PDIC: Anyone wants Exportbank aside from BDO?

MANILA, Philippines – State-run Philippine Deposit Insurance Corp (PDIC) is inviting other banks, aside from Banco de Oro (BDO), that are interested to rehabilitate shuttered Export & Industry Bank (Exportbank) to submit their proposals “anytime.”

In a statement on Thursday, May 24, PDIC stressed it “continues to study all possibilities allowed by law” to protect Exportbank’s depositors and help the bank get back on its feet.

“Parties may manifest their interest to PDIC anytime,” the insurer said.

It is uncertain what this means to BDO’s pending proposal to take over Exportbank.

Exportbank was placed by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) under PDIC’s receivership on April 26 after the bank voluntarily surrendered its operations because it could no longer meet its obligations. Exportbank declared a bank holiday on April 27.

Days later, BDO, which had been in talks to acquire Exportbank before the latter collapsed, filed a proposal with the PDIC to acquire, and most importantly, rehabilitate the bank. BDO said it was “prepared to move in immediately.”

PDIC said it was reviewing the proposal, but noted there were conditions set by BDO that were beyond PDIC’s authority. 

Legal hurdles

BDO, the country’s largest lender owned by mall magnate Henry Sy, was in talks to acquire Exportbank as early as 2009. The BSP and PDIC gave their thumbs up to the deal in 2010. The PDIC approved the deal under revised terms for the second time in 2011. An integration process of the two banks’ operations started, but the deal was never sealed.

In its statement, PDIC said, “all documentations relative to the revised terms were ready for execution. However, the investor required as a closing condition the final resolution of a substantial contingent liability arising from a suit filed by a third party. The transaction could not proceed pending the fulfillment of this closing condition.”

In a press briefing following Exportbank’s closure, BSP Deputy Governor Espenilla said the deal with BDO caved in because the bank didn’t want to get entangled in legal issues involving Exportbank. The troubled bank is facing a suit from a certain group filed early this 2012.

Exportbank was a commercial bank, with over 50 branches and 40 automated teller machines catering to 50,000 depositors nationwide when it closed down.

Its balance sheet as of September 2011 showed it had total deposits of P17.17 billion and a non-performing loan ratio of 21.88%, higher than industry average. Its total liabilities amounted to P27.02 billion, barely covering its total assets of P27.69 billion.

Audit

PDIC said it is undertaking a financial audit of Exportbank through an independent auditor to determine its valuation and define the requirements for its rehabilitation.

“With any closed bank, a rehabilitation proposal should address the requirements for capital strengthening, liquidity, sustainability, viability and governance,” the insurer said.

It added the terms of reference for qualification of parties interested to rehabilitate the bank will be announced as soon as information on the status of the bank’s assets and liabilities have been validated.

In the meantime, PDIC is processing the payment of claims of the bank’s depositors.

On May 22, it started sending payments for valid deposits worth P10,000 and below through postal money orders. These deposits comprised 29,314 accounts or 60.7% of the total accounts of Exportbank as of end-March. PDIC said it expects to complete this batch of payments by June 1, 2012.

Claims of depositors with accounts worth above P10,000 up to P500,000 will be processed beginning June 19, the PDIC noted. – Rappler.com