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PDIC issues bidding procedures for Tranche 1 of
Export & Industry Bank rehab
Bidding set on October 18

The Philippine Deposit Insurance Corporation (PDIC) has issued the terms and conditions of bid and bidding procedure for Tranche 1 for the rehabilitation of the closed Export & Industry Bank (EIB). EIB’s rehabilitation will involve two tranches.

Tranche 1 will be for the purchase of assets and assumption of liabilities of EIB. The bid will reflect the recovery to the uninsured depositors and other ordinary creditors of EIB. Bids for Tranche 1 will be received from 9:00 a.m. to 12 noon on October 18, 2012, at the Penthouse, SSS Bldg., 6782 Ayala Avenue corner V. A. Rufino St., Makati City. Bids will be opened at 1:00 p.m.

Meanwhile, Tranche 2 will be for the disposition of the commercial bank license of EIB and will be governed by separate pre-qualification requirements and bidding procedures that PDIC will release at a later date.

The PDIC explained that the winning bid for Tranche 1 will be that which will give the highest amount of recovery for depositors and ordinary creditors. The bid will be indicated in Philippine peso and will represent the amount the qualified bidder will pay for the uninsured deposits and other ordinary credits of EIB. It will also indicate the repayment terms.

For purposes of determining the highest bid, the bids will be expressed in present value terms using a discount rate of 5%. The bid will be valid for a period of 60 days from submission of bid.

Under the bidding procedures, the PDIC Board will determine the reserve price, or the amount that the PDIC has determined as the minimum amount of recovery that depositors and ordinary creditors should receive considering the net value of the free or unencumbered assets and the net benefits to the acquirer of the rehabilitation.

The terms and condition and bidding procedure for Tranche 1 are posted in the PDIC website, www.pdic.gov.ph.

Prospective bidders have been evaluated under the qualification process based on the following criteria: 1) capital adequacy ratio of at least 12% before and after the EIB transaction, as computed by the Bangko Sentral ng Pilipinas (BSP); 2) compliance with capital requirements for branching, according to BSP regulations; 3) minimum CAMELS rating of “3”, provided that Management rating will at least be “3”; 4) no findings of unsafe and unsound banking practice; and 5) not under the prompt and corrective action (PCA) by the BSP. PDIC conducted the qualification process in consultation with the BSP. PDIC did not disclose the identities and number of qualified bidders due to confidentiality agreements. This qualification process is also intended to meet the parameters for rehabilitation of a closed bank i.e., capital strengthening, liquidity, sustainability and viability; and governance.

The PDIC said that there are critical requirements to see through and implement the rehabilitation of EIB. These are: 1) support from the strategic third party investors that will bid for the rehabilitation of EIB; 2) consent of majority of stockholders; 3) consent of all creditors and uninsured depositors; 4) successful bidding; and 5) approval of the PDIC and BSP. Meanwhile, the PDIC reminded uninsured depositors and creditors that they have until November 9, 2012 to submit their consents to the PDIC.

The PDIC Board has approved the general framework for the bidding process of EIB’s rehabilitation to ensure transparency and attract the best bid from qualified bidders.

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The Philippine Deposit Insurance Corporation (PDIC) was established on June 22, 1963 by Republic Act 3591 to provide depositor protection and help maintain stability in the financial system by providing permanent and continuing deposit insurance.

PDIC news/press releases and other information are available at the website, www.pdic.gov.ph.

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