^

Business

KBs may convert loans to equity in ailing firms — BSP

-
Commercial banks could soon acquire interests in companies or concerns about to go under, especially those in which they have substantial exposures.

Bangko Sentral ng Pilipinas Deputy Governor Alberto Reyes said the BSP is drawing up guidelines that will allow commercial banks to recover their loan exposures in losing companies about to be foreclosed.

The exit mechanism, he said, will allow banks to convert their loans into equity in these companies, equivalent to their exposures in the losing entities.

Under current banking laws, commercial banks are not allowed to own stakes in companies to which they have loan exposures since they cannot engage in non-banking activities.

Once this is implemented, banks whose loans are trapped in financially-troubled companies, stand a better chance of recovering their exposure, especially if new investors bail out these firms and infuse new money.

For instance, banks with significant uncollected loans issued to Uniwide Sales Inc. which has debts totalling more than P13 billion can hope to convert their loans into equity and sell these to new investors who will undertake the rehabilitation of the company.

The BSP’s new policy could also provide relief of creditors of National Steel Corp. which has about P16 billion in unpaid loans, with the semi-private PNB as the biggest lender. – Rocel Felix

vuukle comment

BANGKO SENTRAL

BANKS

COMPANIES

LOANS

NATIONAL STEEL CORP

PILIPINAS DEPUTY GOVERNOR ALBERTO REYES

ROCEL FELIX

UNIWIDE SALES INC

  • Latest
  • Trending
Latest
Latest
abtest
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

Get Updated:

Signup for the News Round now

FORGOT PASSWORD?
SIGN IN
or sign in with