2011 Annual Report Financial Supplements - BDO

NOTES TOFINANCIAL STATEMENTSDECEMBER 31, 2011, 2010 AND 2009(Amounts in Millions of Philippine Pesos, Except Per Share Data or As Indicated)13.01.03 AcquisitionsIn 2011, to execute the deed of assignment made on January 13, 2008, the Parent Bank agreedto transfer, cede and convey absolutely to SM Keppel the outstanding advances totaling P364recognized as part of Others under Loans and Other Receivables in exchange for 36,401,500preferred shares of SM Keppel for a subscription price of P364 (see Note 10).As a result, the investment in SM Keppel as of December 31, 2011 increased to P1,658.On February 11, 2010, BSP approved the acquisition by BDO of the 12.4% equity interest inMNTC equivalent to 2,197,800 common shares held by Global Fund Holdings, Inc. (GlobalFund) in MNTC for a purchase price of P1,405. The purchase of 12.4% was previouslyapproved by the BOD on July 25, 2009. Investment in MNTC is recognized as EquityInvestments and is presented as part of Other Resources in the statements of financialposition. The Parent Bank is properly represented in the board of directors of MNTC.In response to the capital infusion call of Generali to cover its 2007 and 2008 capitaldeficiency, BDO Unibank Group’s BOD separately approved on January 9, 2010 andJuly 31, 2010 additional investment of P114 and P156, respectively. The approval of the BSPwas made on March 5, 2010 and September 21, 2010, respectively. Investment in Generalihas a carrying value of P1,168 and allowance for impairment loss amounting to P898 as ofDecember 31, 2011 and 2010. The investment is recognized as Equity Investments and ispresented as part of Other Resources account.13.01.04 Dissolution of SubsidiariesOn September 30, 2011, the Parent Bank approved the dissolution of PCI Express Padala(Hong Kong) Limited effective September 20, 2011. Capital amounting to P248 was fullyreturned to the Parent Bank on December 5, 2011.On April 30, 2010 by virtue of a proxy letter, the Parent Bank approved the liquidation ofPCIB Europe S.P.A with cut-off financial statement date of December 31, 2009. PCIBEurope S.P.A made partial returns of capital amounting to P23 and P1 on July 16, 2010 andOctober 6, 2010, respectively. As of December 31, 2011, total equity of PCIB Europe S.P.A.amounted to P0.5.13.02 Receivables from SPVsReceivables from SPVs represent the amount due from sale of certain non-performing assetsto SPVs. In 2005, the former EPCIB (now part of BDO Unibank Group) sold certainnonperforming assets with book value of P15,069 to Philippine Investment One, PhilippineInvestment Two and Cameron Granville Asset Management, Inc. (CGAM) for aconsideration of P4,134. Cash received from the SPVs amounted to P98 in 2005 and thebalance of P3,336, through issuance of SPV Notes, shall be paid based on a cash flowwaterfall arrangement and interest rate of 20% and 50% per annum on the P2,776 and P560,respectively. Also, in 2005, the former Equitable Savings Bank, Inc. (ESB) entered into saleand purchase agreements with CGAM and LNC (SPV-AMC) Corporation (LNC) for the saleof the former ESB’s loans to CGAM for P621 and for the sale of its investment properties toLNC for P98. The former ESB received SPV Notes amounting to P60 for loans fromCGAM and P39 for investment properties from LNC, in addition to cash received amountingto P23 from CGAM and P4 from LNC.Full allowance for impairment on the receivables from SPVs amounted to P3,440 as ofDecember 31, 2011 and 2010.