Lehman Brothers to ink new venture with RP bank
Lehman Brothers to ink new venture with RP bank
Agence France-Presse, Manila
U.S. investment bank Lehman Brothers Holdings Inc. was set to sign an agreement with the Philippines' Metrobank Group to jointly set up an asset management company to absorb soured loans, central bank sources said Sunday.
The venture was expected to be signed as soon as Lehman Brothers completes a due diligence on Metrobank, the country's largest bank, the sources said.
Finance officials last week said Lehman Brothers had pledged to invest up to one billion dollars to buy up banks' bad loans, housing mortgages of the government as well as finance new projects.
If the deal with Metrobank pushes through, it would pave the way for the Philippines' largest bank to get rid of some 30.95 billion pesos (US$595.19 million) worth of non-performing loans (NPL) as of the third quarter of last year.
Central bank governor Rafael Buenaventura last week said the Philippines is currently preparing laws to pave the way for the acquisition of bad loans by foreign investors.
Among laws being prepared in Congress is one allowing the establishment of asset management companies to take over the NPLs, which have been estimated at about 470 billion pesos.
Another proposed law will cover corporate bankruptcies and the restructuring of failed firms.
Senate Majority leader Loren Legarda meanwhile urged President Gloria Arroyo to certify as urgent a bill she filed pushing for the creation of asset management companies for NPLs.
She said the rising NPLs were "a cause for concern that could undermine" the banking sector, noting that the Thailand government succeeded in selling off up to 40 percent of its banks' bad loans.
"If the administration really wants new legislation allowing (asset management companies) to acquire the NPLs of banks to be in place by March, then the president should waste no time in certifying the bill," Legarda said.
A central bank source said Sunday that another US firm, Cerberus Ltd., was also in serious talks with another local bank for the establishment of a similar partnership.
Among Philippine banks which have been scouring for foreign partners to solve their NPLs include Equitable PCIbank, the state-run Land Bank of the Philippines and the Philippine National Bank, officials said.
Non-performing loans are loans whose principals and interest have been unpaid for three consecutive months, officials said.