Metrobank signs deal with Rabobank

Metrobank, the country’s largest bank, has concluded an agreement for the sale of over P16 billion worth of non-performing loans (NPLs) to Asia Recovery Corp.–an asset management company (AMC) set up on the basis of investments by a foreign group led by Rabobank Nederland.

The sale and purchase agreement, the first ever in the banking industry, and probably the largest in amount, has been submitted to the Bangko Sentral ng Pilipinas (BSP) for approval by the Monetary Board. Metrobank said that pending its approval, details of the agreement cannot be disclosed.

Metrobank executive vice president and CFO Alfredo Javellana II reported that a group of investors led by Rabobank invested in Asia Recovery Corp. He said Metrobank has no equity investment in the AMC.

Rabobank, a triple A rated bank, is one of the top 100 banks in the world based on a recent Euromoney survey. It is one of the banks active in the purchase of bad NPLs in the Asian region, particularly in Indonesia where it has acquired NPL assets from the Indonesian Bank Restructuring Agency (IBRA).

Asia Recovery Corp. is the first AMC to be formed by the private sector to solve the banking industry’s growing problem of NPLs.

Congress has yet to pass the special purpose asset vehicle (SPAV) bill to address the banking sector’s distressed assets. The passage of the bill is expected to spur the creation of asset management companies (AMCs) that will acquire the banking industry’s NPLs and foreclosed assets which at present are worth over P470 billion.