UCPB asset management group head Andrew D. Alcid said the bank intends to capitalize on its foreclosed properties by either developing them or via joint-venture arrangements with property developers.
This new tact of UCPB, Alcid said, will allow the bank to have a constant income stream as the scheme will make UCPB develop the properties into shopping malls or real estate projects.
The bank’s expansion of its asset management group into a division to handle its billions of pesos in bad debts is one way of trimming the bank’s non-performing assets.
Bank sources said that the bank’s non-performing assets (NPAs) remained over 18 percent last year similar to the industry level. In 1999, it was in the vicinity of 14 percent.
Most of its bad loans are tied down in real estate properties such as the shopping malls, and medium to high-end residential properties worth nearly P10 billion.
The asset management group also plans to dispose of its assets that can be absorbed by the market while it will develop the unattractive assets in anticipation of a stronger property market in the future.
Among its already productive assets are the mixed-use hotel-office and shopping mall in Pasay City, a parking lot located in Makati, and a vacant lot in Mandaluyong City near EDSA.
One big ticket bad loan of the bank involves the Ramcar Group which reportedly owes UCPB over P500 million. A large portion of the debt will be converted to dacion en pago (payment in kind) or most likely property assets.
"With signs of renewed investor interest in the Philippines, we think it is the right time to go full blast with out asset management effort," said Alcid.
UCPB’s move is similar to what pension fund Government Service and Insurance System (GSIS) is doing to its foreclosed or idle properties. It is looking for joint venture partners in developing the properties thus allowing a constant flow of earnings.