Al Amanah negotiated sale bid fails

BY Ma. ELOISA I. CALDERON, BusinessWorld Reporter The government’s bid to privatize Al-Amanah Islamic Investment Bank of the Philippines has suffered another setback after it failed to draw prospective investors, including former bidder Banco de Oro-EPCI, Inc. (BDO), into a negotiated deal. The Finance department’s Privatization Management Office (PMO), which handles the sale of government assets, had hoped to dispose the bank through a negotiated agreement following last May’s failed bidding. The PMO declared the May 21 bidding a failure after only one investor, BDO, submitted an offer. Al Amanah President Ali B. Sangki said the deadline for signifying interest in a negotiated contract lapsed 10 days after the failed bidding with no proposals on the table. "After the failed bidding, there were no manifestations to negotiate for the takeover of the bank," Mr. Sangki said in a phone interview. BDO President Nestor V. Tan, who had previously said the bank was open to negotiations and that Al Amanah would become a subsidiary catering to Islamic finance, was not immediately available for comment. Finance Undersecretary for Privatization John Philip P. Sevilla also begged off when asked for comments, saying PMO chief privatization officer Guillermo N. Hernandez was privy to the Al Amanah privatization plan. Apart from BDO, at least 10 investors pre-qualified to join the bidding. They were mostly banks and financial institutions from the Middle East and Europe. The investors, however, later pulled out, noting that they had yet to study the bank’s books, including its contingent liabilities. Mr. Sangki said President Gloria Macapagal Arroyo’s order for the privatization of Al Amanah still stands but the bank would again seek approval from Malacañang for a package of interventions aimed at strengthening the institution prior to its sale. "Since the privatization did not materialize, we can continue pursuing earlier proposed interventions to turn the bank around. The marching order is still to privatize but we have to make the bank more enticing to investors," he said. The bank has long been pushing for its inclusion in the disbursement system of local government units, whose funds can be used to help it get back on its feet. Al Amanah’s operations adhere to the laws of the Koran, treating depositors and borrowers as partners who do not earn or pay interest but share in the profit of businesses where the bank’s funds are used. The bank’s liabilities have been estimated at P400 million to P500 million, compared to P115 million worth of assets as of 2005. Al Amanah has liquid assets of P47.377 million, while its non-performing loans account for 97% of its loan portfolio. The government tried to privatize the bank for the first time in 2000.