Philippine Financial System: Structure and Institutions, Summaries of Accounting

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CHAPTER 6

THE PHILIPPINE

FINANCIAL SYSTEM

STRUCTURE OF THE

PHILIPPINE FINANCIAL

SYSTEM

BANGKO

SENTRAL NG

PILIPINAS

BANKING

INSTITUTION

S

NON-BANK

FINANCIAL

INSTITUTION

S

1 2 3

II. BANKING INSTITUTI ONS

A. Private Banking Institutions

• (^) Expanded Commercial Banks (EKB) or Universal Bank (UB)
• (^) Commercial Banks (KB)
• (^) Thrift Banks (TB)
• (^) Rural Banks (RB)
• (^) Cooperative Banks

B. Government Banking

Institutions

• (^) Development Bank of the Philippines (DBP)
• (^) Land Bank of the Philippines (LBP)
• (^) Philippine Al-Amanah Islamic Investment Bank 1 2

III. NON-BANK FINANCIAL INSTITUTIONS III. NON-BANK FINANCIAL INSTITUTIO NS A. Private Non- bank Financial Institutions

• (^) Investment Houses
• (^) Investment Banks
• (^) Financing Companies
• (^) Securities Dealers/Brokers
• (^) Savings and Loan Associations
• (^) Mutual Funds
• (^) Pawnshops
• (^) Lending Investors
• (^) Pension Funds
• (^) Insurance B. Government Non-bank Financial Institutions
• (^) Government Service Insurance System (GSIS)
• (^) Social Security System (SSS)
• (^) Pag-ibig

2. Commercial Bank or Domestic Bank – any commercial bank that is confined only to commercial bank functions such as accepting drafts and issuing letters of credit, discounting and negotiating promissory notes, drafts and bills of exchange and other evidences of debt. BRIEF DESCRIPTION OF THE FINANCIAL INSTITUTIONS

3. Thrift Banks (TB) – include savings and mortgage banks, stock savings and loan associations and private development hanks. a) Stock Savings and Mortgage Bank (SSMB) b) Private Development Bank (PDB) BRIEF DESCRIPTION OF THE FINANCIAL INSTITUTIONS

B. Government Banks Institutions or Specialized Government Banking Institutions

1. Development Bank of the Philippines (DBP) – provides loans for developmental purposes, gives loans to the agricultural sector, commercial sector and the industrial BRIEF DESCRIPTION OF THE FINANCIAL INSTITUTIONS

2. Land Bank of the Philippines (LBP) - a government bank, which provides financial support in the implementation of the Agrarian Reform Program (CARP) of the government. BRIEF DESCRIPTION OF THE FINANCIAL INSTITUTIONS

A. Private Non-bank Financial Institutions

● (^) Investment house - any enterprise, which engages in underwriting securities of other companies. ● (^) Investment banks - differ from commercial banks in that they do not take in deposits and until very recently rarely lent directly to households. ● (^) Financing company - any business enterprise where the primary purpose is to extend credit facilities to consumers and to industrial, commercial or agricultural entities by discounting or factoring commercial papers or account.

III.NON-BANK FINANCIAL

INSTITUTIONS

● (^) Securities dealer - any person or entity engaged in the business of buying and selling securities for his own or its client’s account thereby making a profit from the difference between the purchase prices and selling price of securities. ● (^) Savings and loan association (S&Ls) - which have traditionally served individual savers and residential and commercial mortgage borrowers, accumulate the funds of many small savers and then lend this money to home buyers and other types of borrowers. ● (^) Mutual funds - corporations which accept money from savers and then use these funds to buy stocks, long-term bonds, or short-term debt instruments issued by

III.NON-BANK FINANCIAL

INSTITUTIONS

B. Government Non-bank Financial

Institutions

● Government Service Insurance System(GSIS) -

provides retirement benefits , housing loans,

personal loans, emergency and calamity loans to

government employees.

● Social Security System (SSS) - provides

retirement benefits, funeral benefits, housing loans,

personal loans, and calamity loans to employees

who are working in private companies and offers.

● Pag-ibig - provides housing loans to both

III.NON-BANK FINANCIAL

INSTITUTIONS

THE EVOLVING

PHILIPPINE

FINANCIAL SYSTEM

REGULATORY

LANDSCAPE

a) The BSP has released Circular No. 975 in October 2017 to streamline the requirements on the issuance of bonds and commercial papers by banks and quasi-banks and Circular Nos. 984 and 985 in December 2017 in furtherance of liberalizing the foreign exchange (FX) regulatory framework. b) A key priority of the Insurance Commission (IC) is the adoption of international reporting practices. The IC is preparing for the implementation of the Philippine Financial Reporting Standards by the Financial Reporting Standards Council that will be applied to insurance companies. A. ALIGNMENT WITH GLOBAL STANDARDS