Clemencia I. De Tobon
Elisa N. Gallo
Published by
Summit of the Americas Center
Latin American and Caribbean Center
Florida International University
Miami, FloridaWith additional support from
Florida International Bankers Association
AUTHORS
Clemencia I. de Tobón has been a successful banker for more than 26 years. She is a past president of the Florida International Bankers Association in Miami; former acting chairperson, president and chief executive officer of a national bank; and former general manager and vice president of an Edge Act international corporation in Miami. She is currently a consultant to high-level bank management.
Elisa N. Gallo is a Ph.D. candidate in economics at Florida International University. She is a Research Associate in the Summit of the Americas Center, specializing in development, trade and financial systems in Latin American and Caribbean countries.
Special thanks are due to Miami attorney Gerald S. Duty for his collaboration in the completion of this second edition.
DISCLAIMER
The materials contained in this publication were obtained from a number of sources, including the central banks, banking authorities and/or bank associations of 34 countries in the Americas. Any reader aware of additional information or updated material concerning any representation made in this publication should contact the Summit of the Americas Center at Florida International University. This guide is for informational purposes only and should not be used as a basis for investment or other business-related decisions. Such decisions should be made only after consultation with competent individuals/organizations expert in the particular banking/financial systems of the countries considered in this publication. All information provided herein is subject to change upon the discretion of each individual country. Neither the authors nor the Summit of the Americas Center are responsible for inaccuracies appearing herein.
Copyright (c) 1998 by the Summit of the Americas Center, Latin American and Caribbean Center, Florida International University. All rights reserved; duplication permitted only with prior approval of the publisher. Printed and bound in the United States of America.
Graphic Design: Beki Levantini
Summit of the Americas Center
Florida International Bankers Association
Foreword
Introduction
Banking Terminology and Concepts
Acronyms
1998/1999 Survey of Banking Systems in the Americas
Map of the Americas
Florida
Argentina
Bahamas
Barbados
Belize
Bolivia.
Brazil
Canada
Colombia
Costa Rica
Dominican Republic
Eastern Caribbean Countries
Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and
St. Vincent and The Grenadines.
Ecuador
El Salvador
Guatemala
Guyana
Haiti
Honduras
Jamaica
Mexico
Nicaragua
Panama
Paraguay
Peru
Suriname
Trinidad and Tobago
United States
Uruguay
Venezuela
Credits
Appendix: FIBA (Florida International Bankers Association) Members
FLORIDA INTERNATIONAL UNIVERSITY'S THINKTANK ON
HEMISPHERIC BUSINESS ISSUESThe Summit of the Americas Center (SOAC) is located in the Latin American
and Caribbean Center (LACC) at Florida International University. SOAC also
cooperates with the Center for Latin American Studies at the University of
Florida and the North-South Center at the University of Miami.
SOAC's mission is to enhance the involvement of the U.S. and Florida in
hemispheric commercial integration as called for by the accords of the Summit of
the Americas, held in Miami in December 1994. SOAC conducts assessments of
hemispheric trade in goods and services and initiates conferences, meetings and
focus groups to enhance Florida¹s competitiveness in commercial relations with
Latin America and the Caribbean. SOAC operates AmericasNet, an internet
information system that links the business and public affairs communities to
current information about trade and commercial integration. For further
information about SOAC and its activities, please contact:Summit of the Americas Center
Latin American and Caribbean Center, Florida International University,
University Park, Miami, Florida 33199 U.S.A.
Tel: (305) 348-2894 ? Fax: (305) 348-3593
TDD: (800) 955-8771 ? E-Mail: [email protected]This report, trade agreements, other reports, Summit implementation plans,
newsletters, and the Customs Guide to the Americas are also available on:AmericasNet
The information backbone of hemispheric integration. http://www.americasnet.netFIBA - The Florida International Bankers Association, Inc.
The Board of Directors, the Trade Finance Committee and the members
of FIBA are pleased to have provided a portion of the funding for Banking
Systems in the Americas, 1998-1999.
The Florida International Bankers Association, Inc. (FIBA), is a non-profit
corporation founded in 1979. It is composed of 87 domestic and foreign financial
institutions from 23 countries operating in the state of Florida, as well as a limited
number of supporting members whose activities are closely related to international
banking.
The membership of FIBA includes nearly every U.S. domestic, national or state-
chartered bank active in international banking in Florida. It includes Edge Act
Corporations and foreign bank agencies, representative offices and administrative
offices licensed under the laws of Florida or organized in Florida under the
Federal International Banking Act of 1978 and its amendments.The purposes of the Florida International Bankers Association are:
return to top
- To promote international banking and commerce in Florida.
- To promote and sustain ethical standards and practices in the conduct of international banking.
- To represent the common interests of its membership, to function as the forum for international commercial banking entities and, when necessary, to take public positions reflecting the balanced view of its membership.
- To actively participate in community betterment to develop trade and finance, and to make a significant contribution to the community.
- To enhance the professional development of its members through seminars, conferences, briefings and other continuing education programs.
The Summit of the Americas Center at Florida International University is pleased to present the second edition of Banking Systems in the Americas. In this years edition we have incorporated all 34 countries who signed the Plan of Action at the First Summit of the Americas in Miami and who ratified their commitment to the process in Santiago, Chile in April 1998. As in last year¹s edition, we have also provided a profile of Florida, whose banking industry is especially significant to the Americas.
The Summit of the Americas Center is indebted to Clemencia de Tobón for her leadership in the development of this banking guide. She has worked long and meticulous hours putting together every country profile. This year she was fortunate to have the assistance of Elisa Gallo, a Ph.D. candidate in economics at Florida International University. Together they have significantly improved the content of this guide.
We are especially grateful to the Florida International Banking Association (FIBA), which co-sponsored this publication. Special mention must be made of every banking official in those 34 countries who responded diligently to our survey. Their prompt response enabled us to cover more than a dozen more countries than last year. The staff at the Summit of the Americas Center and at the Latin American and Caribbean Center should also be credited for its support of this project. As was the case with the first edition of Banking Systems in the Americas, the principal objective is to provide the reader with a brief, clear and concise overview of the banking industry. With that objective in mind, we hope that you find this year¹s edition useful.
Eduardo A. Gamarra
Director
Latin American and Caribbean Center
Florida International University
In December 1994, Miami hosted the first Summit of the Americas. This historic meeting brought together the leaders of 34 nations in an endeavor to promote hemispheric development, democracy and respect for human rights; eradicate poverty and discrimination; and deepen economic integration and free trade. These goals were written into the final Plan of Action, which set forth the commitment of the heads of state who attended the meeting to create the Free Trade Area of the Americas (FTAA) by the year 2005. This commitment was ratified in April 1998 at the second Summit of the Americas in Santiago, Chile, where the region as a whole agreed to begin negotiations toward the establishment of the FTAA.
Under the same initiative that covered the promotion of the FTAA, the Plan of Action of the Miami Summit dealt with capital markets development and liberalization. The Plan stated that ³developing, liberalizing and integrating financial markets domestically and internationally, increasing transparency, and establishing sound, comparable supervision and regulation of banking and securities markets will help to reduce the cost of capital by enhancing investor and depositor confidence.² In other words, the leaders of the hemisphere recognized financial sector integration as a key element in the promotion of private sector investment and, therefore, economic development and trade. At the same time, the hemispheric leadership realized that the financial sector should be a participant in financing trade, allowing for and maintaining a free flow of funds to be invested in infrastructure,capital goods,and providing other medium and long term financing. Furthermore, it became evident that free trade is dependent upon financial systems that facilitate the free flow of funds to pay for and finance commerce at a global level.
Recent financial crises have generated great turmoil around the world, especially in emerging markets. East Asian countries that for years were considered models of economic success, stability and growth faced the repercussions of the lack of adequate capital resource allocation, over-investment, internal inflationary pressures and overvaluation of the currency. In fact, weak banking systems and inefficient bank supervision were among the most important contributing factors to the Asian crisis. The interplay of these Asian nations within the global economy created a chain effect that raised investment uncertainty and speculation around the world, especially in the Americas. A growing sense exists in the Americas that, if urgent and appropriate precautionary measures are not adopted, the economies of the region could face a similar crisis.
This second edition of Banking Systems in the Americas is an effort to compare and analyze banking systems in the region. It presents an overview of the structure and current regulatory banking guidelines of the 34 countries of the Western Hemisphere that subscribed to the Plan of Action of the Miami Summit. An analysis of the State of Florida as an independent system is also included. Over the past two decades, the State of Florida, whose geographical location has converted it into a virtual gateway to the Americas, has strengthened its banking industry which, in turn, has contributed to the development of international banking. Moreover, the past decade has witnessed a tremendous growth in Florida¹s international trade and banking.
The preparation of this guide involved the compilation of data in key areas that define banking activity in the Americas. The data provided were gathered through a brief questionnaire submitted to each country¹s banking regulatory and supervisory authorities. In some cases the information was gathered through the banking associations that are members of the Federation of Latin American Banks (Federación Latinoamericana de Bancos, or FELABAN). Any minor discrepancies found were resolved through a careful consideration of the responses from regulatory and supervisory authorities.
The main areas covered in the guide are:
Banking supervision has a special place in the integration process. Healthy banking systems can contribute greatly to the dramatic opening of the economies of the hemisphere and to the prevention of Asia-like crises. Before entering into formal negotiations to open financial markets, practical steps in the financial sector and capital markets are necessary. These steps towards integration will benefit the banking systems of the region as a whole and, therefore, lead to positive externalities in Florida.
- Banking supervision and systems used to rate banks¹ safety, soundness and performance.
- The Basle Accord on consolidated supervision, comprehensive supervision on a consolidated basis, and the right to gather information from cross-border banking establishments;
- National systems to define interest rates on both assets and liabilities;
- Insurance on deposits and limitations per account or per depositor;
- Definition of trade finance and treatment of export, import, pre-export, working capital, capital goods finance and their financing instruments, such as letters of credit, acceptances, drafts and others;
- Capital adequacy, with a special emphasis on minimum capital requirements and categorization;
- Asset quality, which contains methods and systems used to classify the loan portfolio, legal lending limits, and the categorization and evaluation of the investment portfolio; and
- Structure of liabilities, which includes types of deposits offered, reserve requirements and limits of concentration.
Public and private sector groups along with academics share the responsibility for disseminating information as this process unfolds. To a great extent it also depends on the political will of the region¹s leadership to ensure the stability of the financial system.
- To ensure the process of integration in the Americas, a plan of action to include the following items is suggested:
- To incorporate financial and banking systems and capital markets into the agenda of the negotiating groups who report to the annual Trade Ministers Meetings.
- To stimulate the creation of working groups which deal directly and specifically with banking systems.
- To create an inventory of the applicable banking legislation, including regulations as well as financial services and products in the hemisphere.
- To develop an inventory of the financial structure of each country that includes, among others, the regulatory and supervisory authorities, number of banks, types of banks and/or financial institutions.
- To establish a permanent system for evaluating the financial and banking industry in each country by maintaining updated figures on total assets, capital, net worth, total deposits, efficiency and profitability ratios, and the like.
- To mobilize a network of interested parties by identifying universities that work in coordination with banker¹s associations in each country, regional associations such as FELABAN, the Central American and Caribbean Banks Association and the Eastern Caribbean Central Bank, and associations of regulatory and supervisory authorities.
- To promote a better understanding of the importance of financial systems integration through symposia, seminars and publications oriented towards bankers, government officials, private sector groups and other interested parties.
The authors are grateful to the Summit of the Americas Center at Florida International University for allowing us the opportunity to contribute to the future integration of the Americas. It is our hope that the information provided herein will contribute in a small way to the development of the FTAA and the expansion of free trade in the Americas.
Clemencia I. de Tobón
Elisa N. GalloBANKING TERMINOLOGY AND CONCEPTS
Agency. Relationship between two parties, one a principal and the other an agent representing the principal in transactions with a third party.
Finance. Certain types of accounts in trust institutions where individuals, usually trust officers, act on behalf of customers. Agency services to corporations are related to stock purchases and sales. Banks also act as agents for individuals.
Government. Securities issued by government-sponsored corporations such as Federal Home Loan Banks or Federal Land Banks. Agency securities are exempt from Securities and Exchange Commission (SEC) registration requirements.
Investment. Act of buying or selling for the account and risk of a client. Generally, an agent or broker acts as intermediary between buyer and seller, assuming no personal or firm financial risk, and charging a commission for the service.
Asset. Anything owned of value; any interest, in real property or personal property, that can be used for payment of debts.
Available-for-Sale Account. Debt and equity securities not classified as either held-to-maturity securities or trading securities. These securities are reported at fair value, with unrealized gains and losses excluded from earnings reported as a net amount in a separate component of the shareholder¹s equity.
Basle Agreement. An agreement signed by various countries stating that they agree with the 25 core principles of the Basle Committee of 1997. Aimed at strengthening financial institutions.
Basle Committee on Banking Supervision. A committee of banking supervisory authorities established by the central bank governors of the Group of Ten countries in 1975. It consists of senior representatives of banking supervisory authorities and central banks from Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Sweden, Switzerland, the United Kingdom and the United States. The Committee usually meets at the Bank for International Settlements in Basle, Switzerland, where its permanent Secretariat is located. The committee¹s goal is to improve the strength of financial systems.
Brokered Deposits. Brokered deposits represent funds a reporting bank obtains, directly or indirectly, by or through any deposit broker for deposit into one or more deposit accounts. Brokered deposits include both those in which the entire beneficial interest in a given bank deposit account or instrument is held by a single depositor and those in which the deposit broker pools funds from more than one investor for deposit in a given bank deposit account.
Capital Adequacy. The capacity of a financial institution¹s net worth to absorb potential adverse changes in the value of its assets without becoming insolvent.
Collateral. Assets pledged to a lender until a loan is repaid. If the borrower defaults, the lender has the legal right to seize the collateral and sell it to pay off the loan.
Demand Deposit Account. Deposits which the owner can withdraw instantly upon demand, either with checks or electronically.
Deposit. (1) Cash, checks or drafts placed with a financial institution for credit to a customer¹s account; (2) securities placed with a bank or other institution or with a person for a particular purpose.
Discount Rate. Financial institutions can borrow from the U.S. Federal Reserve. The interest rate charged by the Federal Reserve Bank is called the discount rate. The act of borrowing from this bank is called ³borrowing at the discount rate.²
Dual Banking System. Systems peculiar to the United States, in which there are two distinct regulatory systems: state and federal. Banks are regulated according to the system under which they are chartered.
Duration. Measure of price sensitivity of a fixed income security to changes in interest rates; e.g., a bond with a duration of three means that for every 1% change in the interest rate the value of the bond will change by 3%.
Edge Act Corporations. Vehicles for United States banks to perform international banking activities in a state other than that in which the bank is headquartered.
Equity. The ownership value of a business.
Florida International Bank Agency. An international banking corporation established in Florida for the purpose of engaging in banking activities.
Financial Institution. An institution that collects funds from the public to place in financial assets such as stocks, bonds, money market instruments, bank deposits or loans. Depository institutions (banks, savings and loans, savings banks and credit unions) pay interest on deposits and invest the deposit money mostly in loans. Nondepository institutions (insurance companies and pension plans) collect money by selling insurance policies or receiving employer contributions and pay it out for legitimate claims or retirement benefits. Increasingly, many institutions perform both depository and nondepository functions. For instance, brokerage firms now place customers¹ money in certificates of deposit and money market funds and sell insurance.
Financial Market. Market for the exchange of capital and credit in the economy. Money markets concentrate on short-term debt instruments; capital markets trade in long-term debt and equity instruments. Examples of financial markets include the stock, bond, commodities and foreign exchange markets.
Foreign Bank Office. An entity of a foreign bank that is not separately incorporated in the United States.
Foreign Currency. Any currency different from the legal tender of the home country.
Guarantee. One to whom a guaranty is made. This word is also used as a noun to denote the contract of guaranty or the obligation of a guarantor, and as a verb to denote the action of assuming the responsibilities of a guarantor.
Held-to-Maturity Accounts. Debt securities that the institution has the intent and ability to hold to maturity. These securities are reported at amortized cost.
Home Country. The country in which a banking entity or holding company is headquartered.
Host Country. The country in which a foreign bank opens a banking office.
Investment. (1) The ownership or control of equity; (2) binding commitments to acquire equity; (3) contributions to the capital and surplus of an organization; and (4) the holding of an organization¹s subordinated debt when the investor and the investor¹s affiliates hold more than 5% of the organization¹s equity.
Letter of Credit. Instrument or document issued by a bank guaranteeing the payment of a customer¹s drafts up to a stated amount for a specified period. Letters of credit substitute the bank¹s credit for the buyer¹s and eliminate the seller¹s risk. They are used extensively in international trade.
Liability. (1) Money owed; (2) an obligation to do, or refrain from doing, something; and (3) a duty that eventually must be performed.
Mark-to-Market. The comparison of the purchase price or book value of an investment with the price of the primary and/or secondary market.
Market. (1) Public place where products are bought and sold, directly or through intermediaries (also called marketplace); (2) aggregate of people with the present or potential ability and desire to purchase a product or service, equivalent to demand; and (3) securities markets in the aggregate.
Net Worth. The net ownership value of a firm. Net worth equals the value of assets held by a firm minus the value of all liabilities owed by the business.
Offshore. Located in foreign territory.
Portfolio. Combined holding of more than one stock, bond, commodity, real estate investment, cash equivalent or other asset by an individual or institutional investor. The purpose of a portfolio is to reduce risk by diversification.
Repurchase Agreement. Agreement between a seller and a buyer, usually of U.S. government securities, whereby the seller agrees to repurchase the securities at an agreed upon price usually at a stated time. It is widely used as a money market investment vehicle and as an instrument of the Federal Reserve Board¹s monetary policy.
Reserve. (1) Segregation of retained earnings to provide for payouts such as dividends, contingencies, improvements or retirement of preferred stock; (2) valuation reserve for depreciation, bad debt losses, shrinkage of receivables because of discounts taken, and other provisions created by charges to the profit and loss statement; (3) hidden reserves, represented by understatements of balance sheet values; (4) cash on hand and deposit maintained by a commercial bank in a Federal Reserve Bank to meet the federal reserve requirements; and (5) gold and foreign currency held by governments to pay for imports and foreign debts.
Reserve Requirement. Rules mandating the financial assets that member banks must keep in the form of cash and other liquid assets as a percentage of demand and time deposits.
Savings Account. A deposit or account in which the depositor is not required by the deposit contract, but may at any time be required by the deposit institution, to give written notice of a withdrawal not less than seven days before withdrawal is made, and that is not payable on a specified date or at the expiration of a specified time after the date of deposit. The term ³savings account² includes a regular share account at a credit union and a regular account at a savings and loan association.
Subsidiary. Company in which more than 50% of the voting shares are owned by another corporation, called the parent company.
Tier 1 Capital. The sum of core capital elements: (1) common stockholders¹ equity; (2) qualifying noncumulative perpetual preferred stock (including related surplus); and (3) minority interest in the equity accounts of consolidated subsidiaries less goodwill and other intangible assets required to be deducted.
Trade. In general, buying or selling of goods and services among companies, states or countries; also known as commerce. The amount of goods and services imported minus the amount exported makes up a country¹s balance of trade.
Trade Finance. The financingby either the buyer, the buyer¹s bank, the seller, or the seller¹s bankof commodities and manufactured merchandise as they move from country to country in the channels of international trade.
Trade Portfolio. Debt and equity securities, bought and held principally for the purpose of selling them in the near term, are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings.
Transaction Account. A deposit or account from which the depositor or account holder is permitted to make transfers or withdrawals by negotiable or transferable instrument, payment order or withdrawal, telephone transfer, or other similar device for the purpose of making payments or transfers to third persons or others. Includes accounts from which the depositor may make third-party payments at an automated teller machine (ATM), remote service unit or other electronic device, including by debit card. The term does not include savings deposits.
Working Capital. Funds invested in a company¹s cash, accounts receivable, inventory and other current assets (gross working capital). It usually refers to net working capital, or current assets minus current liabilities. Working capital finances the cash conversion cycle of a business, defined as the length of time required to convert raw materials into finished goods, finished goods into sales, and accounts receivable into cash.
Worth. Inherent value of a commodity, service or other economic factor. Worth is often measured in nonprice terms, as in comparable worth programs designed to pay equivalent wages for work of equivalent worth, even though the market prices of the services ordinarily would differ.
AIM. Asset Quality, Internal Controls and Management
ALADI. Asociación Latinoamericana de Integración
B A. Basle Accord
BAP. Basle Accord Principles
CAMEL. Capital Adequacy, Asset Quality, Management, Earnings, Liquidity
CAMELS. Capital Adequacy, Asset Quality, Management, Earnings, Liquidity, Sensitive to Market Risk
CAMEO. Capital Adequacy, Asset Quality, Management, Earnings, Sensitivity to Market Risk
CEMLA. Centro de Estudios Monetarios Latinoamericanos
FASB. Financial Accounting Standards Board
FBO. Foreign Banking Organizations
FED. Federal Reserve Bank
FIRREA. Financial Institution Reform Recovery and Enforcement Act of 1989
GAAP. Generally Accepted Accounting Principles
OCC. Office of the Comptroller of the Currency
OREO. Other Real Estate Owned
PCA. Prompt Corrective Action
ROCA. Risk Management, Operational Controls, Compliance, Assets Quality
TR. Tax Referential
WTO. World Trade Organization
1998/1999 Survey of Banking Systems in the Americas
I. BANKING SUPERVISION
1. Please provide the name of the entity responsible for bank supervision in your country.
2. Is this entity an independent agency?
3. Which institution does the supervisory authority report to?
The Treasury Department, Central Bank, government, other?
4. How often does the supervisory authority examine banks?
5. What are the examination ratings and criteria used to conduct bank examinations? For example, in the U.S. a bank¹s safety and soundness classification is between one and five: one for outstanding, two satisfactory, three fair, etc.
Category Definition Criteria
1. ______ ________ ______
2. ______ ________ ______
3. ______ ________ ______
4. ______ ________ ______
5. ______ ________ ______6. Are systems such as CAMEL, CAMEO, and ROCA used?
? CAMEL = Capital adequacy, Assets quality, Management, Earnings, Liquidity.
Yes_____ No_____
If yes, please explain.
? CAMEO = Capital adequacy, Assets quality, Management, Earnings, Operations.
Yes______ No_____
If yes, please explain.
? ROCA = Risk management, Operations, Compliance, Assets quality.
Yes_____ No_____
If yes, please explain.
II. CONSOLIDATED SUPERVISION
1. Does your supervisory authority perform comprehensive supervision on a consolidated basis?
2. Is prior consent required from your country (Home Country) to open or close a banking establishment in a
foreign country?
3. Is prior consent required from your country (Host Country) to open or close a foreign banking establishment in your country?
4. Does your country have the right to gather information from its cross-border banking establishments?
If yes, please explain.
III. INTEREST RATES
1. How are interest rates on loans determined ? By the market, the government, or others? Please explain.
2. How are interest rates on deposits determined ? By the market, the government, or others? Please explain.
IV. INSURANCE ON DEPOSITS
1. Are bank deposits insured by a government agency similar to the Federal Deposit Insurance Corporation (FDIC)? If yes, what is the name of the reporting agency?
2. Is the insurance limited per account, per depositor, and/or per bank?
V. TRADE FINANCE
1. What is your country¹s definition of trade finance?
2. Ultimately, which entity/institution is responsible for bearing the risk of these trade financing vehicles? Please check:
Bank risk or Government/Sovereign risk
? Export finance _______ _______
? Import finance _______ _______
? Pre-export finance _______ _______
? Working capital finance _______ _______
? Capital goods finance _______ _______
? Letters of credit _______ _______
? Acceptances _______ _______
? Drafts _______ _______3. In case of bank liquidations, how do regulators treat:
? Export finance?? Import finance?
? Pre-export finance?
? Working capital finance?
? Capital goods finance?
? Letters of credit?
? Acceptances?
? Drafts?
4. Does the banking system make specific provisions or require reserves for treatment of trade finance obligations during bank liquidations?
Yes______ No_____
If yes, briefly describe the main provisions.
VI. CAPITAL ADEQUACY
1. According to your country¹s legislation, what is the minimum capital required to open a bank?
2. According to your country¹s legislation, what is the minimum capital required to operate a bank?
3. How is capital adequacy measured? Provide categories and ratios. For example, in the U.S., the categories are ³well capitalized,² ³adequately capitalized,² ³fairly capitalized,² etc.
Categories Percentages
? __________ _________
? __________ _________
? __________ _________VII. ASSET QUALITY
1. How are loan portfolios classified? Please define each category and provide its percentage of reserves. For example, in the U.S., ³A² stands for ³current,² ³B² for ³special mention,² ³C² for ³substandard,² ³D² for ³doubtful,² and ³E² for ³losses.²
Loan classification Definition %of reserves
1) ___________ ________ __________
2) ___________ ________ __________
3) ___________ ________ __________
4) ___________ ________ __________2. What are the minimum reserve requirements on bank assets? Please provide the formula for calculation of reserve requirements; include percentage of total assets and percentage of total loan portfolio.
3. What are the legal lending limits for different categories, if any? Include percentage of capital with and without collateral, percentage of net worth with and without collateral, and any other limitation.
Percentage of capital_______ with collateral________
without collateral_____Percentage of net worth_____ with collateral________
without collateral______Other limitations? Please explain:
4. Is it required that the investment portfolio be categorized according to criteria such as hold-to-maturity portfolio, available-for-sale portfolio, trade portfolio, other?
Yes______ No_____5. If yes, please list the investment categories, valuation methods, and how often valued.
Investment category Valuation method How often valued
1) ______________ _______________ ______________
2) ______________ _______________ ______________
3) ______________ _______________ ______________6. Does the valuation of the investment portfolio requirement affect the profit and loss statement? If yes, please explain.
VIII. LIABILITIES
1. What are the minimum reserve requirements on bank liabilities? Please specify and provide the formula for calculation including percentage of total assets, percentage of liabilities, percentage of capital, and percentage of total deposits.
Liabilities Minimum Reserve %of %of % of % of
Requirement Calculation total assets liabilities capital total deposits
Demand deposits
Time deposits
Short-term borrowing
Long-term borrowing
Deposits in local currency
Deposits in foreign currency
Others2. What types of deposits can banks offer in local currency and foreign currency? Please list each deposit category.
Deposit category Domestic Currency Foreign Currency
1) _________ Yes_____ No_____ Yes_____ No_____
2) _________ Yes_____ No_____ Yes_____ No_____
3) _________ Yes_____ No_____ Yes_____ No_____3. What is the limit for deposits? Include percentage of total assets, percentage of capital, and percentage of net worth. Please explain.
4. Is there a limit on the level of concentration for specific types of deposits, such as broker deposits and affiliate deposits?