BSP To Issue New Guidelines On Trust Corporations; Interest Strong
By LEE C. CHIPONGIAN
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has noted renewed interests from banks in setting up trust corporations that are separate from the parent institution in anticipation of new supplementary guidelines clarifying the original circular.
The Monetary Board has reviewed the proposed additional guidelines to give more light to the provisions of Circular No. 710 which implemented the rules and regulations for the creation of trust corporations or TC either as subsidiaries or affiliates of banks and non-bank financial institutions.
The BSP has yet to issue the guidelines but it will address the need to clarify and differentiate the operations of a TC versus banks’ trust departments.
In the meantime, the supplementary guidelines will clarify issues that were forwarded to the BSP after consultations with the industry, according to sources. These are the issues on the distribution of trust products through bank networks and guidelines on the marketing of said products.
Also reviewed is the taxation of trust products such as unit investment trust products which are exchange-traded mutual fund products with fixed terms.
BSP Deputy Governor Nestor A. Espenilla Jr. said the additional TC guidelines will highlight risk management. “This is what the industry is looking for,” he said.
The most recent guidelines relating to TC that BSP has issued was a memorandum instructing banks with investment house functions to transact all activities relating to underwriting and securities dealing through a separate entity.
Circular No. 710, approved early in 2011, allowed the spin off of banks’ TC into a separate entity.
Based on the circular, the organizational requirements of establishing a TC has been patterned after the basic guidelines in setting up banks with the exception of the nationality provision. There was no ceiling on foreign ownership of a TC.
The TC is required to have a minimum capitalization of P300 million for assets under management of up to P20 billion.
And, like banks, a TC will have a separate single borrower’s limit and DOSRI (directors, officers, stockholders and their related interests) ceilings.
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