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BANKNG Equity Investments

This document compares the equity investment powers of a universal bank and a commercial bank. A universal bank can invest in both allied and non-allied enterprises, with certain limits on total investment and investment in individual enterprises. A commercial bank can only invest in allied enterprises, and has lower limits of 35% of its net worth for total investment and investment in individual allied enterprises. Both banks can own up to 100% of equity in thrift banks, rural banks, and financial allied enterprises, but have different rules for investment in other commercial and universal banks.

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Nicole San Juan
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91 views1 page

BANKNG Equity Investments

This document compares the equity investment powers of a universal bank and a commercial bank. A universal bank can invest in both allied and non-allied enterprises, with certain limits on total investment and investment in individual enterprises. A commercial bank can only invest in allied enterprises, and has lower limits of 35% of its net worth for total investment and investment in individual allied enterprises. Both banks can own up to 100% of equity in thrift banks, rural banks, and financial allied enterprises, but have different rules for investment in other commercial and universal banks.

Uploaded by

Nicole San Juan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Equity Investments Universal Bank Commercial Bank

Powers -Powers of a commercial bank -General powers incident to


-Powers of an investment house corporations
-Power to invest in non-allied -Functions necessary to carry on
enterprises business like accepting drafts,
issuing letters of credit,
Can invest in the following: discounting and negotiating
1. Allied enterprises, whether promissory notes, drafts, and
financial or non-financial bills of exchange; accepting or
2. Non-allied enterprises creating demand deposits;
buying and selling foreign
exchange

Can invest only in allied


enterprises, whether financial or
non-financial
General Limit Total investment in A and NA Total investment in AE shall not
shall not exceed 50% of the net exceed 35% of net worth of the
worth1 of the UB CB

Investment in one enterprise (A Total equity investment in one


or NA) shall not exceed 25% of AE shall not exceed 25% of net
net worth of the bank worth of CB
Thrift Bank/ Rural Bank/Financial Can own up to 100% of the Can own up to 100% of equity of
Allied Enterprise equity of the TB, RB or GAE. TB or RB

In other financial allied


enterprise, investment should be
minority in that enterprise
Universal bank/Commercial Bank A publicly listed universal bank A publicly listed commercial bank
may own up to 100% of the may own up to 100% of the
voting stock of only one other voting stock of only one other
universal or commercial bank universal or commercial bank

If not publicly listed commercial


bank, investment in another
commercial bank shall remain a
minority in that other
commercial bank
Non-financial allied enterprise May own up to 100% of the May own up to 100% of the
equity in NFAE equity in NFAE
Non-allied enterprise Not exceeding 35% of the total Not allowed
equity of the NAE, and not
exceeding 35% of voting stock of
that enterprise

1"net worth" shall mean the total of the unimpaired paid-in capital including paid-in surplus, retained earnings and
undivided profit, net of valuation reserves and other adjustments as may be required by the Bangko Sentral.

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