Bankers seek 2-year extension of SPV incentives
August 28, 2004 | 12:00am
The Bankers Association of the Philippines (BAP) is pushing for an extension of the grant of tax incentives offered under the Special Purpose Vehicle (SPV) Act of 2002 by at least two years, a ranking official said.
BAP president Cesar Virata said they are coordinating with Congress for the possible amendment to the SPV law which would involve a simple revision or change in the Sept. 2004 expiration date to Sept. 2006 or 2007.
"It will be simple because all the rest of the provisions of the law will remain," Virata added.
He said the additional time would allow the banks to reduce their bad assets and clean up their books "if government can ease up on certain restriction or provisions and allow an extension of the law."
Based on the law, all SPVs must be registered with the Securities and Exchange Commission (SEC) on or before Sept. 18 this year known as the "sunrise provision" and that all the assets under the SPV must be noted with the Bangko Sentral ng Pilipinas (BSP) by April 2005.
Outside of the SPV law, the BSP also has the power to grant additional incentives for the banks valuation reserves for a period of between seven to 10 years.
The BAP, which represents the countrys commercial banking industry, sought the extension as only two banks (Bank of the Philippine Islands and Rizal Commercial Banking Corp.) have successfully completed the sale of their bad assets, the precondition for the formation of SPVs that would apply for the incentive package.
BPI has formed a SPV with Morgan Stanley Emerging Markets Inc. for its P8.6-billion bad assets while RCBC forged a joint venture with Lehman Brothers for its P3.9-billion bad assets. Bad or non-performing assets consist mainly of non-performing loans (NPLs) and real and other properties owned or acquired (ROPOA).
However, other banks still negotiating the disposition of their bad assets may register an SPV even if they have not formed a joint venture with an asset management company (AMC) yet. The move would allow the SPV all the incentives offered by the law even if the deal is consummated after Sept. 2004.
BAP president Cesar Virata said they are coordinating with Congress for the possible amendment to the SPV law which would involve a simple revision or change in the Sept. 2004 expiration date to Sept. 2006 or 2007.
"It will be simple because all the rest of the provisions of the law will remain," Virata added.
He said the additional time would allow the banks to reduce their bad assets and clean up their books "if government can ease up on certain restriction or provisions and allow an extension of the law."
Based on the law, all SPVs must be registered with the Securities and Exchange Commission (SEC) on or before Sept. 18 this year known as the "sunrise provision" and that all the assets under the SPV must be noted with the Bangko Sentral ng Pilipinas (BSP) by April 2005.
Outside of the SPV law, the BSP also has the power to grant additional incentives for the banks valuation reserves for a period of between seven to 10 years.
The BAP, which represents the countrys commercial banking industry, sought the extension as only two banks (Bank of the Philippine Islands and Rizal Commercial Banking Corp.) have successfully completed the sale of their bad assets, the precondition for the formation of SPVs that would apply for the incentive package.
BPI has formed a SPV with Morgan Stanley Emerging Markets Inc. for its P8.6-billion bad assets while RCBC forged a joint venture with Lehman Brothers for its P3.9-billion bad assets. Bad or non-performing assets consist mainly of non-performing loans (NPLs) and real and other properties owned or acquired (ROPOA).
However, other banks still negotiating the disposition of their bad assets may register an SPV even if they have not formed a joint venture with an asset management company (AMC) yet. The move would allow the SPV all the incentives offered by the law even if the deal is consummated after Sept. 2004.
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