BSP sets fees on nonbanks with trust units

The Bangko Sentral ng Pilipinas (BSP) will begin charging supervision fees to nonbank financial companies with trust units, a move aimed at covering the cost of maintaining regulatory oversight.

Under Circular No. 1228, dated Jan. 6, the central bank set an annual supervision fee for affected firms, to take effect this year. The assessment will be based on the assets under management of a firm’s trust department, using a rate comparable to that applied to banks with trust operations.

Specifically, covered companies will be required to pay an annual supervision fee equivalent to 1/28 of 1 percent of their average assessable assets in the preceding year.

Average assessable assets are defined as the sum of the month-end balances of total assessable assets, divided by the number of months the trust department was in operation during the assessment period. Total assessable assets refer to assets under management by the trust department, excluding securities held under custodianship.

Income derived by the BSP, including supervisory fees, is exempt from national internal revenue taxes. As a result, nonbank financial institutions with trust authority are no longer required to withhold taxes on their payment of annual supervision fees to the central bank.

As of June 2024, records showed three nonbank financial intermediaries with trust authority under BSP supervision: AB Capital and Investment Corp., Philippine Commercial Capital, Inc. and Philippine Depository and Trust Corp.

“The collection of the said fee, which is anchored on the provisions of the New Central Bank Act, as amended, helps defray the cost of maintaining appropriate supervisory resources within the Bangko Sentral,” BSP Deputy Governor Lyn Javier said.

The supervisory fee must be paid on or before May 31 each year. Firms that fail to comply may face administrative sanctions and monetary penalties.

The Monetary Board, the highest policy-making body of the BSP, may also impose additional sanctions, including the suspension or revocation of a firm’s authority to engage in trust, fiduciary or investment management activities.

If the violation is committed by a director or officer, the board may order their suspension or removal. In cases involving corporate violations, the BSP said the entity may be dissolved through quo warranto proceedings initiated by the Office of the Solicitor General.