Metrobank in talks with new AMC

The country’s biggest commercial bank is talking with a new asset management company (AMC) after it could not come to terms with US investment bank Lehman Brothers.

Unconfirmed reports indicate that a new memorandum of agreement (MOA) is in the works while the Metropolitan Bank and Trust Co. (Metrobank) is awaiting the approval of the Bangko Sentral ng Pilipinas (BSP) for its planned disposal of bad assets with the new AMC.

Highly-placed sources said that the bank’s board has approved the plan including the AMC that will acquire the non-performing loans (NPLs) of the bank.

"We still have to get the approval of the Monetary Board (MB) of the BSP before we can go on with the plan," the same bank sources said, hinting that the new group has both foreign and local partners.

The same sources said that they are proposing to own a significant portion of the new AMC in the absence of the SPAV law. "We are looking at equity (within the AMC) as high as 25 percent," they said.

Metrobank reportedly did not agree with the high discount level sought by Lehman Bros. for the acquisition of P15-billion worth of NPLs. The amount represents half of the P31-billion bad debts, which the bank wants to write off through a sale to an AMC.

"There were also several terms which extremely favored Lehman Bros. and left the bank with a lot of unacceptable expenses," bank sources said.

Adding to the difficulties of dealing with Lehman Bros. was the absence of a law such as the special purpose asset vehicle (SPAV) law to guide both parties in negotiations for the sale of bad debts or assets.

Metrobank needs to "rid" itself of its high NPL ratio to be able to raise new funds. In the first half of the year, it was fortunate to be able to raise $100-million in Tier 2 capital from Dunmore Asset Ltd. The amount was reportedly used to buy US dollar-denominated sovereign bonds.