BDO joint ventures get central bank nod

REPORT FROM BUSINESSWORLD THE BANGKO Sentral ng Pilipinas (BSP) approved on Thursday Banco de Oro Unibank’s (BDO) application for joint ventures with three local property developers. The move will allow the Sy-led BDO to get rid of distressed assets with book value of over P200 million, BSP Deputy Governor Nestor A. Espenilla, Jr. told reporters last week. The properties to be developed are in Laguna and Rizal. The central bank approval will allow the Sy-owned bank to formally seal a partnership with three property development firms, namely: Sta. Lucia Realty & Development, Inc., Filinvest Land Inc., and Crown Asia Inc. Mr. Espenilla said the bank only "qualified the transaction in regulation," as BDO had already started with the joint venture in 2005. The central bank approved on March 2006 Circular No. 518, allowing banks to enter into joint venture agreements with real estate development firms for the development of foreclosed properties as well as other properties that a bank had acquired through a merger which are no longer necessary for banking operations. This is in line with the central bank’s move to encourage banks to dispose their non-performing loans (NPLs) and non-performing assets (NPAs), especially in light of the Basel 2 accord that makes it expensive for banks to hold on to their bad loans. As of October, the NPA level of universal and commercial banks stood at P250.74 billion, down from the previous month’s P251.06 billion and P315.7 billion in the previous year, data from the BSP showed. The NPA to gross assets ratio went up to 5.74% from last month’s 5.69% but improved from the previous year’s 7.47%. Also in the same period, banks’ real and other properties acquired or ROPA to gross assets ratio went down to 3.56% from last month’s 3.57% and 4.39% a year ago. NPLs stood at 5.29% as of end-October, an increase from the previous month’s 5.19% but a significant improvement from 7.10% in the previous year. — G.S. de la Peña/BusinessWorld