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					                                                                       CAPITAL REQUIREMENTS


                                 Risk                                   Minimum Capital                    Gearing                      Risk
    Country                  Based Capital                                  Amount                          Ratio                      Weights


    Australia                8% Total RBC                                                      Deposit liabilities may not exceed   0, 20, 50 & 100%
                               4% Tier-1                                                        20 times capital and reserves




  Cook Islands      10% Total RBC               (aka     NZ$2 million                                        None                   0, 20, 50 & 100%
                            "eligible capital")
                                5% Tier-1
                    Domestic banks only though the
                        FSC has the authority to
                      implement assigned capital
                     requirements for foreign bank
                                branches



       Fiji                   12% Total RBC              FJ$2 million                                        None                   0, 20, 50 & 100%
                    Tier-2 may not exceed the total of
                                   Tier-1
                    Applicable to domestic banks and
                          foreign bank branches


 Marshall Islands            15% Tier-1                  US$1 million                                        None                   0, 20, 50 & 100%
                          Domestic banks only


   Micronesia                15% Teir-1                  US$1 million (with FDIC insurance)                    6%                   0, 20, 50 & 100%
                          Domestic banks only            US$20 million (non-FDIC insured)            Tier-1 to Total Assets


      Palau                  12% Total RBC               Domestic Banks -                                      5%                   0, 20, 50 & 100%
                                6% Tier-1                  100% Palauan-owned US$500,000             Tier-1 to Total Assets
                    Applicable to domestic banks and       Other domestic banks US$1 million
                    uninsured foreign bank branches      Uninsured foreign bank branches -
                                                           US$2 million


Papua New Guinea            12% Total RBC                K15 million                                          6%                    0, 20, 50 & 100%
                              8% Tier-1                                                             Tier-1 to Total Assets
                          Domestic banks only                                                     excluding intangible assets
    Samoa                 15% Total RBC              SAT2 million                                       None     0, 20, 50 & 100%
                            7.5% Tier-1
                        Domestic banks only


Solomon Islands             15% Total RBC            Domestic banks - SBD5 million                      None   0, 20, 50, 100 & 150%
                              7.5% Tier-1            Foreign bank branches - SBD5 million
                  Applicable to domestic banks and      assigned capital
                        foreign bank branches


  Timor-Leste             12% Total RBC              US$2 million                                       None     0, 20, 50 & 100%
                            6% Tier-1
                        Domestic banks only


    Tonga                     15% Tier-1             Domestic banks - TOP2 million                      None       0, 20 & 100%
                  Applicable to domestic banks and   Foreign bank branches - TOP2 million
                        foreign bank branches           assigned capital

                                                     "Assigned capital represents the component of
                                                     Balances due to Head Office which are
                                                     regarded as a permanent commitment of funds
                                                     for Tongan operations."



   Vanuatu                12% Total RBC              Domestic banks - VT200 million                     None     0, 20, 50 & 100%
                            6% Tier-1                Foreign bank branches - VT200 million
                        Domestic banks only             assigned capital

                                                     Assigned capital means "the assets of those
                                                     operations in excess of the liabilities of those
                                                     operations, and includes reserves and retained
                                                     profits of those operations."
                                                            LARGE CREDIT EXPOSURES


                                            Aggregate
                                          Limits for Large Large Exposure
                                            Exposures         Definition
                Limit to Borrower as        (Percent of      (Percent of
  Country        Percent of Capital           Capital)         Capital)

 Australia     Bank set own policies.                          10%
               Over 30%- Prior
               consultation required.




Cook Islands   Domestic banks - 25%       400% Total RBC     10% Total
               Total RBC.                                      RBC




    Fiji       Domestic banks - 25%            800%            None
                                          after deducting
               Foreign bank branches -     exempt credit
               25% of global capital of      exposures
               head office.
 Marshall Islands   Domestic banks - 25%      None   None

                    Foreign bank branches -
                    none


   Micronesia       Domestic banks - 20%      None   None




      Palau         Domestic banks &          800%   10%
                    uninsured foreign bank
                    branches - 20% Tier 1




Papua New Guinea    Domestic banks:           800%   10%
                    1. Single borrower -
                    1. 25% Total RBC
                    2. Corporate Group -
                    2. 40% Total RBC
Timor-Leste    Domestic banks - 25%           10 largest    10%
               Total RBC                    borrowers or
                                            inter-related
                                           persons cannot
                                            exceed 40%
                                             Total Credit
                                               Portfolio




  Tonga        Domestic banks - 25%            None         None
               with unsecured not to
               exceed 10%

               Foreign bank branches -
               25% of global capital of
               head of office



  Samoa       Domestic banks - 25% Total       None         None
                        RBC
Solomon Islands   Domestic - 25% total RBC    800%   10%

                  Foreign bank branches -
                  25% global capital




   Vanuatu        Domestic - 25% total RBC    800%   10%

                  Foreign bank branches
                  operate under the lending
                  limit of the head office.
RGE CREDIT EXPOSURES




                                            Definition of Group of Related     Limits on Sectoral
         Exceptions or Exemptions                     Borrowers                    Exposure

                                            Cross guarantees, common                  No
                                            ownership, control, financial
                                            interdependency, etc.




        1.   Interbank transactions;        Includes a borrower and any               No
        2.   Advance or credit to or        other person connected through
        2.   Gty'd by government;           ownership of a significant
        3.   Purchase of Bills of           interest, family relationship or
        3.   Exchange;                      that results in a group
        4.   Advance or credit facility     representing a risk of credit
        4.   fully secured by cash or a     concentration to the licensee.
        4.   deposit redeemable cash.
        5.   Telegraphic transfers.



        1.   Interbank transactions;        1. when one a person has, 1.              No
        2.   Bills of exchange for          directly or indirectly, the
        2.   export bills;                  1. power to exercise control
        3.   Exposures to Fiji              1. or influence over another
        3.   govt, holdings of govt, govt   1. person; or
        3.   gty'd securities, RBF          2. when connect in such a
        3.   securities;                    2. way that financial
        4.   Short term exposures of        2. soundness of a person
        4.   credit institutions;           2. may affect the financial
        5.   Exposures gty'd by govt        2. soundness of another
        5.   or a bank                      2. person or the same
        6.   Where a binding right of       2. factors may affect the
        6.   set-off against accts of       2. financial soundness of
        6.   the same counterparty, or      2. both or all counterparties.
        6.   group of related
        6.   counterparties, with
        6.   credit balances.
        7.   Telegraphic transfers.
None                             None                              No




None                             1.   Includes "related persons"   No
                                 1.   and any loans for the
                                 1.   benefit of any related
                                 1.   person;
                                 2.   For corporations, includes
                                 2.   majority owned
                                 2.   subsidiaries.



1.   Loans to or guaranteed by   1.   Where proceeds are           No
1.   Government;                 1.   re-loaned to another
2.   Portion secured by cash     1.   person;
2.   deposit;                    2.   Loan used for direct
3.   Loans guaranteed by         2.   benefit of another person;
3.   another bank limited to     3.   Two persons constitute
3.   200% of bank's capital.     3.   common enterprise.



1.   Discounted paper            Loans are combined base on:       No
1.   negotiated with recourse;   1. direct benefit test; or
2.   Banker's acceptance up      2. common enterprise exists
2.   to 200% of Total RBC;       2. between the persons.
3.   Loans secured by
3.   marketable commodities
3.   up to 40% of Total RBC
3.   provided the MV of the
3.   commodity is 125% of
3.   the amount exceeding
3.   25% of Total RBC;
4.   Government-backed debt;
5.   Cash security or
5.   segregated deposits;
6.   Bank debts.
1.   Loans secured by cash        1.   When one person holds,              No
1.   deposits place with the      1.   directly or indirectly,
1.   bank                         1.   power of control over the
2.   Loans guaranteed by          1.   other;
2.   govt of East Timor.          2.   Interconnected such that
                                  2.   if one experiences financial
                                  2.   problems the other/s is
                                  2.   likely to encounter
                                  2.   problems.



 1.   Inter/intrabank                             None                     No
 1.   transactions:
 2.   Other approved financial
 2.   institutions;
 3.   Export bills of exchange;
 4.   To or guaranteed by Govt
 4.   of Tonga.



 1.   Government guaranteed        Borrowers so interconnected             No
 1.   loans;                       that if one experiences financial
 2.   Cash secured loans;          difficulties the other/s is likely to
 3.   Interbank transactions.      encounter payment difficulties.
                                   Includes
                                   1. companies with common
                                   1. ownership or cross
                                   1. ownership;
                                   2. Borrowers linked by cross
                                   2. -guarantees.
1.   Interbank transactions;        1.   Where proceeds are           No
2.   Foreign exchange               1.   reloaned to another
2.   transactions;                  1.   person;
3.   Acceptances;                   2.   Loan used for direct
4.   Government guaranteed          2.   benefit of another person;
4.   loans;                         3.   A common enterprise
5.   Cash secured loans.            3.   exists when:
                                    3.   - expected source of
                                    3.   - repymt is the same
                                    3.   - or substantially the
                                    3.   - same;
                                    3.   - persons related by
                                    3.   - common control that are
                                    3.   - engaged in inter-
                                    3.   - dependent business;
                                    3.   - there is substantial
                                    3.   - financial inter-
                                    3.   - dependence among the
                                    3.   - persons.



1.   Interbank transactions;        Group of bodies that is under     No
2.   Purchase of telegraphic        the control of a particular
2.   transfers;                     individual. Control is presumed
3.   To or guaranteed by            when:
3.   Government;                    1. person owns/has power to
4.   Purchase of Bills of           1. vote 51% or more of the
4.   Exchange;                      1. shares;
5.   Cash secured loans;            2. exercises practical
6.   Exposures guaranteed by        2. control over the persons
6.   another bank w/ maturity       2. policies.
6.   not more than 1 year
6.   provided:
6.   ii. gty's by any 1 bank
6.   ii cannot exceed 200%
6.   ii. of the lending banks
6.   ii. capital; and
6.   ii. gty'ing bank must
6.   ii. a. not be related to
6.   ii. a. lending bank; or
6.   ii. b. if related, not rated
6.   ii. b. lower than the 3
6.   ii. b. highest ratings by
6.   ii. b. an international
6.   ii. b. rating agency if
6.   ii. b. related to lending
6.   ii. b. bank.
                                                                CONNECTED LENDING RESTRICTIONS

                                  Limit
                                                                                Related
   Country                         on
                                                                                 Entity
                            Connected Lending


   Australia       No explicit limits. Institutions establish
                   own limits.


 Cook Islands      1.   10% Total RBC to a single               1. Licensee's directors and
                   1.   license-related party;                  1. their relatives;
                   2.   25% Total RBC to aggregate              2. Person with significant interest 2.
                   2.   loans to all licensee-related           and their relatives;
                   2.   parties;                                3. Licensee's officers and their
                   3.   Unsecured loans to officers             3. relatives;
                   3.   and employees limited to one            4. Licensees consultants and
                   3.   years emolument.                        4. relatives.




      Fiji         1.   Aggregate unsecured loans               1.   Directors and immediate
                   1.   cannot exceed the higher of             1.   family;
                   1.   FJ$3,000 or 1% of paid up               2.   Partnerships and companies in
                   1.   capital and reserves;                   2.   which any director is a partner,
                   2.   Unsecured loans to officers and         2.   director, manger, officer or
                   2.   employees limited to one years          2.   agent.
                   2.   emolument.



Marshall Islands   1.   Aggregate unsecured loans               Directors, and their spouse and
                   1.   limited to 2% of unimpaired             children, or any partnership or
                   1.   capital and surplus or                  company in which any director or
                   1.   US$25,000, whichever is                 officer of the bank is interested as a
                   1.   greater.                                director, partner, officer or agent or
                   2.   Unsecured loans to officers             guarantor.
                   2.   and employees not to exceed
                   2.   one year's emolument.



  Micronesia       None                                         Officers, directors, agent, employees,
                                                                or shareholders of more than 10% of
                                                                the outstanding shares.
     Palau         100% of capital                         Any person who participates in policy-
                                                           making functions or has authority to
                                                           lend or invest bank assets or incur
                                                           liabilities on behalf of bank in the
                                                           normal course of business. Includes:
                                                           1. all directors;
                                                           2. legal person with significant
                                                           2. interest in a parent company;
                                                           3. companies affiliated with the
                                                           3. bank or parent company
                                                           3. through ownership, control
                                                           3. or management.




Papua New Guinea   1.   Aggregate limit not to exceed      Directors and officers and large
                   2.   50% Total RBC;                     shareholders along with their
                   2.   All exposures to related parties   financially dependent children or other
                   3.   in excess of K20,000 or 1%         relatives, business associates, the
                   3.   Total RBC must be "fully           bank's parent holding company and
                   2.   secured".                          other companies affiliated with bank
                                                           or parent holding company through
                                                           common ownership, control or
                                                           management.




   Timor-Leste     1.   To any related person - 5%         1.   Officers and directors;
                   1.   Total RBC;                         2.   Principal shareholders;
                   2.   Aggregate limit to all related     3.   persons related to above by
                   2.   persons - 40% Tier-1.              3.   marriage, consanguity to the
                                                           3.   2nd degree, or business
                   Excludes loans and advances             3.   interest;
                   secured by cash deposits or a           4.   Any company in which the
                   government guarantee.                   4.   bank holds a significant
                                                           4.   interest.
    Tonga         100% Total RBC                         1    Directors;
                                                         2.   Employees;
                                                         3.   Shareholders exercising
                                                         3.   control over 10% or more of the
                                                         3.   bank's shares.




    Samoa         None                                   Shareholders, parent companies,
                                                         subsidiaries, affiliated companies and
                                                         directors, principal officers and their
                                                         interests and members of their
                                                         immediate families.


Solomon Islands   Aggregate unsecured loans limited to   Included in call report instructions and
                  $10,000 or 1% of paid-up capital.      includes:
                                                         1. Large shareholders - persons
                                                         1. owning or controlling, directly
                                                         1. or indirectly, 10% or more of
                                                         1. the voting shares
                                                         2. Directors;
                                                         3. Executive officers;
                                                         4. Subsidiaries
                                                         5. Affiliates.



   Vanuatu        Unsecured loans to employees limited   None
                  to one years salary unless exempted
                  by Reserve Bank.
NG RESTRICTIONS


          Conditions and Procedures for          Supervisory Enforcement
                     Lending                            Measures


         Include in risk management systems
         descriptions.


         No preferential terms.                 NZ$50,000 fine on conviction.




         None




         None




         1.   Aggregate borrowings of
         1.   $5,000 or more required prior
         1.   approval of BOD;
         2.   No preferential terms, except
         2.   for employees as part of an
         2.   internally established employee
         2.   benefit plan.
1. Conform to loan policy;
2. No preferential terms; and,
3. Prior Board approval.




1. Same terms and conditions as     Usual enforcement measures.
1.1similar loans to non-related
1. parties;
2. conform to credit underwriting
2. procedures that are no less
2. stringent than for loans to
2. non-related parties;
3. involve no more than normal
3. risk;
4. loans in excess of K100,000 or
4. 5% of Total RBC, whichever is
4. less and prior BOD approval.



1. Must be on an arm's length
1. basis;
2. No preferential terms.
1.   No preferential terms;
1.   conditions as offered to the
1.   public;
2.   Unsecured advances to
2.   employees limited to one
2.   year's salary;
3.   Notify Reserve Bank with 15
3.   days following any lease,
3.   rental or sale/purchase
3.   agreement with any director.
3.

No preferential terms.




No preferential terms.              Monetary penalties for
                                    noncompliance.




No preferential terms.
                                                                  LIQUIDITY REQUIREMENTS

                                                       Minimum
                                                       Liquidity
   Country                                           Requirements

   Australia       Yes - Board of directors to implement liquidity management strategy. Guidelines
                   provided. Require crisis scenario analysis on regular basis. Able to withstand
                   outflows out to 5 business days. May exempt if smaller or capacity for scenario
                   analysis inadequate. Instead, maintain minimum liquidity of 9% of liabilities in
                   specified high quality liquid assets. May direct to hold specified amount of high
                   quality liquid assets where not satisfied with adequacy of liquidity management.




 Cook Islands      No - BOD to implement liquidity management policy for dealing with normal,
                   temporary and long-term liquidity disruptions.




      Fiji         No. Banks are required to formulate liquidity risk management policies which
                   provide for:
                   1. determination of liquidity position;
                   2. monitoring of liquidity; and
                   3. contingency planning.


Marshall Islands   1.   Domestic banks must maintained liquid assets of not less than 25%
                   1.   of deposit liabilities;
                   2.   Banks must implement and maintain a liquidity management strategy
                   2.   appropriate for its operations that include:
                   2.   - liquidity management policy approved by BOD for domestic banks and
                   2.   - for foreign bank branches approved by senior management outside
                   2.   - Marshall Islands;
                   2.   - system for measuring, assessing and reporting liquidity;
                   2.   - procedures for managing liquidity; and
                   2.   - a formal contingency plan for dealing with a liquidity crisis.



  Micronesia       None




     Palau         Minimum liquidity ratio requirement is based on ratings for Asset Quality and Capital
                   ranging from 15% to 40%.
Papua New Guinea   No. FIA provides that banks shall not be regarded as conducting its business in a
                   prudent manner unless it maintains adequate liquidity having regard to the
                   relationship between its actual and contingent liabilities, the times at which those
                   liabilities will or may fall due and its assets mature, and other factors appearing to
                   the Central Bank to be relevant.


   Timor-Leste     1. 15% highly liquid assets-to-total liabilities;
                   2. Banks must develop a structure for liquidity management including:
                   2. - a strategy for day-to-day liquidity management;
                   2. - board-approved policy related to liquidity management that ensures
                   2. - that management will monitor and control liquidity risk;
                   2. - have in place a management structure to execute the liquidity strategy;
                   2. - must have adequate MIS for measuring, monitoring, controlling and
                   2. - reporting liquidity risk;
                   3. Board-approved cumulative net funding requirements as a percentage of
                   3. total liabilities for next day, up to seven days, and eight days to one
                   3. month.



     Tonga         No. Banks must implement and maintain a liquidity management strategy to ensure
                   it has sufficient liquidity to meet its obligations as they fall due under a range of
                   operating conditions. Must have
                   - board-approved liquidity and funding policies;
                   - ongoing monitoring of liquid assets and funding requirements;
                   - formal contingency plan for dealing with a liquidity crisis.



     Samoa         No. Banks are to have in place written policies, systems and procedures for
                   monitoring and assessing at any time the appropriate level of liquid assets it must
                   hold taking into consideration:
                   - the stability (volatility) of deposits;
                   - maturity structure of asset;
                   - maturity structure of deposits;
                   - projected growth of loan accounts.



 Solomon Islands   No. Banks must have in place liquidity risk measurement and information systems
                   and policies which provide for both normal and name crisis situations. Banks must
                   have sufficient liquidity to cover funds outflows for at least 5 business days.
Vanuatu   No. Banks are to implement and maintain a liquidity management strategy
          appropriate for its operations that includes:
          - system for measuring, assessing and reporting liquidity;
          - procedures for managing liquidity;
          - defined management responsibilities and controls;
          - contingency plan for dealing with a crisis.
EMENTS

         Required Reserves                   Lender
                 at                             of
           Central Bank                    Last Resort

                  No              No automatic "lender of last
                                  resort" facility. Any such lending
                                  at Reserve Bank's discretion.




                  NA              None




         10% of total deposits    Reserve Bank of Fiji with
          & similar liabilities   specific conditions.




                  NA              None at national level;
                                  U.S. Federal Reserve for FDIC
                                  insured banks.




                  NA              None at national level;
                                  U.S. Federal Reserve for FDIC
                                  insured banks.


                  NA              None at national level;
                                  U.S. Federal Reserve for FDIC
                                  insured banks.
  5% of total deposits
   & similar liabilities




3.5% of deposit liabilities




7.5% of deposit liabilities   CBSI for both domestic banks
                              and foreign bank branches
7% of deposit liabilities
                                                    ASSET CLASSIFICATION AND PROVISIONING

                                               Asset Quality
  Country                                Classification and Criteria

 Australia     Must have credit risk grading system (CRGS). Not favor imposing standards
               but guidelines provided. Have at least 4 categories along lines of :
               Special mention - clients experiencing difficulties which, if persists, could result
               in losses.
               Substandard - definable weaknesses could jeopardize repayment.
               Doubtful - collection in full improbable and expect to sustain a loss.
               Loss - facilities considered uncollectible within reasonable time frame.
               For prescribed provisioning:
               Category 1 - secured by first mortgage on residential property and insured
               100% or where ratio of balance (less insurance) to valuation of security no
               more than 80%, etc.
               Category 2 - secured by first mortgage against residential property, where
               ratio of balance (less insurance) to valuation of security greater than 80% but
               no more than 100%.
               Category 3 - all facilities not in Categories 1, 2, or 4. Personal and
               commercial loans (secured and unsecured), and mortgage loans where ratio
               of balance, less insurance, to valuation of security greater than 100%.
               Category 4 - overdrawn savings accounts, unsecured overdrawn limits on
               credit cards, overdrafts, etc.




Cook Islands   Banks must have appropriate systems and procedures established to
               accurately and timely recognize problem or deteriorating assets. Loan grades
               include:
               1. Pass - fully protected by current sound worth and paying capacity:
               2. Special Mention - exhibits potential weaknesses which may, if not
               2. corrected, weaken the asset or the bank's position, includes any
               2. loan past due more that 30 but less than 90 days;
               3. Substandard - is inadequately protected by the current sound worth
               3. and paying capacity of the obligor, is past due more than 90 but
               3. less than 180 days, is required to be placed on non-accrual, and
               3. renegotiated with less than six months of performance;
               4. Doubtful - exhibits all the weaknesses of a Substandard asset but
               4. is not well secured, includes any loan past due more than 180 days
               4. but less than 360 days;
               5. Loss - any loan past due more than 360 days, characterized as
               5. Doubtful but event concerned did not occur within 360 days, or is
               5. otherwise considered uncollectible or of such little value to continue
               5. to hold on books.
      Fiji         Banks must have in place risk grading systems which classify the quality of
                   the loan portfolio. At a minimum banks should classify loans according the
                   following five categories:
                   1. Standard - full repayment of principal and interest is not in doubtful;
                   2. Special Mention - higher than normal degree of risk which could
                   2. threaten the institution's position;
                   3. Substandard - display a definable credit weakness which is likely to
                   3. jeopardize repayment;
                   4. Doubtful - all the weaknesses of Substandard plus creditworthiness
                   4. of borrower has deteriorated to such an extent that full collection is
                   4. improbable;
                   5. Loss - considered to be uncollectable or of minimal recoverable
                   5. value or unable to be collected within one year after commencing
                   5. legal proceedings.



Marshall Islands   Banks should have a well defined credit classification system based on
                   collectability considerations. Credit classifications used by the Banking
                   Commissioner include:
                   1. Substandard - inadequately protected by the current paying
                   1. capacity and/or sound worth of the obligor, has well-defined
                   1. weaknesses that jeopardize liquidation, carry more than normal
                   1. degree of credit risk, includes non-accrual assets which are at
                   1. least 90 days past due;
                   2. Doubtful - exhibits all weaknesses inherent in Substandard with
                   2. added characteristic that the weaknesses make collection or
                   2. liquidation in full questionable, includes non-accrual assets which
                   2. are at least 180 days past due;
                   3. Loss - uncollectable or such little value their continuance as
                   3. bankable asset is no longer warranted, includes non-accrual
                   3. assets which are at least one year past due.
Micronesia   Banks must adopt and maintain standards for the identification and
             classification of all potential problems, overdue or non-performing credit
             facilities and for establishment of an adequate Allowance for Loan Losses.
             Four classification grades:
             1. Standard (Pass) - presents an acceptable degree of credit risk;
             2. Special Mention - presents a higher level of credit risk than
             2. Standard credits but less than Substandard;
             3. Substandard - definable weakness/es that jeopardize the full
             3. repayment of the debt and there exists a distinct possibility the
             3. bank may suffer some loss;
             4. Doubtful - in addition to definable credit weakness of Substandard
             4. classification, the collection or liquidation of the debt in full is highly
             4. questionable or improbable;
             5. Loss - consider uncollectible or of insufficient current value to
             5. warrant being maintained as a bankable asset, includes consumer
             5. credits past due 120 day or more and commercial facilities past due
             5. 180 days or more unless well-secured and in process of collection.



  Palau      Must have internal loan review and grading system.
             1. Pass - loans that are fully protect by sound worth and paying
             1. capacity, typically not past due;
             2. Special Mention - exhibiting deficiencies that may (i) impair ability
             2. to properly supervise loan, (ii) deteriorating condition/control of
             2. collateral, (iii) deteriorating economic conditions/adverse trends in
             2. FS; (iv) any loan past due 60 days but less than 90 days;
             3. Substandard - primary repayment source is insufficient to service
             3. debt and must rely on secondary repayment sources; includes
             3. restructured loans that have not performed for 6 months, any loan
             3. past due 90 days but less than 180 days;
             4. Doubtful - same as substandard but not well-secured, any loan past
             4. due 180 days to 360 days must be classified here unless it is well
             4. secured, legal action has commenced and time to realize
             4. collateral/guarantee does not exceed 180 days;
             5. Loss - deemed uncollectable, does not warrant carrying on books;
             5. any loan past due 360 days or more unless it is well secured, legal
             5. action has commenced and time to realize collateral/guarantee
             5. does not exceed 180 days.
Papua New Guinea   Banks must adopt written loan policy and establish a loan review process.
                   Loan grades include:
                   1. Pass or Acceptable - fully protected by current sound worth and
                   1. paying capacity of the obligor or collateral pledged;
                   2. Special Mention - exhibit potential weaknesses which if not
                   2. corrected may weaken the asset or the bank's position, includes
                   2. any loan past due 60 days or more but less than 90 days;
                   3. Substandard - not adequately protected by current sound worth and
                   3. paying capacity of obligor, primary repayment source is not
                   3. sufficient to service debt and relying on secondary sources such as
                   3. collateral for repayment. Have well-defined weaknesses that
                   3. jeopardize the orderly repayment of the debt, includes any loan past
                   3. due 90 days or more but less than 180 days;
                   4. Doubtful - all weaknesses of Substandard assets plus they are not
                   4. well-secured. Collection in full based on existing facts, conditions
                   4. and values is high questionable, includes any loan past due 180
                   4. days or more but less than 360 days. If pending factors do not
                   4. occur within 180 days must classify a Loss;
                   5. Loss - considered uncollectible or of such little value that
                   5. continuance as bankable asset is not warranted. In some cases, a
                   5. distressed asset may require a partial write-down. Includes any
                   5. asset past due 360 days or more unless the asset is well-secured,
                   5. legal action has commenced and time to realize collateral is less
                   5. than one year.



   Timor-Leste     Each bank must adopt, and ensure implementation of, a written policy
                   covering the classification of assets and establishment of credit loss
                   allowances. Asset classification grades include:
                   1. Standard - generally sound credit, performing, no reason to believe
                   1. the loan poses a risk of loss;
                   2. Under Supervision - weaknesses exist in financial position/collateral
                   2. pledged, if left unaddressed/corrected could result in deterioration of
                   2. repayment prospect;
                   3. Substandard - well-defined weaknesses that make full collection
                   3. questionable, includes non-performing assets which are past due at
                   3. least 90 days;
                   4. Doubtful - collection or repayment in full is highly questionable and
                   4. improbable based on current existing circumstances, conditions
                   4. and estimated recoverable amount of collateral; includes non
                   4. -performing assets which are past due at least 180 days;
                   5. Loss - assets deemed uncollectible and of such little value that it
                   5. should not be included on the accounts and FS of the bank,
                   5. includes non-performing loans past due at least 270 days.
                   Note - branches of foreign banks may on written approval of Central Bank be
                   exempt in whole or part provided the parent foreign bank is subject to asset
                   classification requirements in its home country which comply with Basel
                   requirements.
    Tonga         Each bank must take effective steps to identify, monitor and rectify problem
                  loans identified as non-performing or impaired and to make adequate
                  provisions for losses in respect of those loans. Impaired assets includes
                  assets which are on non-accrual, have been restructure as well as assets
                  acquired through security enforcement (i.e. repossession/foreclosure).
                  Substandard, Doubtful and Loss classifications are not defined.




    Samoa         Subsidiaries of "major recognized international banks" may comply with
                  policies of parent; other banks must establish a portfolio management system
                  for evaluating credit policies and identifying and monitoring existing or
                  potential problem loans. Portfolio review system should include a grading
                  scheme. As a general rule, asset grades should be based on the evaluation
                  of primary sources of repayment with collateral used to determine severity of
                  the grade.



Solomon Islands   Must have internal loan review and grading system.
                  1. Pass - loans that are fully protect by sound worth and paying
                  1. capacity typically not past due;
                  2. Special Mention - exhibiting deficiencies that may (i) impair ability
                  2. to properly supervise loan, (ii) deteriorating condition/control of
                  2. collateral, (iii) deteriorating economic conditions/adverse trends in
                  2. FS; (iv) any loan past due 60 days but less than 90 days;
                  3. Substandard - primary repayment source is insufficient to service
                  3. debt and must rely on secondary repayment sources; includes
                  3. restructured loans that have not performed for 6 months, any loan
                  3. past due 90 days but less than 180 days;
                  4. Doubtful - same as substandard but not well-secured, any loan past
                  4. due 180 to 360 days must be classified here unless it is well
                  4. secured and legal action has commenced and time to realize
                  4. collateral/guarantee does not exceed 180 days;
                  5. Loss - deemed uncollectable, does not warrant carrying on books;
                  5. and loan past due 360 days or more unless it is well secured, legal
                  5. action has commenced and time to realize collateral/guarantee
                  5. does not exceed 180 days.
Vanuatu   Banks are expected to have in place a portfolio review system for monitoring
          existing or potential problem loans. Foreign banks and subsidiaries are
          permitted to adhere to systems adopted by parent but must provide the RBV
          with a "map" showing links and differences between the portfolio review and
          provisioning methodology used by the parent/head office and those required
          by the RBV.
          Classification grades and criteria include:
          1. Standard - loans and assets which are fully collateralized and full
          1. repayment of interest and principal is not in doubt regardless of
          1. arrears or adverse credit factors;
          2. Substandard - loans and assets that are not protected by the
          2. current financial soundness and paying capacity of the obligor,
          2. reliance on secondary sources for repayment;
          3. Doubtful - same as substandard but not well-secured;
          4. Loss - considered uncollectible, have minimal recovery value, or are
          4. uncollectable within a reasonable time after commencement of legal
          4. proceedings.
N AND PROVISIONING

                            Provisioning
                            Percentages                            Frequency

         2 approaches:                                             Regularly
         (1) encourage own methodology ;
         (2) where not warranted or inadequate, require
         (2) standardized:
         000% - Category 1; Arrears up to 90 days
         000% - (Category 2 and 3); irregularity up to 14 000% -
         days(Category 4)
         005% - > 90 days but < 182 days(Category 2);
         010% - 182 days but < 273 days (Category 2);
         015% - 273 days but < 365 days(Category 2);
         020% - 365 days and over(Category 2);
         040% - > 90 days but < 182 days(Category 3);
         040% - > 14 days but < 90 days(Category Four)
         060% - 182 days but < 273 days(Category 3);
         075% - 90 days but < 182 days(Category 4)
         080% - 273 days but < 365 days(Category 3);
         100% - 365 days and over (Category 3); 182 days
         100% - and over(Category 4)
         Where secured, guidelines for adjusting provision.
         Banks formulate general provisions. 0.5% of total risk
         weighted credit risk assets benchmark to assess
         adequacy.



         000% - Pass                                               Regularly
         005% - Special Mention
         020% - Substandard
         050% - Doubtful
         100% - Loss
 020% - Substandard                                     Quarterly
 050% - Doubtful
 100% - Loss

Additionally banks must maintain general reserves for
credit loses "at prudent levels"




.1.5% - All other credit exposures                      Regularly
035% - Renegotiated credit exposures
030% - Substandard
050% - Doubtful
100% - Loss
020% - Substandard                                    Regularly
050% - Doubtful (net of realizable value of
      collateral)
100% - Loss (net of realizable value of collateral)




001% - Pass                                           Regularly
005% - Special Mention
020% - Substandard
050% - Doubtful (net of realizable value of
      collateral)
100% - Loss (net of realizable value of collateral)
 001% - Standard or Acceptable                            Regularly
 005% - Special Mention
 025% - Substandard
 050% - Doubtful (net of realizable value of
 050% - collateral)
 100% - Loss (net of realizable value of collateral)




 002% - Standard (Pass)                                At least quarterly
 005% - Under Supervision (Special Mention)
 025% - Substandard
 050% - Doubtful
 100% - Loss

With prior approval may deduct estimated recoverable
amount when determining the amount of provisions
needed.
None                                                  Not
                                                     stated




001% - Unclassified                                   Not
020% - Substandard                                   stated
050% - Doubtful
100% - Loss




001% - Pass                                          Monthly
005% - Special Mention
020% - Substandard
050% - Doubtful (net of realizable value of
050% - collateral, provided resulting provision is
050% - not less than 20% of gross loan amount)
100% - Loss (net of realizable value of collateral
100% - provided resulting provision is not less
100% - than 20% of gross loan amount)
001% - Standard (Pass)   Regularly
020% - Substandard
050% - Doubtful
100% - Loss

				
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