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Banks Intensify Efforts to Unload NPAs

10.08.2004

Bangko Sentral ng Pilipinas (BSP) Officer-in-Charge Armando L. Suratos disclosed yesterday that BSP has issued sixty-eight (68) Certificates of Eligibility (COEs) to eighteen (18) banks involving a total amount of P4.5 billion worth of non-performing assets (NPAs) transferred under the Special Purpose Vehicle (SPV) Act of 2002.  In a period of eight months, the amount of NPAs transferred under the said Law rapidly increased from P713.3 million early this year to P4.5 billion as of the third quarter.    

At the moment, BSP is processing applications from nineteen (19) banks totaling P34.4 billion of NPAs.  The COEs that have been issued so far involve the sale of Real and Other Properties Owned or Acquired (ROPOAs) of banks to individuals and settlement of non-performing loans (NPLs) by dacion en pago. 

Three (3) banks have pending applications for COEs with the BSP involving bulk sale of P10.1 billion worth of NPAs.  This does not yet include the deal announced by United Coconut Planters Bank (UCPB) recently involving the sale of P13.6 billion of its NPAs and the National Steel Corporation (NSC) deal that is being completed. 

As of the September 18, 2004 which is the deadline for registration of SPVs with the Securities and Exchange Commission (SEC), thirty-six (36) SPVs have been registered making them eligible to acquire NPAs until April 8, 2005.  This is a good indication that banks are pursuing serious efforts to unload their NPAs under the SPV Act of 2002. 

The SPV Act of 2002 is intended to help banks to dispose of their NPAs by granting tax exemptions and reduced registration and transfer fees.  Banks have only up to April 8, 2005 to sell their NPAs to qualified SPVs or individuals in order to avail of these privileges.  Nevertheless, a Bill has been filed in Congress to extend the effectivity of the privileges under the Law.  If approved, this will further increase the potential value of NPAs cleaned up from bank books.

“Availment of incentives under the SPV Law to dispose of NPAs is finally gaining strong momentum after a slow start.  We welcome banks’ greater resolve in cleaning up their accounts.  This is necessary in order to strengthen the banking system.” BSP OIC Suratos said.

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