Documentary needs delaying sale of Al-Amanah Bank

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) remains the last hurdle for the Development Bank of the Philippines’ plan to divest from the country’s sole Islamic bank after the regulator of government-owned and controlled corporations (GOCCs) expressed support to the initiative.

 “We are ready to approve it but they (DBP) cannot comply with our documentary requirements. They have been asking for extensions,” Governance Commission on GOCCs (GCG) Commissioner Ma. Angela Ignacio told The STAR in a text message.

 “Once these requirements are settled, we should be able to complete our memo to the President in two to three days. Then the agreement with the Office of the President is that, if we don’t get any other directive within 15 working days, we will inform DBP already,” she explained.

State-run DBP is planning to sell 99.98 percent of its stake in Al-Amanah Ismalic Bank of the Philippines, four years after taking over its management from the Bureau of the Treasury, which allowed it to expand operations in Mindanao.

The sale will allow Al-Amanah’s privatization, which is expected to boost its balance sheet after incurring losses for 17 years under the hands of the government.

Al-Amanah is an Islamic bank, adhering to Muslim teachings and as such, does not charge interest to its clients but instead earns like an equity investor to its borrowers by forging partnerships, lease-to-own deals and similar arrangements.

Ignacio said GCG is awaiting three requirements from DBP to process its application, including the approval of the sale transaction from the BSP.

BSP Deputy Governor Nestor Espenilla Jr. told The STAR the central bank has no problem with the stake sale “in principle.”

 “That was always their plan… however any specific transaction requires prior BSP approval. I am not yet aware though if they have a specific deal,” he said.

Another pending requirement is the approval of Al-Amanah stockholders and a copy of the Bureau of Internal Revenue’s response to DBP’s query if it can avail of tax exemptions granted by law to Al-Amanah for the sale.

Under Section 37 of Republic Act 6848 or the Al-Amanah Islamic Investment Bank Charter, all “assets, profits distributions and all contracts, deeds documents and transactions related to the conduct of business of the Islamic Bank shall be exempted from all taxes under the National Internal Revenue Code.”

 “They also owe us some financial analysis/valuations under different options,” Ignacio said.

Sought for comment, DBP Treasurer Maria Theresa Quirino said in a separate text message that the bank had been waiting for BSP’s approval since April this year.

“We have no problem with other matters. GCG is waiting for BSP approval so it can act on our request,” Quirino said.