Allied Bank sells P4.3-B worth of bad assets

Allied Banking Corp. has sold P4.3-billion worth of non-performing assets (NPAs) through the special purpose vehicle (SPV) route in a joint venture with ADC Resources and Holdings (SPV-AMC) Inc.

Of the total NPAs sold, P1.5 billion are ROPOAs (real and other properties owned or acquired) and P2.8 billion in non-performing loans or NPLs, mostly unsecured.

Allied Bank officials said that they are now waiting for the issuance of the certificate of eligibility (COE) by the Bangko Sentral ng Pilipinas before they can "complete the process" and avail of incentives under the SPV Law.

With the completion of the sale, the bank’s NPL ratio will be reduced to about 10 percent from the present 15 percent.

Seven local and foreign asset management companies (AMCs) had been courting Allied Bank to form the SPV and acquire the bad assets.

"We had to be really sure that the bank got the best possible deal and package for the positive disposal of the bad assets," the bank officials said.

They added that the banking industry was also anxiously awaiting word regarding the proposed two-year extension of the incentives under the SPV Law.

The industry has already disposed of roughly P100 billion in bad assets but more can still be "written off" if the extension is granted by Congress, the officials added.

The Lucio Tan-controlled commercial bank earlier successfully launched a $50-million Tier 2 capital "private placement."

"But there is no immediate need to seek another capital raising activity now that we have disposed of some of the NPAs," Allied Bank officials said.