MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has pegged the minimum capital requirement for banks seeking to engage in investment management activities as well as trust and other fiduciary businesses at P300 million.
BSP Governor Amando Tetangco Jr. issued BSP Circular 756 last April 24 amending certain provisions of the manual of regulation for banks and manual of regulations for non-bank financial institutions to align the requirements for the grant of a full trust license and an investment management authority.
Tetangco stated in the three-page circular that banks seeking to perform investment management activities should have a minimum capital account of not less than P300 million or such amount that may be required by the central bank’s Monetary Board.
The circular stated that a bank or financial institution should have an authority to engage in investment management activity in lieu of acting as trustee or administering any trust or holding property in trust or in deposit for the use of or in behalf of others.
To engage in investment management activities, the institution should also have an investment management committee, an investment management officer, and an investment management director.
Investment management activity refers to any activity resulting from a contract or agreement primarily for financial return whereby the bank binds itself to handle or manage investible funds or any investment portfolio in a representative capacity as financial or managing agent, adviser, consultant or administrator of financial or investment management, advisory, consultancy or any similar arrangement which does not create or result in a trusteeship.
Likewise, he pointed out that a financial institution seeking to engage in trust and other fiduciary businesses should have a minimum capital account of not less than P300 million.
Trust business refers to any activity resulting from a trustor-trustee relationship involving the appointment of a trustee by a trustor for the administration, holding, management of funds and properties of the trustor by the trustee for the use, benefit or advantage of the trust or of others called beneficiaries.
Meanwhile, other fiduciary business refers to any activity of a trust-licensed bank resulting from a contract or agreement whereby the bank binds itself to render services or to act in a representative capacity such as in an agency, guardianship, administratorship of wills, properties and estates, executorship, receivership, and other similar services which do not create or result in a trusteeship.
Earlier, Tetangco urged fund managers in the Philippines handling P3.8 trillion worth of funds to prepare for challenges brought about by the economic uncertainties in the US as well as the debt crisis in Europe.
“The asset management industry, as a whole, faces a market landscape that has fundamentally changed in the last four to five years. Today we live in an environment of more stringent capital requirements, steeper yardsticks of governance and higher standards for consumer protection,” Tetangco earlier told members of the Fund Management Association of the Philippines (FMAP).
Total assets under management by FMAP members stands at about P3.8 trillion or more than double the September 2008 level of P1.7 trillion. - By Lawrence Agcaoili