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Banks Unload P26.2 Billion NPAs

01.06.2005

Bangko Sentral ng Pilipinas Governor Rafael B. Buenaventura disclosed yesterday that BSP has issued a total of one hundred twenty-one (121) Certificates of Eligibility (COEs) involving P26.2 billion worth of non-performing assets (NPAs) transferred under the Special Purpose Vehicle (SPV) Act of 2002.  In a period of three months, the amount of NPAs transferred under the said Law increased from P4.5 billion as of the third quarter of last year to P26.2 billion as of year-end 2004.  

Bank of the Philippine Islands, Rizal Commercial Banking Corporation and Equitable PCI Bank top the list in terms of amount of NPAs transferred with P5.0, P5.01, and P2.9 billion, respectively.  The COEs that have been issued involve various transactions such as sale of Real and Other Properties Owned or Acquired (ROPOAs) of banks to individuals, settlement of non-performing loans (NPLs) by dacion en pago and bulk sale of NPAs to SPVs. 

Five (5) banks have pending applications for COEs with the BSP involving bulk sale of P53.8 billion worth of NPAs.   If the NPAs qualify under the SPV Law, this will bring the total amount of NPAs transferred under the Law to P80 billion which is close to the immediate target  of P100 billion.

 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.  However, to date, none of the SPVs established by banks has been a party to the bulk sale of NPAs.

 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.  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.

 “With only three months remaining or until April 8, 2005, we are still expecting that more banks will take advantage of the privileges and incentives provided under the SPV Law.  We welcome the banks’ serious efforts in cleaning up their accounts.” BSP Governor Buenaventura said. 

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