The government is preparing to divest its holdings in Al Amanah Islamic Investment Bank of the Philippines, a subsidiary of state-owned Development Bank of the Philippines, possibly bringing in a new group to run the country’s first and only Islamic bank.
As instructed by the Department of Finance to unload its 99.88 percent stake in the Islamic bank, DBP is now preparing the package for divestment,” said Al Amanah senior vice president Idiosa Ursolino.
In a briefing on Islamic finance conducted by the Philippine Stock Exchange, Ursolino said DBP’s divestment would have to be approved by the Bangko Sentral ng Pilipinas, Governance Commission for Government-Owned and-Controlled Corporations (GCG) and the Office of the President.
“We are in the process of getting those approvals,” she said.
She said Al Amanah was operational and doing business as usual “but on a limited scale because of the limited capitalization.”
In 2009, she said the government, through DBP, had invested P1 billion in Al Amanah. In the same year, the Bangko Sentral ng Pilipinas approved the bank’s five-year rehabilitation plan which focused on four corporate strategies: Recapitalization, restoration of financial viability, reorganization and reforms institutionalization. The bank was allowed to continuously do both conventional and Islamic banking.
“The instruction of DOF is to divest 100 percent. If it would be privatization, then we will have new investor,” she said.
Among the groups that earlier expressed interest in Al Amanah is the Metrobank group’s First Metro Investment Corp. FMIC, however, was willing to cede the majority control to a foreign partner with expertise in Islamic banking.
The Islamic banking system shuns charging or accepting interest payments for the use of money. However, the charter of Al-Amanah has a 40-percent foreign equity ceiling, which was not palatable to FMIC’s potential partner.
Based on its published financial statement as of end-June this year, Al Amanah had total assets of P667.8 million. Most of its assets are those from the BSP (P425.6 million) while loans and receivables accounted for P186.6 billion. Deposit liabilities amount to P208.6 million.
It has a total stockholders equity of P417 million as a portion of its P1-billion capital stock, which was eroded by negative retained earnings.
