PDIC finalizing terms of sale of EIB assets

MANILA, Philippines - The state-run Philippine Deposit Insurance Corp. (PDIC) is finalizing the terms and conditions of the sale of the shuttered Export and Industry Bank (EIB) to interested investors.

In a statement, PDIC said it would soon announce the terms of reference for qualification of interested parties and the requirements for rehabilitation of EIB that was ordered closed by the Bangko Sentral ng Pilipinas (BSP) late last month.

 “As with any closed bank, a rehabilitation proposal for EIB should address the requirements for capital strengthening, liquidity, sustainability, viability, and governance,” the government-owned deposit insurer said.

PDIC took over EIB last April 27 as receiver and is now undertaking a financial audit of the bank through an independent financial auditor to determine the bank’s valuation and define the requirements for rehabilitation

The agency pointed out that interested parties could manifest their interest anytime while the status of major assets and liabilities of EIB is sufficiently being validated.

So far, PDIC has received a proposal from Banco de Oro Unibank Inc. of retail and banking magnate Henry Sy. The proposal would be evaluated within a 90-day period to determine whether it is the most advantageous to depositors, creditors, and taxpayers.

The PDIC Board approved an agreement between EIB and BDO last March 2010 for the acquisition of all the bank’s assets and the assumption of all liabilities with financial assistance to the ailing bank subject to certain conditions.

In April 2011, the PDIC Board again approved the terms between EIB and BDO under amended terms and conditions that included the restructuring of the financial assistance in accordance to the amended requirements.

All documentations relative to the revised terms were ready for execution but BDO required as a closing condition the final resolution of a substantial contingent liability arising from a suit filed by a third party.

The PDIC said the transaction could not proceed pending the fulfillment of the closing condition.

EIB has close to 50,000 depositors with deposits amounting to over P15 billion. It has a nationwide network of 50 branches and 47 automated teller machines (ATMs).

In its website, EIB said it is backed by local and global stockholders led by the Yao Group as well as Hong Kong-based Lippo China Resources Ltd., Raiffeisen Zentralbank Österreich AG (RZB) of Austria as well as investment and financial advisory specialist American Orient Capital Partners Group

Based on its 2011 General Information Sheet submitted to the Securities and Exchange Commission (SEC), EIB has an authorized capital stock of P7.5 billion of which P4.73 billion has been paid-up and subscribed.

Its major shareholders include Amsterdam-based Ridderbrecht BV with 11.62 percent, Lead Bancfund Holdings Inc. with 10.03 percent, Apex Bancrights Holdings Inc. with 10.03 percent, Extra Year Investments Ltd with 9.5 percent, Asiawide Refreshment Corp. with 8.45 percent, Medco Asia Investments Corp. with 7.88 percent, and Yao with 6.35 percent.

Other shareholders include Yao’s Zest-O Corp. with 5.92 percent, San Miguel with 4.96 percent, King Mild Ltd. with 2.64 percent, Conreal Holdings Ltd with 2.64 percent, and Medco Holdings with 2.45 percent.

Meanwhile, Cagayan Rep. Jack Enrile criticized the Bangko Sentral ng Pilipinas (BSP) yesterday for its alleged failure to check on the financial condition of small banks and protect their depositors.

He said the recent closure of Export and Industry Bank and a rural bank in Tagkawayan, Quezon show that something is amiss with how the BSP is monitoring the performance of banks.

“There may be something wrong with how BSP monitors transactions undertaken by banks as well as their general financial position, or may have just been too slow to act on early indications that a bank is facing huge financial trouble that could cause its closure,” he said.

He said BSP’s failure to demonstrate to the public that it can protect depositors from bank closure and unfair business practices only encourages Filipinos not to save their money in banks.

“BSP’s apparent lackluster monitoring of EIB’s financial performance leading to its closure as well as its failure to institute measures that could have prevented the bank‚Äôs closure cast doubts on BSP‚” competence in protecting depositors” he added.