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Appendix 9

By Harold Wilson,2014-11-22 17:32
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Appendix 9

    APPENDIX 16

    Page 1 of 3

    Guidelines on the Transfer of Undivided Profits/(Losses)

    from FCDU/EFCDU Books to the RBU Books

     The transfer of “Undivided Profits/(Losses) – FCDU/EFCDU” to the

    “Retained Earnings – Free” (and in the case of Philippine branches of foreign banks, “Net Due to H. O./Branches/Agencies Abroad”) account in the RBU book shall refer to realized FCDU/EFCDU profits/(losses) only and shall exclude the following:

    1. Unrealized Gains/(Losses) from Marking to Market of Financial Assets

    and Liabilities Held for Trading (HFT);

    2. Unrealized Gains/(Losses) from Marking to Market of Financial Assets

    and Liabilities Designated at Fair Value through Profit or Loss (DFVPL);

    3. Foreign Exchange Profit/(Loss);

    4. Unrealized Gains/(Losses) from Remeasurement of Hedging

    Instruments; and

    5. Unrealized Gains/(Losses) from Remeasurement of Hedged Items.

    (collectively referred to as “Net Unrealized Gains/(Losses) from Operations” in this Section): Provided, That prior to the transfer of realized “Undivided Profits/(Losses) FCDU/EFCDU” to the “Retained Earnings – Free” in the RBU

    book, the FCDU/EFCDU shall fully provide for its classified accounts.

    1. The transfer of realized FCDU/EFCDU profits to the RBU book shall be made initially by a debit to “Undivided Profits/(Losses – FCDU/EFCDU” and a

    credit to “Retained Earnings – Free - FCDU/EFCDU” at the end of the calendar

    year or fiscal year adopted by the bank, and subsequently by a corresponding transfer of eligible foreign currency assets from the FCDU/EFCDU to the RBU books within a period of one month from the end of the calendar year or fiscal year adopted by the bank. The foreign currency assets shall be in the form of:

    a. Due from BSP Foreign Currency;

    b. Due from other banks (Other FCDUs/EFCDUs, OBUs and non-

    resident banks);

    c. Investments in readily marketable foreign currency denominated

    debt instruments, except for the following:

    1) those which are sold/lent in repurchase agreement/securities

    lending and borrowing transactions and those used as additional

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    collateral in repurchase agreements or as collateral of the borrowing

    bank in securities lending and borrowing transactions;

    2) those investments in structured products; and

    3) those Philippine debt papers which were restructured during the

    period of moratorium in the payment of external debt.

    Provided, That these shall likewise be booked under the same category in the RBU book as they were before the transfer from FCDU/EFCDU.

    The transfer of the abovementioned eligible foreign currency assets representing realized FCDU/EFCDU profits to RBU book shall be made by a debit to „Retained Earnings – Free - FCDU/EFCDU‟.

    2. The transfer of realized FCDU/EFCDU losses to the RBU book shall be made immediately and shall be accompanied by a corresponding transfer of the abovementioned eligible foreign currency assets from the RBU book to the FCDU/EFCDU: Provided, That investments in readily marketable foreign

    currency denominated debt instruments shall likewise be booked under the same category in the FCDU/EFCDU as they were before the transfer from RBU book.

    The transfer of the abovementioned eligible foreign currency assets representing realized FCDU/EFCDU losses during the interim period from the RBU book shall be made by a credit to “Due to RBU – FCDU/EFCDU Realized

    Losses from Operations”, which account shall not be subject to asset and liquid

    asset cover requirements, and which account shall be credited to the “Undivided Profits/(Losses) FCDU/EFCDU” at the end of the calendar year or fiscal year adopted by the bank.

    The amount of eligible foreign currency assets to be transferred from the RBU book to the FCDU/EFCDU shall be that which will bring the balance of “Due to RBU - FCDU/EFCDU Realized Losses from Operations”, equal to the cumulative net realized losses incurred from the beginning of the calendar year or fiscal year adopted by the bank.

    Whenever the balance of “Due to RBU – FCDU/EFCDU Realized Losses

    from Operations” exceeds the cumulative net realized losses incurred from the beginning of the calendar year or fiscal year adopted by the bank, the excess shall be settled by the FCDU/EFCDU to the RBU by a credit to the abovementioned eligible foreign currency assets at the end of the reference month.

    3. The items comprising the “Net Unrealized Gains/(Losses) from Operations” in the FCDU/EFCDU, on the other hand, shall be credited/debited to “Undivided Profits/(Losses) – FCDU/EFCDU” at the end of each month, which

    APPENDIX 16

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    account shall be credited/debited to “Retained Earnings – Free FCDU/EFCDU”

    at the end of the calendar year or fiscal year adopted by the bank.

    Whenever the total of the following:

    a. Retained Earnings Free FCDU/EFCDU, representing

    cumulative unrealized gains/(losses) from operations from prior years;

    b. Items comprising the “Net Unrealized Gains/(Losses) from

    Operations” credited/debited to “Undivided Profits/(Losses)”, as well as

    those not yet credited/debited to “Undivided Profits/(Losses)”;

    c. Net Unrealized Gains/(Losses) on AFS Financial Assets recognized

    directly in equity; and

    d. Gains/(Losses) on Fair Value Adjustments of Hedging Instruments

    recognized directly in equity,

    results to a net debit balance, the bank shall transfer from the RBU book to the FCDU/EFCDU immediately the abovementioned eligible foreign currency assets by a credit to the “Due to RBU – FCDU/EFCDU Unrealized Losses Recognized

    in Profit or Loss and in Equity”, which account shall not be subject to asset and liquid asset cover requirements.

    The amount of eligible foreign currency assets to be transferred from the RBU book to the FCDU/EFCDU shall be that which will bring the balance of “Due

    to RBU - FCDU/EFCDU Unrealized Losses Recognized in Profit or Loss and in Equity” equal to the net debit balance of the immediately preceding Items “a”, “b”,”c” and “d” above.

    Whenever the “Due to RBU – FCDU/EFCDU Unrealized Losses

    Recognized in Profit and Loss and in Equity” exceeds the net debit balance of the immediately preceding Items “a”, “b”, “c” and “d” above, the excess shall be settled by the FCDU/EFCDU to the RBU book by a credit to the abovementioned eligible foreign currency assets at the end of the reference month.

    The prescribed accounting entries on the transfer of Undivided Profits/(Losses) from FCDU/EFCDU to RBU books are attached in Circular No. 601 dated 13 February 2008.

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