Thread by @cnnphilippines

THREAD: The House Blue Ribbon Committee starts its probe on past loans of the Lopez Group written off by the state-run Development Bank of the Philippines | LIVE bit.ly/38PeL3o

Tweets by our correspondent @meltlopez

Joining are DBP president Emmanuel Herbosa, Lopez Holdings president Salvador Tirona, BSP and SEC representatives

The issue on Lopez Group's loans was earlier discussed during the House hearings on ABS-CBN's franchise renewal bid, which was rejected by a committee in July 2020 bit.ly/38PfFNk

Panel chairman Rep. Michael Aglipay assures there will be 'no politicking' during the hearing on the condoned loans of the Lopez Group, says proceedings are done 'in aid of legislation'

Rep. Aglipay: We will investigate and review the policies of DBP to ensure these are acts sanctioned by law and are being performed correctly. This is not a continuation of the ABS-CBN franchise hearing.

Earlier this month, Senate President Tito Sotto filed a bill seeking to renew ABS-CBN's franchise, but this has not yet been taken up in the House bit.ly/3imlYep

Rep. Claudine Diana Bautista, who requested for the probe on Lopez Group's DBP loans, says the write-off cost the Filipino people ₱1.6 billion

DBP President Emmanuel Herbosa says the loan write-off for the Lopez Group years ago was made after the bank availed of RA 9182 or the Special Purpose Vehicles Act.

Herbosa: The law provided the avenue for PH banks to dispose non-performing assets to be more liquid.

DBP: We sold the Lopez loans to Lehman Brothers, a global financial firm. It's not a loan condonation, we sold it with a ₱3.83-billion bid in favor of DBP.

The bank says some of the documents are not with them anymore as DBP turned these over to the acquiring bank.

Lopez Holdings president Salvador Tirona says ABS-CBN did not submit any documents regarding the loans in question during the franchise hearings, contrary to the statement made by lawmakers.

He also denies any loan condonation or write-off from DBP that benefited Lopez Group

BSP Director Mary Anne Cube: Banks are authorized to write off credit if deemed worthless as part of its credit risk system.

Based on available records, there are no records of loan write-off from DBP favoring Lopez-owned companies.

Rep. Michael Defensor questions why DBP no longer has loan documents of the Lopez companies with them.

DBP says all documents have been turned over to the financial firm that bought the loans from them.

DBP says the bank no longer has copies of the records as the loans in question date back to early 2000s: Any documents from that time have been destroyed as the papers are only stored after 10 years, it's part of banks' retention policies.

DBP president: We're talking about a loan from 20 years ago. I would advise everybody to look into the National Archive Law covering preservation of documents.

Rep. Bautista wants copies of corporate rehabilitation plans for Lopez-owned Maynilad Water, BayanTel, and Central CATV

Lopez Holdings: Bayantel and Maynilad are no longer part of the group. These documents remained with the companies as ownership was transferred.

The firms are now under the Ayala-owned Globe Telecom and the MVP Group, respectively.

According to DBP, only 2 loans are given certificate of eligibility – Central CATV (now SkyCable), BayanTel. BSP says it only granted a certificate to BayanTel.

BSP adds that the SPV act that allows the sale of non-performing loans requires a COE as one of the requirements.

Is selling the loan illegal without a certificate of eligibility?

DBP: If there’s no COE, DBP can still transfer all its rights under a loan obligation but without the tax incentives under the SPV Act.

Rep. Defensor asks what were the collaterals posted by Lopez Group in applying for Maynilad, BayanTel loans. DBP says they still have to look for that in the loan documents which were over 10 years ago.

Rep. Defensor questions why the Lopez Group loans were transferred to Special Purpose Vehicles without seemingly exhausting all means to recover the principal through the forfeiture of collateral: Dito nagkaroon ng pananaw na masyadong pinaburan ang Lopezes at hindi ito binayaran

DBP says BayanTel's old loan was dollar-denominated.

The sale of non-performing assets was done in 2006-2007, in the aftermath of the 1997 Asian Financial Crisis and running up to the 2008 Global Financial Crisis.

Lawmakers question why DBP seems unprepared to answer details of the loans after months of prior notice.

DBP earlier said that the loan documents have long been destroyed in keeping with archiving policies.

Rep. Ria Vergara collects fellow lawmakers: The resolution says it's a loan condonation. It's different from an asset or loan account sale.

Condonation means loans are written off by a bank, an asset sale means a different entity will be in charge of collecting loan payments.

DBP says the SPV law of 2002 is now being mimicked through the FIST Bill pushed by the Department of Finance.

It will allow banks to sell defaulted loans to other financial firms so they can extend new credit lines to borrowers. bit.ly/3bNwn1n

Was the sale of non-performing loans problematic?

DBP: It was audited by the COA and in the annual audit report, there was no finding of irregularity.

DBP says it expected losses from the non-performing or long unpaid loans: With bulk sale, the outstanding balance was ₱9.55 billion. It was sold to Lehman brothers and transferred for ₱3.83 billion. They stepped into the shoes of DBP as the lender.

Rep. Lito Atienza: SPV is not a condonation or writing off. The Lopez Group was not absolved by the transfer of loans.

Rep. Atienza believes there is 'nothing irregular' in the transfer of Lopez Group's loans in the 2000s: Kung wala tayong pruweba, huwag nating aksayahin ang oras ng Kongreso sa ganitong mga alegasyon.

Rep. Defensor: Kung tayo po ay nagwi-witch hunt dito, huwag na po nating ituloy ito. Pero kung meron naman pong kakulangan ng dokumento, dapat pong itanong ito.

Rep. Defensor insists the bank gave a 60% discount to borrowers on the transfer of loans.

The value of the loan transfer only applies bank-to-bank, it does not necessarily mean that the individual borrower also pays a reduced amount.

Rep. Atienza again questions the proceedings, saying the investigation on DBP and Lopez Group loans are all based on mere allegations: We're wasting very precious time of the 18th Congress.

DBP reiterates: There's no condonation or write-off, there was a transfer or sale of loan accounts which are past due and non-performing.

DBP: Banks like DBP may still transfer receivables to another institution but without tax incentives. We don’t need a certificate of eligibility for that.

There are 2 types of accounts transferred: Those SPV-eligible, and those non-eligible.

Can banks also transfer without COE?

BSP: There are other laws that cover the assignment of receivables, not just the SPV law

DBP President says the bank has reached ₱1 trillion assets, will propel it as 7th biggest bank in the country: We're standing the test of time.

Rep. Joseph Stephen Paduano wants to invite other major companies who are among the over 2,000 firms whose loans were sold to an SPV in the year 2000s in the next committee hearing