DBP disposes of P9.56-B worth of bad assets

The Development Bank of the Philippines (DBP) has sold P9.56 billion worth of non-performing assets (NPAs) to help cushion the effects of Basel 2, a stricter banking regulatory measure to be globally imposed next year.

DBP president and chief executive officer Reynaldo G. David told reporters yesterday that the state-run bank sold the NPAs to international firm Lehman Brothers Asian Investment Ltd. last Oct. 16.

Of the sold NPAs, P5.82 billion were classified as non-performing loans (NPLs) while P3.74 billion were real and other properties acquired (ROPAs).

DBP has P7.14 billion worth of NPAs and P4.76 billion worth of ROPAs.

"We’re very happy with the deal and I think Lehman is very happy with the deal," David said.

However, he refused to say how much the investment house paid for the sold assets. "For reasons of confidentiality I just cannot announce the kind of percentage that we got for NPAs and NPLs," he explained.

Because of the Special Purpose Asset Vehicle (SPAV), the bank’s NPA ratio moved to 1.92 percent from 8.45 percent before the sale. Past due ratio likewise improved to 1.04 percent from 5.25 percent.

When asked why the bank did not sell all its soured assets, David explained that the remainder will be sold by the individual branches. As a result, a number of branches pulled back the bad assets that were originally part of the bulk sale.

"There were a lot of pullbacks and the pullbacks were around P2 billion. We are very sure that we will unload those in a bidding basis or a negotiated sale," he added.

The impending sale will further improve the NPA ratio, which David expects will go below one percent.

Aside from the NPA sale, the bank expects to counter the effects of Basel 2 by selling additional capital next year.

"We still have some room in terms of our Tier 2 capital. We were given an approval to issue up to P10 billion. The maximum we can offer in Tier one has been done. We have around P7.6 billion for Tier 2," he said.

DBP recently finished a Tier one capital offering worth $130 million.

In the same conference, David announced a third income growth of 22.71 percent to P3.08 billion from P2.51 billion.

Total assets likewise grew to P230.81 billion in the first nine months of the year from P187.75 billion during the same period the previous year.

"We are proud to have kept our financials strong despite difficult economic conditions," David said.