BSP streamlines process for issuance of LTNCDs

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has streamlined the process for the issuance of Long Term Negotiable Certificates of Time Deposit (LTNCD).

In a circular, the central bank has made a number of pre-offering requirements as post-issuance requirements, cutting the waiting time faced by banks when issuing LTNCDs.

The BSP now mandates banks to submit a written waiver of secrecy of deposits on the product, the terms and conditions of the offering, promotional materials, and copies of the proposed registry confirmation and purchase advise from selling agent or market maker to show evidence of sale following the issuance of the LTNCDs.

Previously, banks were required to submit them 15 days before the offering date.

“The new circular streamlines BSP’s licensing process on the issuance of LTNCTDs by allowing banks to proceed with the issuance of LTNCTDs upon receipt of notice of MB approval,” BSP Deputy Governor Nestor A. Espenilla Jr. said in a text message.

“Delays in offering LTNCTDs by banks are now reduced with the amendments to the timing of submission of certain documentary requirements previously submitted as a pre-offering  requirement to a post-issuance requirement,” he continued.

LTNCDs are certificates which show the indebtedness of a bank with a designated maturity.

They offer higher interest rates than regular deposits but they cannot be pre-terminated like time deposits. However, LTNCDs can be traded in the secondary market.

Espenilla last month noted banks have been focused on matching the maturity of their liabilities against their assets. This is being done on the back of loans extended for big-ticket infrastructure projects.

As a result, banks are issuing longer-dated instruments such as LTNCDs, which have at least five years in maturity.

The BSP official earlier noted there is a strong demand for LTNCDs because it is a safe and high-yielding investment compared to other instruments in the market.

Moreover, LTNCDs have a tax advantage as investors won’t be charged with a withholding tax as long as the certificates are held until maturity.

Last month, BDO Unibank Inc. issued P5-billion worth of LTNCDs. This follows LTNCD issuances from EastWest Banking Corp. and Philippine National Bank.