2004 - Asianbanks.net

As of December 31, 2004 and 2003, the appraised value of the Group’s investments in real estate amounted to P=4.9billion and P=4.6 billion, respectively.On October 20, 2004, the BSP approved the request of the Parent Company to write offlong-outstanding float items with a net credit balance of P=129.3 million subject to certain conditions.Assets held by SPV consists mainly of certain loans and ROPOA as of December 31, 2004.On October 17, 2002, the BSP approved the Parent Company’s request to write off long-outstanding interoffice floatitems. Accordingly, the Parent Company wrote off against the allowance for probable losses long-outstandinginteroffice floats - net debit balance amounting to P=340.4 million.As of December 31, 2004 and 2003, interoffice float items outstanding for more than 60 days amounted to P=179.0million and P=214.0 million (net debit balance), respectively, for which a full provision has been established.Management believes that no material unreserved losses will be incurred by the Parent Company on interoffice floatitems.Other investments include the Group’s investments in Bank of Commerce with net carrying value of P=151.3 million asof December 31, 2004 and 2003.The BODs of ESB and MDB approved the Plan of Merger of ESB and MDB (with ESB as the surviving corporation)on November 23, 2004 and November 18, 2004, respectively. Thereafter, the shareholders of MDB and ESBapproved such Plan of Merger on December 6, 2004 and November 23, 2004, respectively. Under, the Plan ofMerger, owing to the capital deficiency of MDB, ESB will not issue any shares of stock to the shareholders of MDB.On December 28, 2004, the BSP approved the merger between ESB and MDB subject to certain administrativeconditions, which include, among others, submission to the BSP of the Philippine Deposit Insurance Corporation’s(PDIC’s) written consent to the merger. Among others, the incentives approved by the BSP follow:a. Conversion of the MDB Head Office and the 13 MDB branches closed in 2004 into ESB branches and theirrelocation within a period of one year from date of merger;b. Transfer of all rights, privileges, immunities, permits, licenses, franchises and powers of MDB to ESB except for(a) the FCDU license, which has been revoked by BSP effective March 7, 2004 and (b) the trust licenseprovided that the merged bank should comply first with all the prerequisites under Circular No. 348 datedAugust 20, 2002;c. ESB will retain MDB’s trust license with the required trust duties of at least P=500,000 in MDB’s name ondeposit with BSP to be transferred to ESB;d. Amortization of all merger costs, including retrenchment costs for a period not exceeding five years.e. Capital infusion by the Parent Company of P=1 billion into ESB;f. Conversion of the Parent Company’s outstanding interbank call loans and advances granted to MDB into ESBcommon shares subject to compliance with the procedural requirements and various bank regulatory ceilingsand subject to the SEC approval;g. Temporary relief for six months from the compliance with the prescribed capital adequacy ratio and the 20%ceiling on the nonperforming loan to total loans ratio if such ratios are not complied with as a result of themerger;h. Revaluation of bank premises, improvements and bank equipment, with the appraisal increment forming part ofcapital provided that the merged bank will meet the existing capital requirement after all the adjustments aretaken up in the books of accounts of the merged bank but before considering appraisal increments;- 62-