In a special shareholders meeting held last Tuesday, PBCom expanded its board seats from 12 to 15 as it likewise announced that its major shareholders pledged to infuse P3 billion in fresh capital.
PDIC president and chief executive officer Ricardo M. Tan said they are in talks with the commercial bank, whom they urged to dispose of its non-performing loans (NPLs) via the special purpose vehicle (SPV) route.
However, the SPV law allows asset management companies or buyers of the bank’s bad assets to avail of huge discounts reaching as high as 80 percent.
The PDIC, though, is prepared to partially subsidize possible book losses for PBCom after the sale of its bad assets. "We are willing to help cover the net book losses. But the bank must be prepared to share in the burden," the PDIC chief executive stressed.
"If indeed discussions prove successful, we would want to be able to monitor with reasonable presence that the bank will not continue to incur losses," Tan said.
"We must ensure that there are adequate safeguards."
But the PDIC chief said that they would not be involved in the selection of a financial advisor for PBCom "but we would see to the transparency and fairness of the bidding process."
PBCom is choosing between Ernst & Young (E&Y) or KPMG as its financial advisor to arrange the sale of P3- to P4-billion worth of bad assets. Sources estimate the bank’s non-performing loans (NPL) at over P6 billion, considered among the disturbing levels in the country’s commercial banking sector.
The financial advisor is required to review, price and package the bad assets that would be sold to an asset management company through the SPV route.
"We want to solve our NPL problems permanently," said PBCom president and chief executive officer Isidro C. Alcantara Jr.
Alcantara admitted that the bank successfully disposed of bad assets in the past two years. The gains from the sale were substantial enough to keep the bank from posting negative growth figures. However, it was not enough to make the bank financially flexible in terms of expansion and healthy capital ratios.