8990 sells housing receivables to CTBC

Mass housing developer 8990 Holdings has sold P1 billion worth of housing receivables to CTBC Bank, the local subsidiary of Taiwanese banking giant Chinatrust.

Through its subsidiaries 8990 Housing Development Corp. and Foghorn Inc., 8990 Holdings signed a memorandum of agreement for CTBC’s takeout of its existing contracts to sell (CTS) with CTBC Bank, allowing the housing developer to pass on to the local lender the financing of residential units that have been purchased.

In a statement, 8990 Holdings said the P1-billion deal ushered in more banking sector involvement in mass housing. The agreement is on a “without recourse” basis and for the full value of the outstanding principal balance.

“8990 is happy to be working with CTBC Bank on this endeavor as it shows the innovative spirit of the bank in tapping customers coming from the mass housing market. This is a significant milestone not only for 8990 Holdings, but also for the mass housing sector because it opens a major avenue for sustainable long-term housing finance,” said Januario Jesus Atencio, president and chief executive of 8990 Holdings.

“The arrangement between 8990 and CTBC Bank for the takeout of our contracts to sell based on the full outstanding principal balance without recourse is a rare financial product, and probably the first of its kind in recent times,” he added.

CBTC Bank, formerly Chinatrust Philippines, opened as a full-service commercial bank in the latter part of 1995 and now has one of the largest branch networks among foreign banks in the country. It is part of a global network that includes 147 branches throughout Taiwan, and 68 overseas outlets located in the United States, Canada, Japan, India, Indonesia, Hong Kong, Singapore, Thailand, Vietnam and China.

“Our partnership with the subsidiaries of 8990 Holdings, a recognized leader in affordable housing, provides us with a great opportunity to expand our mortgage market to a new segment and at the same time fulfill our social mission to uplift the lives of the communities where we maintain a presence,” said Mark Chen, president and CEO of CTBC Bank.

Atencio said 8990 Holdings’ arrangement with CTBC Bank was a “clear vote of the confidence for 8990 over the long term, its innovative business model and the quality of its buyers, and a strong signal that the banking sector is starting to be positive about the prospects of mass housing in the Philippines.”

8990 Holdings has P11.5 billion in CTS receivables portfolio, which started in 2011 with the launch of its CTS in-house facility called “CTS-Gold” where qualified buyers can avail themselves of houses at a faster turnover by paying only a 2-percent downpayment, 8.5 percent to 11.5 percent interest rate a year and a maximum term of 25 years.

Other initiatives recently taken by 8990 to liquify its portfolio include the migration of accounts to Pag-IBIG Fund to the tune of P4 billion, of which close to P1 billion had already been taken out, and a planned P1-billion securitization of housing receivables scheduled in July, potentially the first purely private sector housing securitization deal in the country. Doris C. Dumlao