PDIC OKs bidding process for Export & Industry Bank

CEBU, Philippines - The Philippine Deposit Insurance Corporation (PDIC) has released the terms and conditions of bid and bidding procedure for Tranche 1 for the rehabilitation of the closed Export & Industry Bank (EIB).

In a statement, PDIC issued two tranches for the EIB’s rehabilitation bidding. Tranch 1 will be for the purchase of assets and assumption of liabilities of EIB. The bid will reflect the recovery to the uninsured depositors and other ordinary creditors of the bank.

Bids for Tranch 1 will be received on October 18, 2012 at the PDIC office in Makati City in Metro Manila.

Meanwhile, Tranche 2 will be for the disposition of the commercial bank license of EIB and will be governed by separate pre-qualification requirements and bidding procedures that PDIC will release at a later date.

According to the state-owned deposit insurer, that the winning bid for the Tranch 1 will be that which will give the highest amount of recovery for depositors and ordinary creditors.

The bid will be indicated in Philippine peso and will represent the amount the qualified bidder will pay for the uninsured deposits and other ordinary credits of EIB. It will also indicate the repayment terms.

For purposes of determining the highest bid, the bids will be expressed in present value terms using a discount rate of five percent. The bid will be valid for a period of 60 days from submission of bid.

Under the bidding procedures, the PDIC Board will determine the reserve price, or the amount that the PDIC has determined as the minimum amount of recovery that depositors and ordinary creditors should receive considering the net value of the free or unencumbered assets and the net benefits to the acquirer of the rehabilitation.

Prospective bidders have been evaluated under the qualification process based on the following criteria: 1) capital adequacy ratio of at least 12 percent before and after the EIB transaction, as computed by the Bangko Sentral ng Pilipinas (BSP); 2) compliance with capital requirements for branching, according to BSP regulations; 3) minimum CAMELS rating of “3”, provided that Management rating will at least be “3”; 4) no findings of unsafe and unsound banking practice; and 5) not under the prompt and corrective action (PCA) by the BSP.

PDIC conducted the qualification process in consultation with the BSP. It did not disclose the identities and number of qualified bidders due to confidentiality agreements. This qualification process is also intended to meet the parameters for rehabilitation of a closed bank i.e., capital strengthening, liquidity, sustainability and viability; and governance.

The PDIC said that there are critical requirements to see through and implement the rehabilitation of EIB. These are: 1) support from the strategic third party investors that will bid for the rehabilitation of EIB; 2) consent of majority of stockholders; 3) consent of all creditors and uninsured depositors; 4) successful bidding; and 5) approval of the PDIC and BSP.

Meanwhile, the PDIC reminded uninsured depositors and creditors that they have until November 9, 2012 to submit their consents to the PDIC. 

The PDIC Board has approved the general framework for the bidding process of EIB’s rehabilitation to ensure transparency and attract the best bid from qualified bidders.

— (FREEMAN)