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What debt write-off? DBP sold Lopezes bad loans to Lehman Brothers in 2006 at 40 centavos on a peso

The Development Bank of the Philippines (DBP) did not condone or write-off any debt of the Lopezes as alleged by a party-list lawmaker.

“DBP takes the position that there is no loan condonation or write-off involved in the non-performing loans (NPLs) and non-performing assets (NPAs) covered by the banking transactions with DBP of the companies controlled or affiliated with the Lopez Family,” said DBP president and CEO Emmanuel G. Herbosa.

In DBP’s 14 January 2021 position paper submitted to the House committee on good government and public accountability, Herbosa said the Lopezes’ bad loans were part of P9.556 billion NPA package it sold under Republic Act Act 9182 which authorized financial institutions, like DBP to transfer NPLs and NPAs to Special Purpose Vehicles.

Lehman Brothers Asian Investment Ltd. (LBAIL) won the bidding for DBP’s bad assets with its offer of P3.83 billion in a sealed public bidding in October 2006. The DBP NPAs sold include loans by the Lopezes’ Sky Cable Corp., Maynilad Water Services (taken over by the Salim-Metro Pacific group), and Bayantel (taken over by the Ayalas).

“In effect, DBP relinquished effective control over the transferred NPAs after it sold its NPAs without recourse for cash. DBP did not condone the subject NPLs and did not pursue further collection because there was no write-off involved in the NPLs of the Lopez Companies,” Herbosa said.

Hebosa noted that both the Bangko Sentral ng Pilipinas and Commission and Audit cleared the sale of its NPAs to Lehman.

Herbosa said the SPV law enabled Philippine banks dispose of their NPAs to become more liquid and be able to have more funds available for lending to businesses.

He said various institutions were encouraged to participate in the transactions under the law due to its incentives and benefits, such as tax exemptions and fee privileges..

The House committee launched a probe Monday based on a claim by Drivers United for Mass Progress and Equal Rights-Philippines Taxi Drivers Association (Dumper PTDA) Rep. Claudine Bautista claimed the the government lost P1.6 billion from the alleged condonation of the Lopez group’s loans by the DBP.

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