Top firms purchase RP loans

Top firms purchase RP loans

U.S. investment bank Lehman Brothers Holdings Inc. and the World Bank's International Finance Corp. (IFC) plan to invest in buying bad loans from Philippine banks, central bank governor Rafael Buenaventura said Thursday.

"Lehman Brothers says it is willing to put in one billion dollars," he said at a year-end economic briefing for reporters.

He said President Gloria Arroyo's economic team held talks last month with a number of other U.S.-based funds that expressed interest in the non-performing loans (NPLs) of Philippine banks, which officials estimate at 470 billion pesos (US$9 billion).

He mentioned IFC, the World Bank's investment arm, but he did not identify the other funds.

Lehman was "just waiting for the passage of the Special Purpose Asset Vehicle Act that would facilitate the transfer of assets from one company to the other and reduce the friction cost," Buenaventura said.

Arroyo agreed with congressional leaders last week to put in place within six months a law creating private sector-led asset management companies that would take over the bad loans to enable the banks to clean up balance sheets and resume lending.

The commercial banking system's NPL ratio shot up to 18.81 percent in October. -- AFP