DBP maintains it did not write off Lopez group's loans

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Metro Manila (CNN Philippines, February 23) - The Development Bank of the Philippines maintained Tuesday it did not write off the ₱1.6-billion worth of loans owed by the Lopez group of companies, which it sold to a foreign investment bank in 2006.

DBP president Emmanuel Herbosa told lawmakers at the hearing of the House Committee on Good Government and Public Accountability that the sale of the Lopez group's loans to Lehman Brothers Asia was above board.

"You're not gonna see any notice of foreclosure on the Lopez loans, or for that matter the NPLs (non-performing loans) that were sent to the SPVs (special purpose vehicles) because there's no condonation of the loan. It was a true sale," he said.

The Lopez group's loans were among the debts totaling P9.5 billion from over 2,000 borrowers, which were sold to Lehman Brothers Asia for ₱3.83 billion, or just a third of the cost.

Republic Act 9182 or the Special Purpose Vehicle Act of 2002 allows banks to sell bad loans to trim losses.

Herbosa said DBP benefited from the sale because it gave the state-owned bank funds for investment.

"We sold garbage to Lehman at 64%. How they turned it around, I don't know. It's the challenge at the time. But for me, DBP did right and all the other banks did right by virtue of the law that allowed us to recover something. That was 64%. So with that 64%, it gave us and other banks a lot of liquidity, or some liquidity, that allowed us to invest in a faster horse," he said.

President Rodrigo Duterte recently lashed out at the Lopez family over their alleged unpaid loans to DBP. He said he will not allow ABS-CBN to return to free television unless its owners settle their obligations to the government.

Another hearing on the Lopez group's loans will be conducted by the House committee on March 9.