Landbank sells P3.5-B NPAs

State-owned Land Bank of the Philippines (Landbank) has successfully sold P3.5 billion worth of non-performing loans and idle assets as part of efforts to clean its balance sheet, its top official said during the weekend.

The financial institution sold the three asset pools – comprising of industrial, commercial and residential properties – through an international auction last Dec. 12.

The assets were sold under the Special Purpose Vehicle Act, the law that provides fiscal incentives to sellers of soured loans and acquired properties.

French financial firm Calyon won two of the asset pools, while the remaining pool was auctioned off to local company Pacific Wide Realty and Development Corp.

Landbank president and chief executive officer (CEO) Gilda Pico said the bank is transforming non-performing assets (NPAs) into earning assets in order optimize revenues.

“The sale is part of our ongoing efforts to transform non-performing assets into earning assets in order to expand our loans to our priority sectors and optimize revenues,” Pico said.

Pico also said the sale would complement Landbank’s ongoing efforts to reduce its NPAs and to comply with the capital requirements under Basel II, a set of global standards for banks around the world.

Ernst and Young Transaction Advisory Services Inc. served as the bank’s financial advisor for the transaction.

In 2004, Landbank has disposed of P13.5 billion worth of non-performing loans under the SPV. The sale was considered a landmark transaction for the Philippines in terms of its size and number of bidders.

This year, prior to the latest sale, Landbank has been conducting a series of property auctions where a total of P314 million worth of assets have been sold.

The first auction was held last March 15, with P243 million worth of properties in the Mega Manila area sold to buyers.

The second auction which sold a total of P71 million worth of real and other properties owned or acquired included condominium units, office spaces and commercial lots in various areas in Luzon and the National Capital Region.

This was conducted last Sept. 27. The third and fourth property auctions, which are currently ongoing cover properties in the Visayas and Mindanao regions including properties in Luzon which were not sold in the previous auctions.

Landbank has reported a net income for the period of P3.53 billion or 31 percent higher than the P2.7 billion recorded a year ago and above the target for the period of P2.9 billion.

 For the rest of the year, Landbank is targeting to post a net income of P4 billion.