X136.

2: Requirements on Declaring of Dividends:

1. Clearing account in the Bangko Sentral is not overdrawn
2. Liquidity floor requirement for government funds
3. Minimum capitalization requirement and risk – based ratio
a. Provided under applicable and existing capital adequacy framework
4. Capital conservation buffer requirement
a. Universal and commercial banks
b. Subsidiary and quasi-banks
5. Higher loss absorbency requirement
6. No major violations as may be determined by the Bangko Sentral
X3136.2: Limitations and Amount Available for Dividends Declared
A. Reserve for retirement of government preferred stock
B. Applicability of other laws, rules and regulations for Coop Banks
C. Dividends on government shares for RBs:
Held by LBP, DBP, or any government-owned-controlled
bank
Held prior to 09 June 1992 Held on or after 09 June Held on or after 13 September
1992 2013
 NOT LESS THAN 14%  4% - for first and  Amount is based on
- COMMON STOCK second years and the lending
 GOVERNMENT would increase 2% benchmark approved
PREFERRED STOCK - for the succeeding by the Bangko
entitled to cash dividend two years until its Sentral plus the
but not exceeding in the fifteenth year prevailing nonprime
2% of total outstanding spread of the
preferred stock government FI
 LESS THAN 14% -
dividend in preferred
stock shall be
proportionately reduced

Under the subsection X136.3, the amount of unrestricted or free earnings and undivided profits shall be
the net amount available for dividends it should be reported to the Financial Report Package in the
calendar or fiscal year-end immediately preceding the date of the dividend declaration. The amount shall
be bases on a sound accounting loss provisioning processes under existing regulations which takes into
account relevant capital adjustments including losses, bad debts and unearned profits or income
X136.4: Reporting and verification
 Declaration of dividends
– Reported by the bank to the appropriate department of SES
• Submission of duly notarized certification
• Submission of the Report on Dividends Declared
– Must be reported within 10 business working days after date of declaration
– Banks under prompt corrective action shall be subject to Bangko Sentral verification
X136.5: Recording of dividends
 Liability for dividends declared
o Recorded in the bank’s book upon declaration
 Dividends that are subject to prior Bangko Sentral verification
o Liability for dividends declared is recorded upon the receipt of Bangko Sentral
 Disclosure
– Footnote in the Statement on Changes in Equity
 – Notes to the Financial Statements
X136.6: Issuance of fractional shares
A. Amount corresponding to the fraction should be given in the form of cash dividend
B. Certificate of stock issued should be in whole numbers and the fractional shares shall be issued in
the form of scrip certificates
X136.10: Supervisory enforcement actions
1) Bangko Sentral may deploy enforcement actions to promote adherence with the rules and
regulations governing dividend declaration and bring about timely corrective actions
2) Issue directives to suspend/refrain/ restrict from performing a particular activity
3) Impose sanctions to limit the level of
4) Suspend any business activity that has adverse effects on the safety or soundness of the bank