COMMERCIAL BANK

A commercial bank is a financial institution which performs the functions of accepting deposits from the
general public and giving loans for investment with the aim of earning profit. In fact, commercial banks, as their
name suggest is a profit-seeking institution. It is a type of bank that provides services such as accepting deposits,
making business loans and offering basic investment products.

GOVERNING LAW: RA. No. 8791 (General Banking Law of 2000)

POWERS OF A COMMERCIAL BANK

A commercial banking corporation, in addition to the general powers incident to corporations, shall have
all such powers as shall be necessary to carry on the business of commercial banking:

1. accepting drafts and issuing letters of credit;

2. discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt;
3. accepting or creating demand deposits;
4. receiving other types of deposits and deposit substitutes;
5. buying and selling foreign exchange and gold or silver bullion;
6. acquiring marketable bonds and other debt securities; and
7. extending credit, subject to such rules as the Monetary Board may promulgate. These rules may include
the determination of bonds and other debt securities eligible for investment, the maturities and aggregate
amount of such investment. (sec. 29, Art. II of GBL)

OTHER FUNCTIONS:
It may also exercise or perform any or all of the following:
(1) invest in the equities of allied enterprises as may be determined by the Monetary Board;
(2) purchase, hold and convey real estate as specified under Sections 51 and 52 of R.A. No. 8791;
(3) receive in custody funds, documents and valuable objects;
(4) act as financial agent and buy and sell, by order of and for the account of their customers, shares, evidences
of indebtedness and all types of securities;
(5) make collections and payments for the account of others and perform such other services for their
customers as are not incompatible with banking business;
(6) upon prior approval of the Monetary Board, act as managing agent, adviser, consultant or administrator of
investment management/advisory/-consultancy accounts;
(7) rent out safety deposit boxes; and
(8) engage in quasi-banking functions. (BSP Circular No. 271)
Equity Investments of a Commercial Bank
A commercial bank may, subject to the conditions stated in the succeeding paragraphs, invest only in the equities
of allied enterprises as may be determined by the Monetary Board. Allied enterprises may either be financial or non-
financial.
Except as the Monetary Board may otherwise prescribe:
30.1. The total investment in equities of allied enterprises shall not exceed thirty-five percent (35%) of the
net worth of the bank; and
30.2. The equity investment in any one enterprise shall not exceed twenty-five percent (25%) of the net worth
of the bank.
The acquisition of such equity or equities is subject to the prior approval of the Monetary Board which shall promulgate
appropriate guidelines to govern such investments. (sec. 30, Art. II of GBL)
(NOTE: Allied undertakings are those activities or entities which enhance or complement banking)

I. Equity Investments of a Commercial Bank in Financial Allied Enterprises

A commercial bank may own up to one hundred percent (100%) of the equity of a thrift bank or a rural
bank.
Where the equity investment of a commercial bank is in other financial allied enterprises, including
another commercial bank, such investment shall remain a minority holding in that enterprise. (sec. 31, Art. II of
GBL)
 Financial allied undertakings:

1. Leasing companies

2. Banks

3. Investment houses

4. Financing companies

5. Credit card operations

6. Financial institutions catering to small and medium scale enterprises

II. Equity Investments of a Commercial Bank in Non-Financial Allied Enterprises

A commercial bank may own up to one hundred percent (100%) of the equity in a nonfinancial allied
enterprise. (sec. 32, Art. II of GBL)
 Non-financial allied undertakings:

1. Warehousing companies

2. Storage companies

3. Safe deposit box companies

4. Companies engaged in the management of mutual funds but not in the mutual funds
themselves

5. Management corporations engaged or to be engaged in activity similar to the engagement of

mutual funds

6. Companies engaged in the provision of computer services

7. Insurance agencies

8. Companies engaged in home building and home development

9. Companies providing drying and/or milling facilities for agricultural crops

EXAMPLES OF COMMMERCIAL BANKS:

a) Bank of Commerce
b) Asia United Bank Corp.
c) Philippine Bank of Communications
d) Robinsons Bank Corp.
e) Philippine Veterans Bank
f) Maybank Philippines, Inc.
g) Chinatrust Commercial Bank Corp.
h) BDO Private Bank, Inc.
i) Citibank