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GENERAL BANKING
LAW
Topics
1. Banks
a. Nature of business
b. Authority to incorporate and
operate
c. Classification of Banks
7. Loan to Banks
a. Loans without collateral
2. Functions of Banks
a. Deposit Function
b. Loan Function
c. Other functions
d. Prohibited Acts
3. Ownership of Banks
a. Foreign Ownership
b. Filipino Stockholdings
c. Stockholdings of Family Groups
and related interests
b. Emergency Loans
8. Conservatorship
a. Grounds
b. Powers of Conservatorship
9.
Objectives
General
Objective:
Objectives
At
functions;
Discuss and apply the rules on ownership of banks;
Describe and evaluate the management of banks;
and
Discuss and apply the rules on conservatorship,
receivership, liquidation, and trust operation of
banks
8791
AN ACT PROVIDING FOR THE
REGULATION OF THE
ORGANIZATION AND
OPERATIONS OF BANKS, QUASIBANKS, TRUST ENTITIES AND
FOR OTHER PURPOSES
Short Title: General Banking Law of
2000
1. Banks
A. Definition
B. Nature of business
C. Authority to incorporate and operate
D. Classification of Banks
A. Definition
Banks
in:
the lending of funds
obtained in the form of
(Sec. 8,
GBL)
Stock corporation
Funds obtained from public
Problem
SA
Answer
Yes.
Sec. 2, GBL.
Republic v. Security
Credit and
Acceptance Corporation.
Funds were derived from the public;
Lent out the deposit to persons;
Violation - engaging in banking
without securing the administrative
authority required in Republic Act No.
337.
A. Definition
Quasi-banks
B. Nature of Business
Policy (Sec. 2, GBL)
The State recognizes the vital role of
B. Nature of Business
Rule
GBL)
If unsettled after seven (7) calendar days, Bangko
INDISPENSABLE TO NATIONAL
INTEREST
C. Authority to Incorporate
and Operate
TO INCORPORATE: Articles of
Prudential Measures
Reserve
Requirements
Single Borrowers Limit
Lending Restrictions to Bank Insiders
(DORSI)
Loan-Loss Provisions
Deposit Insurance
Equity Investment Limits
Capital Adequacy
BSP Lender of last resort
Prudential Measures
Reserve
Requirements
Single Borrowers Limit
Lending Restrictions to Bank Insiders
(DORSI)
Loan-Loss Provisions
Deposit Insurance
Equity Investment Limits
Capital Adequacy
BSP Lender of last resort
Prudential Measures
Reserve
Requirements
Single Borrowers Limit
Lending Restrictions to Bank Insiders
(DORSI)
Loan-Loss Provisions
Deposit Insurance
Equity Investment Limits
Capital Adequacy
BSP Lender of last resort
Prudential Measures
Reserve
Requirements
Single Borrowers Limit
Lending Restrictions to Bank
Insiders (DORSI)
Loan-Loss Provisions
Deposit Insurance
Equity Investment Limits
Capital Adequacy
BSP Lender of last resort
Prudential Measures
Reserve
Requirements
Single Borrowers Limit
Lending Restrictions to Bank Insiders
(DORSI)
Loan-Loss Provisions
Deposit Insurance
Equity Investment Limits
Capital Adequacy
BSP Lender of last resort
Prudential Measures
Reserve
Requirements
Single Borrowers Limit
Lending Restrictions to Bank Insiders
(DORSI)
Loan-Loss Provisions
Deposit Insurance
Equity Investment Limits
Capital Adequacy
BSP Lender of last resort
Prudential Measures
Reserve
Requirements
Single Borrowers Limit
Lending Restrictions to Bank Insiders
(DORSI)
Loan-Loss Provisions
Deposit Insurance
Equity Investment Limits
Capital Adequacy
BSP Lender of last resort
Prudential Measures
Reserve
Requirements
Single Borrowers Limit
Lending Restrictions to Bank Insiders
(DORSI)
Loan-Loss Provisions
Deposit Insurance
Equity Investment Limits
Capital Adequacy
BSP Lender of last resort
D. Classification of
Banks
i.
D. Classification of
Banks
ii.
D. Classification of
Banks
iii.
D. Classification of
Banks
iv.
E.g.
Allied
D. Classification of
Banks
v.
D. Classification of
Banks
vi.
D. Classification of
Banks
UNIVERSAL BANKS
COMMERCIAL BANKS
As to Powers
1. The powers authorized for a Commercial Bank;
2. The powers of an investment house
as provided in existing laws;
and
3. The power to invest in non-allied enterprises as
provided in the GBL. (Sec. 23)
Classification of Banks
UNIVERSAL BANKS
COMMERCIAL BANKS
As to Equity Investments
A UB MAY INVEST IN THE
EQUITIES
OF
ALLIED
(EITHER
FINANCIAL OR NON-FINANCIAL) AND
NON-ALLIED ENTERPRISES. (SEC. 24)
EXCEPT AS THE MB MAY
OTHERWISE PRESCRIBE:
THE TOTAL INVESTMENT IN
EQUITIES OF ALLIED AND NON-ALLIED
ENTERPRISES SHALL NOT EXCEED 50%
OF THE NET WORTH; AND THE EQUITY
INVESTMENT IN ANY ONE ENTERPRISE,
WHETHER ALLIED OR NON-ALLIED,
SHALL NOT EXCEED 25% OF THE NET
WORTH OF THE BANK (SEC. 24)
Classification of Banks
UNIVERSAL BANKS
COMMERCIAL BANKS
Classification of Banks
UNIVERSAL BANKS
COMMERCIAL BANKS
Classification of Banks
UNIVERSAL BANKS
COMMERCIAL BANKS
Classification of Banks
UNIVERSAL BANKS
COMMERCIAL BANKS
2. Functions of Banks
A. Deposit Function
B. Loan Function
C. Other functions
D. Prohibited Acts
A. Deposit Function
Simple Loan
Fixed, savings and current deposits of
Problem
A
deposited in Bank X;
Bank used the money;
A would like to withdraw but the
Bank cannot pay;
Is the Bank liable for estafa?
Answer
No.
Guingona
SCRA 577
Since the bank is the borrower, it can
make use as its own the money
deposited, and the amount is not
held in trust for the depositor nor is
it kept for safekeeping. (Tang Tiong
Tick v. American Aphothecaries, 65
Phil. 414)
Problem
A
deposited in Bank X;
B alleges that the money deposited
by A belongs to him;
A withdraws from the bank;
Is Bank X liable?
Answer
No.
Third
Problem
A
deposits in Bank X;
Bank X loans out money to A;
If A defaults in payment, can Bank X
off of the deposits in its hands for
the payment of As indebtedness?
Answer
Yes.
A
Kinds of Deposit
1.
Demand deposits
time.
No interest is paid by the bank
The depositor can withdraw the money
he deposited on the very same day.
Kinds of Deposit
2.
Savings Account
Evidenced by a passbook
Has interest rate, but not as high as time
deposits.
3.
Time Deposit
Kinds of Deposit
4. Negotiable Order of Withdrawal
(NOW) Account is an interest-bearing
deposit account that combines the payable
on demand feature of checks and
investment feature of savings accounts.
Kinds of Deposit
Safety
Deposit Boxes
Loan Function
Basic
adequately secured
Sec.
35.2
DORSI Account
GENERAL
RULE:
DORSI Account
EXCEPTION:
written approval of the majority of all the
directors
entered upon the records of the bank
copy of such entry transmitted to BSP.
Such written approval shall not be required
for loans, other credit accommodations and
advances granted to officers under a fringe
benefit plan approved by the BSP.
DORSI Account
Individual
lending ceiling =
Ceiling =
the insider
estate (collateral)
insured improvements,
Chattels
of the security
Foreclosure of Mortgage
Debtor
Right
Other Functions
UB
Prohibited Acts
Engaging
in insurance
Directors,
Officers, Employees,
Agents
Borrowers
of Banks
3. Ownership of Banks
A. Foreign Ownership
B. Filipino Stockholdings
C. Stockholdings of Family Groups and
Related Interests
Foreign Ownership
Foreign
stockholdings
domestic banks
Foreigners - total equity participation
Corporate stockholder citizenship is
determined by citizenship of controlling
stockholders
Filipino Ownership
Filipino
stockholdings
prohibition
Full
disclosure
4. Directors and
Officers
A. Composition of Board
B. Meetings
C. Qualifications
Composition of BOD
At
participation)
Public Officials (prohibition)
Meetings
conducted
through modern
technologies
E.g. teleconferencing and video-
conferencing.
Qualifications
Fit
integrity,
experience,
education,
training, and
competence