IFC invests P1-B to buy Plantersbank's soured loans

By Donnabelle Gatdula, The Philippine Star

Posted at Jan 31 2013 08:46 AM | Updated as of Jan 31 2013 04:46 PM

MANILA, Philippines - International Finance Corp. (IFC), the private sector investment arm of the World Bank Group, has approved a P1.02-billion investment in a special purpose vehicle (SPV) to purchase Plantersbank’s non-performing loans, the agency said.

In a statement, IFC said this would help Plantersbank, run by the family of Amb. Jesus P. Tambunting, unlock its capital and increase lending to smaller enterprises in a move to stimulate economic growth and create jobs.

IFC said they have entered into a partnership with OPIF Corp. and Altus Capital Partners to become co-investors for the SPV, called the Philippine Asset Growth Opportunity.

“Plantersbank wants to scale up its lending particularly to small enterprises in the countryside and other sectors that promote job creation and grow local economies,” said Tambunting, Plantersbank chairman and CEO.

“IFC’s new investment will strengthen our balance sheet, generate liquidity and help us access additional capital so that we can achieve that goal.”

Following the global financial crisis, IFC launched a debt and asset recovery Program to make direct investments in businesses that need debt restructuring, in pools of distressed assets, and in specialized companies that manage these assets.

IFC also invests indirectly through investment funds that target distressed assets and companies. The program allows banks to focus on their core function of extending credit to borrowers rather than on unloading non-performing assets.

“IFC’s DARP investments help temper the volatility and lack of market confidence brought about by the global financial crisis. The program helps address the rising trend in non-performing loans that hinder banks from originating new loans and contributing to economic recovery,” said IFC resident representative for the Philippines Jesse Ang.

Under the program, debtors will be given various options in resolving their financing obligations so they can regain access to the formal credit system.

“This way, individual borrowers and small enterprises can avoid losing their homes or business assets,” Ang said.

IFC will contribute up to $1.55 billion to the program over three years. It also expects to mobilize about $5 billion more from other international financial institutions and private sector partners.

In 2012, IFC’s investments reached an all-time high of more than $20 billion, leveraging the power of the private sector to create jobs, spark innovation, and tackle the world’s most pressing development challenges.

Plantersbank, meanwhile, is the Philippines’ largest privately owned and managed development bank and the acclaimed leading bank for small and medium enterprises.

The thrift bank has total assets of over P50 billion and ranks 22nd out of 37 commercial and universal banks and over 800 thrift and rural banks. It is also ranked within the top 500 in the Philippines’ top 1,000 corporations.