2004 - Asianbanks.net

i. Access to rediscounting window up to a ceiling of 150% of adjusted capital accounts for a period of one year,reckoned from the date of merger, provided the merged bank meets the required net worth to risk assets ratioand all of the other requirements for rediscounting;j. Any right or privilege granted to MDB under its Rehabilitation Plan previously approved by the MB or under anyspecial authority granted by the MB shall continue to be in effect.On December 29, 2004, the SEC approved the Articles and Plan of Merger of MDB and ESB.On January 19, 2005, the PDIC gave consent to the merger of ESB and MDB subject to the following conditions:a. MDB shall submit a certification to PDIC within 30 days from PDIC notification of its consent to the merger, thatits depositors and creditors have been given notice of the i) merger proposal; ii) full implications of ESB’sabsorption of MDB’s deposits liabilities; iii) depositors’ option to either withdraw their deposits from MDB ormaintain their accounts with ESB as surviving entity; andb. Letter of Guaranty from the Parent Company, which wholly owns ESB, that part of the committed fresh capitalinfusion in the amount of P=1.0 billion would be immediately infused into ESB to assure funding for anywithdrawal of MDB deposits and payment of MDB’s other liabilities as they fall due.Pursuant to the Plan of Merger, the effective date of merger was December 29, 2004, the date the SEC approvedthe Articles and Plan of Merger. The merger constituted a tax-free reorganization and has been accounted for underthe pooling of interest method. Accordingly, the amounts reflected in the financial statements of ESB as ofDecember 31, 2004 were combined on a line-by-line basis with ESB’s 2004 accounts (net of material intercompanybalances and transactions between ESB and MDB). For comparative purposes, ESB’s financial statements as ofDecember 31, 2003 were restated to include the amounts reflected in the financial statements of MDB as ofDecember 31, 2003 (net of material intercompany balances and transactions between ESB and MDB).In October 2002, ESHC signed a share purchase and sale agreement with another local commercial bank for thesale of Ecology at a base purchase price that approximates the carrying value of the ESHC’s investment in Ecology.The deed of sale was executed by ESHC in January 2003 to evidence the consummation of the sale transaction.The investment carried an adequate provision and, accordingly, no further loss was recognized at the time of sale.Miscellaneous assets include the amount of P=504.4 million as of December 31, 2003 consisting of input value-addedtax (VAT), debt issuance costs, revaluation of forward contracts and sundry debits which pertain to unposted depositwithdrawals.The Group’s management believes that adequate allowance for probable losses has been made on OtherResources and does not anticipate any material adverse effect on the Group’s financial statements upon therealization of these resources.10. Allowance for Probable Losses- 63-