MANILA, Philippines - Allied Banking Corp. which is part of the Lucio Tan Group of Companies plans to offer P5 billion worth of high-yielding long term negotiable certificates of deposits (LTNCDs).
In a separate disclosure to the Philippine Stock Exchange, the bank also said it signed a joint venture agreement with affiliate Eton Properties Philippines Inc. to develop two foreclosed prime properties in Manila and Makati.
Individual investors holding LTNCDs obtain the interest coupon tax-free if they hold the instrument to maturity unlike the central bank's special deposit account and government securities which are subject to the 20 percent withholding tax.
Unlike regular deposits, banks are able to offer higher yields on LTNCDs because funds raised from these are exempt from the reserve requirement.
Since these instruments are negotiable, they can be used as collateral or sold to another investor without effecting a change in ownership. LTNCDs are also covered by the Philippine Deposit Insurance Corp.
The proposed offering of LTNCDs could be made in one or several tranches, Allied Bank corporate secretary Ma. Cecilia Pesayco said.
The bank said its joint venture with Eton covers an acquired property in Roxas Boulevard corner TM Kalaw and Alhambra Streets in Ermita, Manila, and another property along Gamboa and Soria Streets in Legaspi Village, Makati.
Since 2006, banking regulators have allowed local banks to enter into property development deals to reduce their non-performing assets. But banks must involve only real and other properties acquired through foreclosure, payment in kind, or as a result of a merger with another bank.
Under the Bangko Sentral ng Pilipinas guidelines, banks are prohibited from providing funds to any property joint venture involving a foreclosed property either as a loan or capital contribution.
Eton Properties specializes in the development of premium and mid-income residential and commercial buildings, construction of IT- and business process outsourcing-ready office buildings, creation of mixed-use township projects that incorporate residential, office, commercial, leisure and institutional components and development and management of hotels and shopping centers.
Eton has overseas property development projects in Hong Kong and mainland China, particularly in Beijing, Shenzen, Dalian and Xiamen. Its extensive land bank includes properties in the Makati and Ortigas central business districts; Manila, Pasay, and Parañaque Bay Area; Mactan, Cebu; Cabuyao, Laguna; Calatagan and other strategic domestic locations.
Allied Bank plans to merge with Philippine National Bank, which is also controlled by Lucio Tan, but the Office of the Solicitor-General sought a temporary restraining order from the anti-graft court Sandiganbayan even after a sequestration order on disputed assets had been lifted.
