1. Friday, 19 June 2009 Makati Shangri-La Hotel BSP Proposed Changes in Clearing Rules Chamber of Thrift Banks General Membership Meeting

2. BSP Proposed Changes in Clearing Rules Objectives  Minimize/Eliminate BSP Settlement Risk  Level Playing Field for TB and KB  Lay Groundwork for Reduction of Float Days

3. BSP Proposed Changes in Clearing Rules Original BSP Proposal  All Banks to Go on Next Day Value for Clearing Credits  Mandatory Overdraft Clearing Lines  Risk Based Credit Evaluation Current BSP Proposal

4. BSP Proposed Changes in Clearing Rules Current Clearing Time Highlights D + 04:30PMOutward Clearing ECS Cut-off D+0 4:45PMResults of Outward Clearing ECS Available 5:00PMCheck Document Exchange Cut-off 5:45PM Completion of BSP Treasury RP & IBCL for Liquidity and Reserve/Shut down of PhilPass for D+0 12:00PM – 2:00AM (D +1) Completion of Check Document Exchange D + 17:30AMECS of D+0 Morning Returns Cut-off (Value D+0) 7:45AMResults of Morning Returns ECS available 7:45AM– 8:45AMBSP Treasury RP & IBCL for Losses in AM Returns D + 14:30PMOutward Clearing ECS Cut-off D+1

5. BSP Proposed Changes in Clearing Rules Changes in Clearing Timeline D + 17:30AM ECS for D+0 Mandatory Returns ECS for Unfunded Checks of D+0 for Value D+0 D + 14:30PM ECS for Outward Clearing and Technical Returns of D+0 Only for Value D+1

6. BSP Proposed Changes in Clearing Rules Impact of Changes  Mandatory PM Funding of Bank DDA Based on Clearing Results of D+0 – Unfunded Bank’s DDA may Result in Unwinding of Bank’s Clearing Items  Incoming Returns (Due to Insufficiency of Customer Funds) will Result in Adjustment of Bank’s DDA of D+0 Done AM of D+1 with Value D+0 Due to Netting Effect of Unfunded Returns

7. BSP Proposed Changes in Clearing Rules How Changes May Be Accomplished  On Line Operations  Centralization of Clearing Operations in Manila  Use of ECS Data in Early Determination of Unfunded Items  Fast Determination of Thrift Banks NOW Accounts’ Unfunded Items

8. BSP Proposed Changes in Clearing Rules Implication - Customers  Education on Impact of Changes on Account Handling  Funding of Accounts cannot be on a Catch Up Mode  No Client Selection of which Items to Return  Centralized Clearing will Cut Float Period for Regional and Inter-regional Checks

9. BSP Proposed Changes in Clearing Rules Implication - Banks  Same Day Clearing Credit for Cir 163 Thrift Banks  Centralized Clearing will Cut Float Period of Regional and Inter-regional Checks  Credit Implication of Bills Purchase Lines  Time Pressure for Clearing Operations  Higher Efficiency in Branch Operations  Treasury Management of Funding Value Dated Returns  Income Implications on Changes in Handling of Returns  Cost Implications on Centralization  Reputational Risk of Unwinding

10. Target Implementation Date January 31, 2010 BSP Proposed Changes in Clearing Rules

11. Open Forum BSP Proposed Changes in Clearing Rules