MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) penalized the Bank of the Philippine Islands (BPI) with a P1-million fine for trying to sidestep a provision of Republic Act No. 8791 or the General Banking Law.

This violation was related to BPI’s disposal of its treasury shares, which it acquired after its merger with BPI Family Savings Bank. A treasury share is a share of the company issued and sold to the public, which was later acquired or repurchased by the same company.

The Ayala-led bank originally intended to decrease its authorized capital stock by retiring the acquired treasury shares, but the BSP did not approve of this, stating that the retirement of treasury shares does not count as a sale or disposition of shares in accordance with Section 10 of the General Banking Law.

Section 10 allows a bank to purchase or acquire its own capital stock after obtaining the approval of the BSP’s Monetary Board. In any case, the bank must sell or dispose of the treasury stocks within six months from the time of their purchase or acquisition. 

After the BSP’s initial disapproval, in March 2023, the BPI’s board of directors then approved the declaration of property dividends to act as the bank’s mode of disposal for the treasury shares. Under it, 406,179,276 common shares being held in treasury would be distributed to all eligible stockholders as of March 29. BPI also obtained the approval of the Securities and Exchange Commission on June 13.

BPI said it would announce the payment date and details of the distribution of the dividend “in due course.” The bank also said that the dividend declaration as a mode of disposal for the treasury shares would “only be completed after obtaining regulatory approvals.”

In a letter also dated June 13, the BSP imposed the P1-million penalty for BPI’s failure to comply with Section 10 on the disposal of treasury shares.

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– Rappler.com