Metrobank sets aside P3-B for loan losses

Industry leader Metropolitan Bank and Trust Co. (Metrobank) will set aside P3 billion in loan-loss provision as it awaits the release of the implementing rules and regulations (IRR) of the special purpose vehicle (SPV) law.

Likewise, Metrobank is looking for ways to trim the level of its non-performing loans (NPL) which reportedly stood at 16.27 percent of total loan portfolio as of December 2002. Data from the Bangko Sentral ng Pilipinas (BSP) indicate that in terms of absolute amount, the bank’s bad loans stood at P31.4 billion.

Last year, Metrobank set aside P2 billion for loan-loss provisioning to ensure the liquidity of the bank. It was however burdened by a heavy load of real and other properties owned or acquired (ROPOA) amounting to P25 billion.

Metrobank president Antonio Abacan told reporters that the bank set aside a bigger amount for provisions this year in the absence of the IRR.

"We have started aggressively provisioning for the future," Abacan said, adding that their profits this year may not be exceptional in lieu of sufficient cover.

Last year, the bank reportedly finalized the sale of over P16 billion worth of bad assets to Rabobank of the Netherlands. Rabobank formed Asia Recovery Corp., an asset management company (AMC), to acquire P16.3 billion worth of bad loans.

US investment firm Lehman Brothers had earlier initiated talks with Metrobank for the acquisition of the bad loans. However, they were asking for huge discounts in the absence then of the SPV law.

"They were too unreasonable in their negotiations," the Metrobank officials said.