DBP belies allegations it condoned loans from Lopez group


Posted at Jan 18 2021 06:14 PM

DBP belies allegations it condoned loans from Lopez group 1

MANILA - State-owned Development Bank of the Philippines (DBP) on Monday belied allegations that it condoned or wrote off loans from businesses belonging to the Lopez Group of companies.

During a Congressional hearing on the issue, a DBP official said no law was broken following the sale of several loans under Lopez Holdings.

Last year, during a hearing on the proposed renewal of the ABS-CBN franchise, several administration-allied lawmakers said DBP needed to explain allegations it wrote off loans by the Lopez group worth P1.6 billion in 2006.

During Monday’s hearing, DBP president Emmanuel Herbosa said there was nothing irregular in the bank's disposal of the non-performing loans (NPLs) and non-performing assets (NPAs) by the companies belonging to the Lopez Group then.

“These NPLs and NPAs were dealt with in the regular course of business and disposed of by DBP pursuant to Republic Act No. 9182, entitled The Special Purpose Vehicles Act of 2002, as amended by RA No. 9343 and other applicable laws, which authorized financial institutions, like DBP to transfer NPLs and NPAs to SPVs (special purpose vehicles) created under the Act,” Herbosa said.

Non-performing loans are debts that have not been paid for at least 180 days. Many Philippine and regional banks saw NPLs pile up 2 decades ago due to the Asian Financial Crisis, which made them reluctant to lend to consumers and businesses.

SPVs were firms created to assume the NPLs or so-called bad loans of banks. They were meant to unburden banks from these loans so that banks could resume lending to businesses.

A similar measure called FIST or the Financial Institutions Strategic Transfer bill is currently being pushed by the Department of Finance, as banks piled up bad loans due to the economic disruptions caused by the COVID-19 pandemic.

During the hearing, DBP senior vice president Soraya Adiong explained that an audit found no irregularity in these transactions.

“It was audited by the Commission on Audit and in the annual audit report, there was no finding of irregularity,” said DBP Senior Vice President Soraya Adiong.

Adiong added, “as soon as the accounts were transferred to the SPV (special purpose vehicles) DBP no longer had any transaction, at least with respect to those four loan accounts”.

Four business entities formerly and currently owned by the Lopezes were identified to have had non-performing loans transferred to SPVs. These were Maynilad, Bayantel, Central CATV as Philippine Home Cable, and Benpres Holdings.

The loans of these entities along other companies were sold by DBP to Lehman Brothers Asia for P9.55 billion and subsequently sold to other entities.

During the hearing, Anakalusugan Rep. Mike Defensor questioned why DBP sold these NPLs with a 42 percent drop in value compared to the original loan amount.

Adiong meanwhile said that this was what special purpose vehicles were meant to do.

“The context of the law and the situation then was these were non-performing assets already, in the sense that they are non-performing already, you expect that loss would really be incurred,” Adiong said.

House Deputy Speaker Jose Atienza Jr. threatened to move to terminate the hearing saying lawmakers should first show proof of irregularity before conducting any probe.

“Kung mayroon tayong pruweba, ituloy natin. Kung wala naman tayong pruweba, huwag naman nating aksayahin ang panahon ng Kongreso sa mga allegation na wala naman dokumento,” Atienza said.

(If we have proof, let’s continue. If we don’t have proof, let’s not waste Congress’ time on allegations that are undocumented.)

Lawmakers asked DBP and Lopez Holdings to provide documents related to the Lopez loans.

Lopez Holdings President, COO and CFO Salvador Tirona asked for an extension for the submission of documents

“We cannot submit at the moment because of the COVID restrictions to submit any documents that may be needed by the committee. However, any document that will be required we will endeavor to dig this up from our storage because Mr. Chairman, this has been actually more than 10 years,” Tirona said.

Tirona also pointed out that Maynilad and Bayantel are no longer part of the Lopez group as these have already been sold to new owners.

Adiong meanwhile said that DBP no longer has copies of loan agreements of the Lopez-owned businesses.

- Report from Zandro Ochona, ABS-CBN News

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