BSP: Incentives await buyer of closed EIB

Posted at 10/09/2012 7:22 AM | Updated as of 10/09/2012 7:31 AM

MANILA, Philippines - Whoever gets to acquire the remaining assets of the shuttered Export and Industry Bank (EIB) nine days from today also gets to open 30 new branches as a sweetener in the ongoing government effort to dispose of the lender.

In addition, the winning bidder also gets to open some or all 30 branches in so-called restricted areas specified by the Bangko Sentral ng Pilipinas (BSP) as inaccessible to all banks under normal circumstances.

But the restricted areas, Christina Q. Orbeta, executive vice president at the Philippine Deposit Insurance Corp, said on Monday will open temporarily and only for the winning bidder.

The additional 30 new branches are on top of up to 50 EIB branches the winning bidder may get from the PDIC which is currently preparing for a separate bidding sale set on Oct. 18 this year.

Branch licenses typically costs P20 million each to obtain from the BSP which has deliberately withheld giving out more for many years now to put premium on existing franchises and to encourage the banks, particularly small and weak ones, to merge or consolidate.

The Philippine Deposit Insurance Corp. (PDIC) is separately selling EIB’s license as a commercial bank from its remaining assets and liabilities under a date the deposit insurer will disclose later.

The PDIC said in a statement that the bidding process “will reflect the recovery of the uninsured depositors and other ordinary creditors of EIB.”

“The bid will be indicated in Philippine peso and will represent the amount the qualified bidders will pay for the uninsured deposits and other ordinary credits of EIB, It will also indicate the repayment terms,” the PDIC said.

For purposes of determining the highest bid, these will be expressed in present value terms using a discount rate of 5 percent. Bids will be valid for 60 days from submission.

Also, the PDIC said EIB has remaining assets with a book value of only P12 billion and liabilities of P24 billion.

When the bank was ordered closed by the Monetary Board of the BSP, it had assets totaling P25 billion.

Of some P15-billion deposits at the time, only P3.4 billion covered deposits guaranteed by the PDIC.

The EIB recently won a court judgment throwing away an attempt by businessman William Gatchalian to have the lender’s remaining assets garnished as part of his bid to make the bank liable for the alleged liabilities of its fully-owned securities broking firm EIB Securities.

With that legal complication thrown away for good, observers said EIB’s prospective sale to third-party investors like Banco de Oro or the Rizal Commercial Banking Corp. could proceed without fear of complications later.

Both have expressed interest in acquiring EIB.