Landbank to sell P20-B bad assets

The Land Bank of the Philippines (LBP) has set the public bidding for the sale of its bad assets in August or a month ahead of the deadline to register a special purpose vehicle (SPV).

At stake are P15-billion worth of non-performing loans (NPLs) and another P5 billion in ROPOA (real and other properties owned or acquired).

After receiving the preliminary report of financial advisor Ernst & Young, the LBP board and management committee decided to go on with the sale.

The report gave the government financial institution (GFI) an idea on the initial packaging of its bad assets for sale and an initial valuation scheme for the NPLs and ROPOAs, which are mostly residential and commercial properties.

"We got the report and we decided to proceed with the next phases, that means interim valuation, valuation of the NPAs, including possible sales structures and restructures," said Omar T. Salvo, LBP vice president for corporate finance.

Salvo admitted that they were doing their own valuation of the assets that will be put up at the auction block, allowing the bank to compare notes with its financial advisor.

He said there will be a standard pre-qualification process to ensure the full disclosure of the package to the prospective buyers, the economic viability of the buyers, the formation of the SPV, and other necessities for the proper disposition of the bad assets.

"We want to make sure that the buyers are fully aware that these assets are bad assets," the LBP official said.

However, Salvo said, the bank would likely retain a five-percent stake in the proposed SPV.

Some of ROPOAs and NPLs are major commercial properties within Metro Manila, properties within the Fort Bonifacio and the Filinvest controlled areas, and major residential areas within and outside Metro Manila.