Rehab sought for 2 Lehman subsidiaries in RP

MANILA, Philippines – The Metropolitan Bank & Trust Co. (Metrobank), the country’s largest bank, is asking a Makati City court to put two local subsidiaries of the collapsed investment bank Lehman Brothers under rehabilitation.

Metrobank said it petitioned the court to place Philippine Investment One Inc. and Philippine Investment Two Inc. – subsidiaries of the Singapore-based Lehman Brothers South East Asia Pte Limited – under   tation is a preemptive move to protect Metrobank against possible dissipation of assets by foreign claimants,” Vicente Cuna, Metrobank executive vice president, said.

The case was raffled off to Judge Cesar Untalan of Branch 149.

Metrobank disclosed earlier a loan exposure amounting to some P2.4 billion in the two Philippine-based Lehman Brothers subsidiaries.

It stressed that the operations of both the PIOI and PITI remain normal despite the collapse of the giant US investment bank.

“Metrobank is confident that it will recover in full its loan principal given the amount and quality of assets that the two companies are holding,” Metrobank said, adding that the amount was used to purchase foreclosed properties of the Development Bank of the Philippines and the United Coconut Planters Bank, among others.

Metrobank said that without court intervention, “the companies will suffer setbacks in meeting their financial obligations while they are being beleaguered by the attempts of some creditors to enforce payment of their claims to the detriment of other creditors, especially with the recent act of default by Lehman Brothers.”

Metrobank said the filing of petitions for corporate rehabilitation is necessary “to prevent any undue preference to certain creditors and ensure that both companies are properly preserved during the period.”

PIOI and PITI are special purpose vehicles whose business is to acquire non-performing assets or bad loans from banks or other financial institutions under the terms of the Special Purpose Vehicle Act of 2002.

An SPV is a joint venture between a bank and an asset management company.

As a joint venture company, an SPV is registered with the Securities and Exchange Commission. It is also required to secure a certificate of eligibility or COE from the Bangko Sentral ng Pilipinas.