By Ann Rozainne R. Gregorio, Reporter

BSP approves Al-Amanah sale

Posted on October 25, 2012

STATE-RUN Development Bank of the Philippines (DBP) has obtained the Bangko Sentral ng Pilipinas’ approval to sell its stake in the Al-Amanah Islamic Investment Bank of the Philippines (Al-Amanah), a senior official said.

THE GOVERNMENT will again attempt to privatize Al-Amanah, whose mandate is to serve the country’s Muslim community. -- BW PHOTO
“We have obtained the approval in principle for the divestment of our stake in Al-Amanah,� said Estrella E. Icasiano, DBP senior vice president and head of investment banking and capital markets group, in a phone interview yesterday.

The BSP issued its approval on Sept. 20.

Ms. Icasiano said DBP has yet to secure the approval of the Governance Commission for GOCCs (GCG) to be able to proceed with the bidding process for its 99.88% stake in the country’s lone Islamic bank.

“Once we get the GCG approval, we will proceed with the next step of the sale, which is the public bidding,� she said.

DBP is regulated by the Bangko Sentral as a bank and also by the GCG, which oversees state firms, as it is a government-owned and --controlled corporation.

The state-run bank took over Al-Amanah in 2008 after the government failed to privatize the smaller bank. It infused P1 billion into Al Amanah and charted a rehabilitation plan for the bank, which was deeply in the red.

It is selling Al Amanah as it does not have the expertise on Islamic finance. Its planned exit from Al Amanah, which has since relaunched branches but continues to incur losses, comes at a time when demand for Islamic financing worldwide is on the rise.

For his part, Bangko Sentral Deputy Governor Nestor A. Espenilla, Jr., in a phone interview, said: “Yes, they were approved to dispose via auction. It’s in principle because we do not know who will buy DBP’s stake in the bank at this time. We also need to approve the buyer of the bank.�

The central bank, he said, examines investors’ attributes before approving any acquisition. These include amount of resources and governance and management principles.

“If the bank is chartered as an Islamic bank, the investor should be able to demonstrate the ability and expertise to run an Islamic bank,� he further said.

Ms. Icasiano said that with two-and-a-half months before 2012 closes, DBP’s earlier target to sell its stake in Al-Amanah would likely “slide to next year.�

She reiterated that several foreign investors from the Middle East and Malaysia have expressed interest in buying DBP’s stake in the bank.

“There is a good number of interested parties. It is a combination of banks and non-bank groups,� she said.

“Aside from banks, businessmen and investor groups from the Middle East have also expressed interest,� she further said.

Al-Amanah, as an Islamic bank, is mandated to serve the banking needs of the Muslim community in the country. It was formed by virtue of Presidential Decree No. 264 issued by then President Ferdinand E. Marcos.

An Islamic bank adheres to the laws of the Koran, and as such, does not charge interest to its clients but instead earns by acting like an equity investor to its borrowers by forging partnerships, lease-to-own deals and similar arrangements.

The government first attempted to privatize the Islamic bank sometime in 2000 after it started incurring losses in 1990.

From 1990 to 2007, Al-Amanah was managed by the Bureau of the Treasury.