SEC to consult BSP on banks’ capital hike bids

In line with efforts to further tighten supervision of the financial sector, the Securities and Exchange Commission will consult first with the Bangko Sentral ng Pilipinas before approving requests for increase in capital by local banks.

SEC Chairman Lilia R. Bautista said the move is to ensure that banks are following the provisions of the General Banking Act (GBA) when increasing their capital level and to ensure the financial soundness of banks.

In particular, Bautista said the use of property in the issuance of securities for the purpose of expanding capital would now need BSP approval.

"The BSP should decide whether we should accept property in lieu of cash when banks increase their capital. If the BSP thinks the banks need to put up cash then we will not accept property and instead require them to put up the necessary cash to hike capital," the SEC chief said.

Bautista said it is the BSP’s responsibility to ensure that the property to be infused by banks to hike their capital is fit for banking purposes.

Having exclusive jurisdiction over corporations and partnerships, the SEC approves applications for business registration, increase in capital stock, change in corporate name and par value, and quasi-reorganization, among others.

The SEC earlier issued guidelines on the accreditation of appraisal companies to ensure that the issuance of the stock in the form of property is duly evaluated by competent appraisers.

Based on the criteria for accreditation, the appraisal company must be registered with the SEC and licensed by the Department of Trade and Industry and the BSP. The certifying officer of the appraisal company must be a member of good standing of the Institute of Philippine Real Estate Appraisers.

The appraisal company or certifying appraiser must have a minimum experience of five years in the appraisal business and must have rendered professional services to at least one commercial bank and two public companies.

The appraiser must likewise be solvent and in sound financial condition.

Moreover, the appraiser is required to submit a number of documents in order for its application to be processed. These include a company profile indicating the history, scope of services, copy of license issued by the DTI and BSP, list of present clientele and latest audited financial statements.

The accreditation of an appraisal company shall expire after two years unless renewed before said date. Some companies use their real estate assets to pay off debts while some use these as collateral to meet certain trust fund or capital requirements.