PDIC ups ante for white knights of ailing Exportbank

Banking regulators on Monday sweetened the pot for potential white knights of Export and Industry Bank (EIB), which had been ordered closed due to insolvency. PHOTO BY ERWIN AGUILON/RADYO INQUIRER

Banking regulators on Monday sweetened the pot for potential white knights of Export and Industry Bank (EIB), which had been ordered closed due to insolvency.

An official of Philippine Deposit Insurance Corp. said the winning bidder would be allowed to put up as many as 30 additional branches on top of the 50 outlets of EIB prior to its closure in April.

More importantly, the winning bidder for EIB would also be allowed to set up new branches in coveted “restricted key cities” in Metro Manila.

Cristina Orbeta, PDIC executive vice president, on Monday said in a press conference that the authority to put up 30 bank branches in key urban and economic areas would be a key benefit for any institution that would clinch the bid on October 18.

The Bangko Sentral ng Pilipinas has approved in principle the offering of the said incentive package to the winning bidder of the bank, the official said.

Bank branching is currently restricted in key metropolitan areas such as Makati, Mandaluyong, Manila, Parañaque, Pasay, Pasig, Quezon City and San Juan.

EIB, which was ordered closed by the central bank in April because of insolvency, has P12 billion in assets, including 50 branches.

The bank’s liabilities, which include uninsured deposits and obligations to creditors, are estimated at P24 billion.

The bidders will compete based on how much they are willing to pay for EIB’s assets and how much of the liabilities they are willing to assume, Orbeta explained.

PDIC will not reveal the identities of the banks that have already submitted pre-qualification documents. But it did say that it expected several banks to join the bidding.

Nancy Sevilla-Samson, PDIC vice president for receivership, said that the bidding would observe the “reserved price system,” which refers to the minimum amount acceptable for the seller.

The PDIC official will not reveal the minimum amount acceptable until all bids have been submitted.

PDIC said it refused to announce the floor price for EIB because it wanted to encourage participants to submit more competitive bids.

The bidding on October 18 covers EIB’s assets and liabilities. A separate bid for EIB’s commercial banking license will be held at a later date, Orbeta said, believing that a separate auction for the license is the prudent thing to do.

This is because there are some parties interested only in EIB’s assets, while others are interested only in its commercial banking license.

Smaller banks hoping to upgrade into a commercial bank are keen on participating in the bid.

PDIC will issue the requirements for the bidding of the commercial banking license after the October 18 sale of EIB’s assets and liabilities.

Also, PDIC said it already paid bulk of the insured deposits of EIB’s former clients.

As of September 15, Samson said, P1.94 billion of the total insured deposits worth P2.3 billion have already been paid.