Bank sources said that the banks non-performing assets (NPAs) remained over 18 percent last year similar to the industry level. In 1999, it was in the vicinity of 14 percent and increased to 18 percent in 2000.
Most of its bad loans are tied down in real estate properties such as the shopping malls, and medium to high-end residential properties worth nearly P10 billion.
The asset management group will focus on disposing of the assets that can be absorbed by the market while it will develop the unattractive assets in anticipation of a stronger property market in the near future.
Among its already productive assets are the mixed-use hotel-office and shopping mall in Pasay City, a parking lot located in Makati, and a vacant lot in Mandaluyong City near EDSA.
Latest big ticket bad loan is the Ramcar Group which reportedly owes UCPB over P500 million. A large portion of the debt is said to be converted to dacion en pago (payment in kind) or most likely property assets.
"With signs of renewed investor interest in the Philippines, we think it is the right time to go full blast with out asset management effort," said Andrew D. Alcid, newly-appointed head of the group.
Alcid said that they would dispose of productive assets to realize gains in the near term. "At the same time, we will hold on and improve the value of the remaining assets to the point where we can fairly assume higher returns in the future."
The disposition of the properties can also be through a joint venture with property developers or other business ventures like shopping malls.
The move is similar to what pension fund Government Service Insurance System (GSIS) is doing to its foreclosed or idle properties. It is looking for joint venture partners in developing the properties thus allowing a constant flow of earnings.
The government pension fund is also putting its property assets into a land bank for disposition in the future in anticipation of a stronger property market in the next two to three years.
However, bank officials confided that they were prepared to make adjustments in anticipation of a change of top executives. The national government had made it clear that it was not giving up UCPB as it was the holder of the billions of pesos in coconut levy.