LBP taps Ernst & Young as advisor for bad assets sale

Land Bank of the Philippines (LBP) has tapped multinational auditing firm Ernst & Young (E&Y) as its financial advisor for the disposition about P20 billion worth of bad assets.

E&Y bested three other foreign financial institutions to come out with a plan to dispose of LBP’s P15-billion in non-performing loans (NPLs) and P5-billion ROPOA (real and other properties owned or acquired).

The three other bidders for the P20-billion packaging plan are PriceWaterhouseCooper, KPMG, and Credit Lyonnaise SA.

LBP president and chief executive officer Margarito Teves confirmed E&Y’s selection as financial advisor yesterday.

The financial advisor must review and repackage the selected bad assets for sale and present a financial program. The strategic repackaging would be the basis for the fundamentals and pricing of the assets.

The LBP would then invite interested asset management companies (AMCs) to form a special purpose vehicle (SPV) company wherein the government financial institution would retain a minimal exposure of at least five percent equity stake.

The bad assets that may end up in the auction block are major commercial properties within Metro Manila, properties within the Fort Bonifacio and the Filinvest controlled areas, and major residential areas within and outside Metro Manila.

The LBP actually has non-performing assets (NPAs) worth P41.7-billion divided in P25.6 billion in NPLs and P16.2 billion in ROPOA.

Teves said that the amount of bad assets for sale depends on the repackaging of E&Y, and the reception of the AMCs. At the same time, the bank has not stopped looking for interested parties for the disposal of its bad assets.

"It’s a moving target," LBP officials said referring to the conditions of the bad assets.

E&Y is also the financial advisor of the National Home Mortgage Finance Corp. (NHMFC) for the disposal of roughly 30 percent of its delinquent housing loans worth at least P17 billion.