BPI sells P2.4-B bad loans to US fund manager

The Bank of the Philippine Islands (BPI) has sold P2.4 billion worth of non-performing loans (NPLs) to Asset Pool A (SPV-AMC) Inc. and Avenue Asia Special Situations Fund III L.P., both managed by the Avenue Capital Group, a leader in the distressed asset market in the United States.

The NPL sale is the second transaction undertaken by the universal bank of the Ayala Group following the sale last year of P8.6 billion worth of NPLs to Philippine Asset Investment (SPV-AMC) Inc.

BPI said in a statement that the Avenue Capital Group "manifests its positive view and confidence in the Philippines" while BPI is optimistic that the NPL transaction would "unlock the values and provide better retuns to its sharehodlers."

Earlier this year, BPI president Aurelio R. Montinola III said they are looking at a net income of roughly P7.3 billion this year assuming the disposal of P5 billion to P6 billion worth of non-performing assets (NPAs).

Of the total NPAs for disposal this year, almost half are non-performing loans (NPLs) and the rest are real and other properties owned or acquired (ROPOAs). As of end-2004, BPI’s ROPOAs stood at P17 billion.

BPI officials said are targetting a net ROPOA sale of P1 billion this year and anticipate new ROPOAS of between P2 to P3 billion as part of the bank’s business and lending activities.

They said they will continue to look for more opportunities in disposing of the bad assets, including forming joint ventures with property developers, holding public auctions, retail sales, and the special purpose vehicle (SPV).

The country’s second largest commercial bank reported a net income of P5.7 billion in 2003, or 10 percent better than the P5.2-billion earnings in 2002.