SPECIAL REPORT: FIRST QUARTER BANKING REPORT: 7

• Published in: Business world (San Juan, Philippines) Philippines), 2004-05, p.1
• Main Author: Calucag, Ernesto B
• Format: Article
• Language: English
• Subjects: Agreements; Alliances; Alonso, Cathy; Asset acquisitions; Asset management; Bailouts; Balance sheets; Bank failures; Bank portfolios; Banking; Banking industry; Banks; Borrowing; Branch banking; Budget deficits; Business models; Business plans; Cadiz, Federico Y; Candidates; Castelo, Ana Belen F; Collateral; Commercial banks; Consumer credit; Consumer protection; Consumers; Cost control; Credit bureaus; Credit card industry; Credit cards; Delinquency; Deposit insurance; Due diligence; Economic activity; Economic crisis; Economic policy; Election results; Espenilla, Nestor; Espenilla, Nestor A; Financial institutions; Generic products; Government aid; Government securities; Interest rates; Investments; Isidro C Alcantara, Jr; Limlingan, Victor S; Loans; Macapagal-Arroyo, Gloria; Net losses; Nonperforming loans; Participating loans; Poe, Fernando Jr; Political risk; Politics; Presidential elections; Productivity; Profitability; Profits; Provinces; Querubin, Jose L; Rehabilitation; Remittances; Reserve requirements; Risk premiums; Securities markets; State elections; Steel products; Stockholders; Tax regulations; Treasury bills; Turnaround management
• ISSN: 0116-3930

Of the P20 billion, P13 billion was used to buy nonperforming loans of the bank. This immediately resulted in the recapture of P7 billion, which in the previous years was being booked as provisions for loan losses, into UCPB's capital. "The P20 billion infused by PDIC met the requirements of the bank's recapitalization program. After all, the financial assistance agreement (FAA) that UCPB entered into with PDIC last year was drawn up only after PDIC conducted an extensive due diligence on the bank's condition. PDIC's subsequent approval of the bank's 10-year business plan further confirmed that the amount infused was sufficient for the purpose," said UCPB President Jose L. Querubin. Just like all banks, UCPB's high level of NPLs was borne out of the 1997 financial crisis but unlike most of its peer banks that gradually recovered, UCPB had difficulties during the post-crisis years. In terms of asset quality, UCPB still has the third highest NPL ratio among all commercial banks with 34.13% of its total loan portfolio considered dud loans. Including real and other properties owned or acquired (ROPOA), nonperforming assets amounted to P41.05 billion as of the first quarter this year, or 39.73% of its total assets. Mr. Querubin said UCPB is looking at various options in a bid to recover P22 billion worth of ROPOA. Last March, the bank tapped the services of Joaquin Cunanan & Co./PricewaterhouseCoopers, to advise on the valuation of the bank's ROPOA, and to develop and implement strategies on its sale under the Special Purpose Vehicle (SPV) Law.