract with the Bangko Sentral.

III. Revision in the BSP reports, with target dates of implementation as follows:

Title of the Report	Frequency	Target Date of Implementation
1  GL Report
a. Consolidated Statement of Condition	Monthly	08/31/03
b. Consolidated Statement of Income and Expenses	Quarterly	09/30/03
2. Consolidated Daily Report of Condition	Weekly	08/29/03 to 09/04/03
3  Published Statement of Condition (Form 2B)	Quarterly	09/30/03
4. Published Consolidated Statement of Condition (Form 2B.1)	Quarterly	09/30/03

The pertinent pages of the above listed revised BSP reports are attached as Annex A.

For compliance.