EWBC opposes amended rehab plan for Uniwide

East West Banking Corp. (EWBC), one of the creditors of the Uniwide Group of Companies, is opposing the amended rehabilitation plan submitted by the cash-strapped retail and property firm.

EWBC said the proposal for the bank to hold shares in non-allied undertakings is outright illegal.

Under its proposed amended rehab plan, Uniwide is offering to settle its obligation with EWBC by replacing the present collateral, (the Coastal Mall building and collateral) with participation in Metromall. The same Metromall services as collateral for other creditors like Philippine National Bank and Allied Bank.

EWBC said that being a commercial bank, it is not allowed under the General Banking Act to engage in non-allied businesses. The bank added the law limits the investments of commercial banks to allied undertaking such as warehousing companies, leasing companies, storage companies, safe deposit box companies engaged in the management of mutual funds but not in the mutual funds themselves. Equity investments are prohibited in non-related activities.

"Retail business is not among those allied undertakings enumerated under the law. Nor is the realty business in the proposed special purpose company (SPC proposed under the amended rehab plan), whose sole asset would be Metromall," EWBC said.

It added that warehousing in Uniwide's name will not make the business an allied undertaking because the company is not engaged in the business of warehousing, but rather on retail sale.