BDO supports leasing unit via asset transfer
BDO Unibank Inc.’s plan to restructure its leasing business has been moving along, with BDO Leasing and Finance Inc. (BDOLF) announcing the transfer of assets to BDO Finance Corp. (BDOFC).
In a disclosure on Thursday, BDOLF said that it sold 27.02 percent of its assets to BDOFC.
“The bulk of the assets covered by the sale are mortgage receivables from credit transactions secured by real estate mortgage, and other receivables arising from other financing activities such as factored receivables, installment paper purchase and floor stock financing,” BDOLF said.
The exact amount of the transaction was not disclosed but BDOLF said it was based on at least the book value or price on arms’ length basis.
Under BDO Unibank’s restructuring strategy, it incorporated BDOFC, a privately-held company, to handle its lease products and services.
“Additionally, BDOFC will assume current lease transactions booked in the Corporation to provide continuity to existing clients,” it added.
BDO Unibank is restructuring its leasing business to optimize the financial needs of the clients amid the release of new accounting regulations about lease transactions.
The International Financial Reporting Standard 16 is requiring leases to be recognized on balance sheet, like a loan facility.
“This makes lease transactions a less attractive option to corporate borrowers compared to the previous arrangement,” the lender explained.
Shares in BDO climbed by 1.92 percent, or P1.80 each, to end at P95.75 apiece amid the 1.05- percent rise for the main index on Thursday.
Earlier this month, BDOLF said that BDO Unibank and BDOFC acquired 10 percent of its assets. Proceeds were allocated to finance the lender’s existing obligations.
BDOLF in July said that its stockholders approved the amendment of the company’s corporate name to United Platinum Holdings Corp. as it seeks to change the nature of business to a holding firm from leasing and financing.
In the first half, BDO Leasing booked net earnings amounting to P81 million, a turnaround from P29-million loss last year for the same period. The lender said that the boost in profits was supported by its measures addressing margin compression.
BDO Unibank, meanwhile, saw its first half earnings plunge to P4.3 billion from P20.1 billion year-on-year because of higher provisions against credit losses.