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