Notes to Financial Statements - BDO

Notes to Financial StatementsDECEMBER 31, 2008, 2007 AND 2006(Amounts in Millions Except Per Share Data)Real and other properties acquired (ROPA) in settlement of loans through foreclosure or dacion in payment are accounted for as financialassets, investment properties, non-current assets held-for-sale and other resources - others. As of December 31, 2008 and 2007, ROPA grossof allowance comprise of the following:GroupParent Bank2008 2007 2008 2007Investment properties P 14,768 P 16,203 P 13,978 P 16,278Non-current assets held-for-sale 2,209 1,586 2,181 1,586Available-for-sale securities 844 1,049 844 1,049Other resources - others - 28 - -P 17,821 P 18,866 P 17,003 P 18,91313. OTHER RESOURCESThe components of this account are shown below:GroupParent BankNotes 2008 2007 2008 2007Deferred tax assets 27 P 5,780 P 5,741 P 5,747 P 5,614Receivables from SPVs 3,435 3,435 3,435 3,435Deposits under escrow 2,931 2,931 2,931 2,931Foreign currency notes andcoins on hand 2,220 1,742 2,220 1,736Non-current assets held for sale 1,950 1,441 1,932 1,401Equity investments 1,704 1,696 10,874 11,560Interoffice float items - net 1,195 1,104 1,619 1,108Goodwill 26 747 747 747 747Returned checks and other cash items 465 2,743 465 2,740Deferred charges - net of amortization 456 1,038 446 1,025Others 8,860 7,464 7,330 6,94129,743 30,082 37,746 39,238Allowance for impairment 14 ( 7,299 ) ( 6,956 ) ( 9,586 ) ( 10,065 )P 22,444 P 23,126 P 28,160 P 29,17313.1 Receivables from SPVsReceivables from SPVs represent the amount due from sale of certain non-performing assets to the SPVs. In 2005, the former EPCIB soldcertain nonperforming assets having book value of P15,069 to Philippine Investment One, Philippine Investment Two and Cameron GranvilleAsset Management, Inc. (CGAM) for a consideration of P4,134. Cash received from the SPVs amounted to P98 in 2005 and the balance ofP3,336, through issuance of SPV Notes, shall be paid based on a cash flow waterfall arrangement and interest rate of 20% and 50% per annumon the P2,776 and P560, respectively. Also, in 2005, the former Equitable Savings Bank, Inc. (ESB) entered into sale and purchase agreementswith CGAM and LNC (SPV-AMC) Corporation (LNC) for the sale of the former ESB’s loans to CGAM for P621 and for the sale of its investmentproperties to LNC for P98. The former ESB received SPV Notes amounting to P60 for loans from CGAM and P39 for investment properties fromLNC, in addition to cash received amounting to P23 from CGAM and P4 from LNC.As of December 31, 2008 and 2007, allowance for impairment losses on receivables from SPVs amounted to P2,991.13.2 Deposits Under EscrowDeposits under escrow pertain to the portion of the cash received by the Group in consideration for its assumption of First e-Bank Corporation’sdeposits and other liabilities in October 2002. This amount is held in escrow pending compliance by the Group with certain terms and conditionsas stipulated in the MOA. Deposits under escrow earn an annual effective interest of 4.7% and 3.4% in 2008 and 2007, respectively.13.3 Deferred ChargesDeferred charges mainly pertain to computer software licenses. Amortization expense on deferred charges amounted to P115, P94, and P37in 2008, 2007 and 2006, respectively, in the Group financial statements and P115, P93, and P37 in 2008, 2007 and 2006, respectively, in theParent Bank financial statements. These are included as part of Other Operating Expenses in the income statement (see Note 22).54Thinking Ahead To Get You Ahead • Annual Report 2008