The Monetary Board, the policy making body of the Bangko Sentral ng Pilipinas, recently approved the grant of authority to engage in limited trust business to qualified thrift banks and rural banks. Among the requirements for the grant of authority is compliance with the minimum capital requirement under existing regulations or P100 million, whichever is higher. The bank must also be in generally sound financial condition with no major supervisory concerns.
Prior to this move, only universal/commercial banks and thrift banks were authorized to engage in trust business, subject to certain conditions. These conditions include a minimum capitalization requirement (i.e., P4.95 billion for universal banks; P2.4 billion for commercial banks and P650 million for thrift banks).
With a minimum capitalization of P100 million, thrift banks and rural banks may now engage in limited trust business. The limited trust business refers only to (1) court-trusts or trusts under orders of courts of competent jurisdiction, such as acting as executor or administrator of a will, and guardian of the estate of a minor or incompetent; and (2) administration of properties whether or not qualifying under court trusts.
This initiative of the Monetary Board was prompted by the objective of promoting healthy competition that will improve the delivery of banking services especially in the countryside.
Expected to benefit from this new banking service are orphaned minors and families of Filipino migrant workers who can now work abroad with relative peace of mind knowing that the welfare of their families and the security of their properties back home are being looked after by trustee banks.