Central bank temporarily suspends LTNCTD listing

MANILA, Philippines - The Bangko Sentral ng Pilipinas has temporarily suspended the need to list offerings of long term negotiable certificates of time deposits (LTNCTDs) on an exchange.

“It has come to the BSP’s attention that such listing is not possible at this time due to non-availability of a suitable operating platform,” the central bank memorandum stated.

“The BSP is further informed that such a platform is under development now,” the central bank added.

LTNCTDs 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, LTNCTDs can be traded in the secondary market.

The BSP earlier this year required the listing of LTNCTDs, used by banks to raise capital, with an accredited exchange as stated under Circular 824.

Moreover, under Monetary Board Resolution 450 dated March 13, banks were only allowed to issue LTNCTDs if they submit a deed of undertaking that all debt papers will be applied for listing within a day after the LTNCTD platform starts operation.

The memorandum, signed by BSP managing director Restituto Cruz, will take effect after publication in a newspaper of general circulation.

Circular 824, which amended regulations over the issuance of LTNCTDs, also removed the limit for offerings of the papers which was earlier set at P5-billion per issue. The 300-percent cap on the ratio of total LTNCTDs to outstanding capital has also been lifted.

The central bank earlier said “the new rule on LTNCTDs reflects the nexus between banking reform and capital market development.”

“Having banks with stronger balance sheets operate in a well-functioning capital market can only boost financial stability, which is a key policy objective of the Bangko Sentral ng Pilipinas.”