PNB set to get rid of P20-B bad assets through AMC

The Philippine National Bank (PNB) will get rid of about P20- billion worth of bad assets through the creation of an asset management company (AMC).

PNB president Feliciano Miranda said an initial P20 billion of the bank’s ROPOA (pertaining to the bank’s real and other properties owned or acquired) will be disposed of under an AMC in joint venture with one of several groups that have offered to put up such a facility.

Banking sources said there are at least seven groups which have expressed interest in the planned disposal of P20-billion worth of bad assets of PNB. The sources said the same groups that have earlier set their eyes on the assets of Land Bank of the Philippines have also offered to do the same for PNB.

These groups include Cerberus Ltd., Lone Star Asia-Pacific Investment Ltd., Lehman Brothers, Deutsche Bank AG, JP Morgan Chase & Co., and Bank of America.

Miranda said, however, that the bank prefers to wait for the proposed legislation to be passed first before committing to the idea.

"The initial contribution will be our ROPOA. But we will wait for the law to be passed to save on costs," said Miranda.

Miranda said PNB has received proposals from seven foreign groups interested in the bank’s portfolio of assets acquired in the course of granting loans.

PNB’s ROPOA amounted to P22 billion or 28 percent of total loans as at end-September last year.

The country’s 44 operating commercial banks are interested in getting rid of their ROPOAs as BSP rules force them to provide a two-percent cover which are a drain on their profits.

Miranda’s interest in seeing the AMC law passed has to do with a set of fiscal incentives that include exemption from the documentary stamp tax (DST), among others.

The DST and similar percentage taxes imposed on such transactions as the transfer of ownership of property at present are seen as significant stumbling blocks to the speedy disposition of the banks’ portfolio of bad assets.

Miranda said PNB’s non-performing loans (NPL) are the highest in the industry at 53 percent of its loan portfolio or P51.15 billion at end-September last year.

This compares with industry average of 18.8 percent at end-October last year reported by the BSP.

PNB also reported non-performing assets equal to 94 percent of portfolio or P73.6 billion.