TCRAP_Public/000121.MBX      T R O U B L E D   C O M P A N Y   R E P O R T E R

                      A S I A   P A C I F I C

            Friday, January 21, 2000, Vol. 3, No. 15


* C H I N A  &  H O N G  K O N G *

ADMART: Focus on concept -- despite losses
CABLE & WIRELESS HKT: Reorganizes into divisions

* I N D O N E S I A *

ASTRA INT'L.: Ibra fires salvo as Astra battle heats up
ASTRA INT'L: Second bidder shows interest in IBRA stake
PT CIPENDAWA FARM ENTERPRISE: In debt settlement talks

* J A P A N *

TOKYU DEPARTMENT STORE: To withdraw overseas operations

* K O R E A *

DAEWOO GROUP: Gov't begins buyout of Daewoo bonds
DAEWOO MOTOR: GM has other Asia options if loses Daewoo
HYUNDAI MOTOR CO.: South African ops continue to fail
SAMSUNG MOTORS: Renault's board gives green light to buy

* M A L A Y S I A *

TIME ENGINEERING: Losses force focus on Internet business

* P H I L I P P I N E S *

EYCO GROUP: Creditors warn conservator committee
GOTESCO GROUP: Gives up property to settle P880-M UCPB loan
PHILIPPINE NAT. BANK: World Bank questions Tan acquisition
PHILIPPINE NAT.BANK: Gov't rejects Tan merger plan
RURAL BANK OF SAN MIGUEL: 'Prudence' found wanting

* T H A I L A N D *

BANGKOK METROPOLITAN BANK: Announces plan for 25% staff cut
BULONG OPERATIONS PTY LTD.: CreditWatch status remains
KRUNG THAI BANK: To revamp corporate strategy, boost fees
NATURAL PARK PLC: Assets handed over to AMC
SAWASDI HORRUNGRUANG: Signs Sri Racha Harbour debt deal
SIAM CITY BANK: Newbridge Group expected to win bid

C H I N A  &  H O N G  K O N G

ADMART: Focus on concept -- despite losses
Jimmy Lai Chee-ying's direct-marketing venture adMart
handles 150,000 orders every month but is still suffering
losses, according to chief executive Philippe Ravelli.

Since its launch nine months ago, adMart had secured
450,000 customers with average sales per order of $350, he
said.  The venture offers a wide range of goods such as
grocery, textiles, computers, furniture and mobile
telephones as well as discount airline tickets and travel
packages.  It delivers products after taking orders on the
telephone, through its Web site and at outlets around Hong

"We look at business concepts, not numbers," Mr Ravelli
said at HSBC's electronic-commerce seminar.  "It's useless
to look at number-based business or a revenue model."

Mr Ravelli would not disclose adMart monthly losses but Mr
Lai said in November the company was bleeding $50 million
to $60 million a month.  Mr Ravelli said adMart had not
joined supermarket price wars and sold products at a profit
margin of between 12 per cent and 30 per cent.

However, adMart's decision to debut with grocery sales
sparked a price war involving supermarket chains such as
ParknShop and Wellcome.  Meanwhile, at the same seminar,
the chairman of on-line recruitment firm JobsDB, Samuel
Sung, said the company was expanding globally.  Launched
last September, JobsDB attracted 200,000 registered users
monthly, he said.

"We've got eight offices in different countries, mostly in
Asia, and the number is expect to double to 16 by the end
of this year," Mr Sung said.

He said its Web site in Hong Kong attracted the heaviest
traffic, with 10,000 less-than-one-month-old jobs on offer
every month.  JobsDB hoped to grow to one of Asia's top
five interactive recruitment Web portals in the next few
years, he said.  The company relies on advertising and
commission income for revenue. (South China Morning Post

CABLE & WIRELESS HKT: Reorganizes into divisions
Cable & Wireless HKT Ltd. has embarked on a restructuring
aimed at providing more Internet and data services for
business and consumers.  Under the plan implemented
Tuesday, the Hong Kong-based telecommunications giant was
reorganized into seven core divisions, together with
another six business and two resources units, all of which
report directly to Linus Cheung, the company's chief

The seven core divisions are customer service, information
technology and electronic commerce, business development,
external relations, finance and legal, risk management and
human resources.  The six other business units include
group sales and marketing, mobile services, network
operation and services, business aggregator, international
services and regional services, and technology and new
venture management.

Cable & Wireless HKT executives sent an internal memo
Monday telling staff about the restructuring plan, but they
didn't publicly announce any details. On Tuesday, a company
spokesman said the move was aimed at shifting the firm's
focus from traditional telecommunications services toward
information technology.

"The IT industry is changing so rapidly," said the
spokesman. "If we we're going to become Asia's leading
communications company, which is our vision and goal, we
need a new management structure that is positioned to react
quickly to new developments."

The spokesman said the reorganization would also help cut
costs and maintain the group's competitiveness. Be he
didn't specify the amount of savings and said the plan
wouldn't immediately affect the company's staff level.
Cable & Wireless HKT employs more than 13,000 people.

Analysts played down he significance of the plan, saying it
shouldn't be seen as an indicator of the company's business
prospects. "It doesn't necessarily mean better products and
services," said Tim Storey, research analysts at Goldman
Sachs (Asia). "It's not the kind of thing you can point to
and say, "This will translate into X amount of dollars."

Since losing its monopoly licenses on fixed-line and
international direct-dial services in 1995 and 1998,
respectively, Cable & Wireless HKT has sought to broaden
its range of services and form strategic partnerships to
develop others. In November, the company formed a joint
venture with News Corp.'s Star TV satellite broadcaster to
provide interactive television and broadband Internet
services in Asia.

Analysts have valued Cable & Wireless HKT's interactive
division, known as Interactive Multimedia Services, at
HK$15 billion to HK$20 billion (US$1.93 billion to US$2.57
billion) and said the addition of Star TV meant the joint
venture will command even higher valuations.

Still, the restructuring announcement, and last week's
America Online-Time Warner marriage, have fueled further
speculation that parent Cable & Wireless PLC may be
preparing the company for a sale. Cable & Wireless PLC,
which owns 54% of the Hong Kong company, is making its own
bid to enter the cyberworld at a time when rising
competition is eroding earnings in its core businesses.
Last week, the British company moved closer to its global
provider of Internet services to business customers by
acquiring eight of Europe's top business Internet-service
provides for US$500 million.

Analysts say potential buyers include big telecommunication
companies interested in Cabld & Wireless HKT as a platform
from which to expand their businesses into China. In
accordance with Hong Kong law, any buyer taking the
parent's majority stake would be required to make a general
offer for the company, which currently has a market
capitalization of more than US$30 billion. Analysts say
that is pricey and that a sale, if it takes place at all,
probably won't occur until later this year.

In recent weeks, similar talk that Cable & Wireless PLC may
soon sell down its 52.5% stake in Cable & Wireless Optus
has jacked up the Australian unit's share price.

The Hong Kong market's reaction to the restructuring plan
was moderate. Cable & Wireless HKT shares opened higher
Tuesday, at one point up 1.2%, but by noon, profit-taking
and switching to other blue-chip telecommunication stocks
had wiped out all the gains. The company's shares closed at
HK$21.05, down 1.2%, or 25 cents. (The Asian Wall Street
Journal  19-Jan-2000)


ASTRA INT'L.: Ibra fires salvo as Astra battle heats up
The powerful bank restructuring agency has gone on the
offensive in the battle over control of the country's
largest car-maker, Astra International, launching a bid to
change the firm's management.

The Indonesian Bank Restructuring Agency (Ibra), which
controls about 40 per cent of Astra, said that it wanted to
call an extraordinary meeting on February 8 to consider
management changes and review plans for a share issue which
would dilute existing holdings.  The announcement was the
latest salvo in Ibra's struggle to sell its stake to a
group of foreign investors in the face of opposition from
Astra management.

"Ibra has worked with the board of directors to achieve a
mutually beneficial strategy . . . to dispose of its Astra
stake in a timely, transparent and value-maximising
manner," it said.

Ibra is Indonesia's most powerful economic entity. It
controls about 600 trillion rupiah (HK$642 billion) in
equity and debt and is central to the most fundamental
objectives facing Indonesia - rebuilding the banking
sector, restructuring the country's massive debt burden and
attracting investors.

The agency styles itself as a "one-stop shop" for foreign
investors - it controls assets in almost every sector of
the economy and aims to sell them off over coming years.
So the sale of its Astra stake - one of the jewels in its
portfolio - is a test case, closely watched by investors.

But so far, things have not been going well.  Ibra
announced last month that a group of investors led by
Gilbert Global Equity Partners (GGEP) and Newbridge Capital
had been selected as the preferred bidder for its 40 per
cent stake, and would conduct due diligence on the
Indonesian firm.

But negotiations with Astra's management have turned
increasingly acrimonious. Astra refused to answer hundreds
of detailed questions from GGEP/Newbridge, saying that the
information requested was sensitive and could be used by

The investor group accused Astra of withholding information
and blocking due diligence, and said Astra's actions could
scare off other foreign investors.  The issue of foreign
buying of domestic assets is a thorny one. Nationalist
politicians say foreign firms should not be allowed to
scavenge crisis-hit Indonesian assets at low prices, and
asset sales should be on hold until recovery begins. Their
critics say there cannot be recovery without foreign
investment and the sale of distressed assets, however

Nationalist sentiment has already scuppered much of the
country's privatisation programme, and was stirred up again
by a damaging battle over the sale of Bank Bali.  Ibra's
efforts to sell a stake in Bank Bali to Britain's Standard
Chartered are in tatters - Standard Chartered has withdrawn
from agreements to manage and invest in Bank Bali after
finding itself embroiled in a political scandal.

The government this month installed former Telkom president
director Cacuk Sudarijanto as new head of Ibra with
instructions to speed up asset sales and debt
restructuring.  Analysts believe Ibra's aggressive stance
on Astra is a signal Mr Cacuk will push ahead with asset
sales and deal sternly with recalcitrant firms. (South
China Morning Post  19-Jan-2000)

ASTRA INT'L: Second bidder shows interest in IBRA stake
A second bidder has emerged for the stake that the
Indonesian Bank Restructuring Agency (IBRA) holds in Astra
International as the new chief of the agency pushes ahead
with his controversial proposal to replace current Astra

IBRA head Cacuk Sudarijanto told a news conference on
Wednesday that the agency, as the owner of 40 percent of
Astra, would press for the replacement of the Rini
Soewandi-led management because of what he called their
uncooperative attitude towards an IBRA deal with a
Newbridge/Gilbert investor consortium.

IBRA last month chose, without an open tender, an American
investor consortium led by Newbridge Capital and Gilbert
Global Equity Partners as the preferred bidder for its 40
percent stake in Astra.  But the process of the transaction
was obstructed by what Cacuk considered uncooperative
management on the part of the present Astra management
towards Newbridge/Gilbert.

The second bidder, supported by a respected blue chip
financial investor, offers a speedy solution to the current
difficulties in closing the sale, according to Dow Jones
Newswires on Wednesday.  According to a letter sent by
Credit Lyonnais Securities (Asia) Ltd. to the head of IBRA,
the unnamed investor would pay a premium to IBRA's minimum
stated price of Rp 3,750 (US$0.52) per share for the 40
percent stake in the auto maker.

The letter, a copy of which was obtained by Dow Jones
Newswires, noted the difficulty in pressing ahead with a
firm bid given IBRA's move to name the U.S. consortium of
Newbridge Capital and Gilbert Global Equity Partners as the
preferred bidder for the stake in Astra.

"The only obstacle to our client making a firm offer and
proceeding with a transaction... is the current uncertainty
as to the disposal process," Richard Taylor, Credit
Lyonnais Securities managing director, wrote in the letter.

According to the CLSA letter, its client isn't purely a
financial investor, like the Newbridge consortium, "but
would take an active and cooperative role in driving the
company forward in the new millennium."

CLSA also said the transaction process would be fair and
accountable.  "The eyes of the world are on Indonesia in
general and this transaction in particular and a
transparent sale process would send a clear signal to the
international investment community that... IBRA is an
organization people can do business with," the letter

Cacuk said on Wednesday that IBRA was under pressure to
meet its target of raising Rp 17 trillion for the state
budget and that the sale of Astra shares was expected to
contribute a good portion of the total.  Advisor to the
head of IBRA, Amir Sambodo, expressed his confidence that
the current management of Astra would be replaced at the
company's extraordinary shareholders meeting scheduled for
Feb. 8.

"The current management of Astra will definitely be
replaced," Amir said. He added that the agency had prepared
a team to take over the Astra management but he declined to

Astra management has denied charges that it is obstructing
IBRA's sale of Astra shares, explaining that it has only
asked for transparency in the transaction and conformity
with the laws of the securities market as enforced by the
Capital Market Supervisory Agency (Bapepam).  Astra also
rejected the allegations made on Dec. 22 by
Newbridge/Gilbert that management was obstructing the due
diligence it conducted as part of its deal with IBRA.

Astra executives dismissed the charges, saying the investor
consortium only obtained legal clearance on Dec. 15 from
Bapepam to conduct due diligence.

"The Indonesian securities watchdog (Bapepam) confirmed
IBRA as an insider party (significant shareholder) of Astra
only on Dec. 15," Rini has said.

She argued that without being an insider party or
shareholder with at least a 20 percent stake, IBRA or
Newbridge/Gilbert is not allowed under the securities laws
to obtain inside and proprietary information from Astra.
"As a publicly listed company, we have to play by the rules
of Bapepam and the securities laws," Rini said.

Astra also questioned the many benefits and advantages
given to Newbridge/Gilbert as a preferred bidder while the
investor group had not made any upfront payment to support
its commitment to buy Astra shares.

"The Newbridge consortium's right to match any higher bid
may discourage other interested investors from making an
offer," a securities analyst has commented.

Astra has suggested that IBRA sell its take in two phases,
the first one covering less than 20 percent to avoid the
compulsory open tender.  The Astra share price is expected
to rise after the entry of new investors, after which IBRA
could sell its remaining stake at much higher prices and
thereby gain more revenue.

But IBRA seems under tremendous pressure to meet its
revenue target suggesting its Astra stake is the only jewel
among the Rp 600 trillion of assets (equities and bad
debts) the agency currently controls.  The agreement
between IBRA and Newbridge/Gilbert stipulates that the
investor group will pay only Rp 3,000 for Astra shares, and
that they can buy less than 30 percent. The price will rise
to between Rp 3,750 and Rp 3,825 if the acquisition reaches
more than 30 percent.

An analyst here argued that the clause is much in favor of
the American investor consortium as they can opt for buying
less than 30 percent, having to pay only Rp 3,000 per share
versus the current market valuation of over Rp 3,800 per
share.  Stranger still, Newbridge/Gilbert are entitled to a
compensation of up to $1.5 million if the planned
transaction fails to be closed. (The Jakarta Post  20-Jan-

PT CIPENDAWA FARM ENTERPRISE: In debt settlement talks
PT Cipendawa Farm Enterprise has reported to the Jakarta
Stock Exchange that  as of 31 December, a total of Rp in primary debt and a total of interest of Rp
1.603.972.222 was owed by the company to Bank Prima Master.
Despite the efforts of the Board of Directors to try to
settle the obligation on several occasions, the matter has
been delegated to the Advocate Office & Law Consultant
Mohammad Hasan & Rekan. Recently, the management of PT
Cipendawa Farm Enterprise is negotiating to settle the
obligation of Commercial Paper to the other third party.
(Jakarta Stock Exchange  19-Jan-2000)


TOKYU DEPARTMENT STORE: To withdraw overseas operations
Tokyu Department Store Co. (8232) plans to withdraw from
all of its overseas businesses and drastically change
operations at eight of its 14 domestic outlets as part of a
corporate restructuring plan, The Nihon Keizai Shimbun
learned Wednesday.

The company will also offer early retirement to about 200
employees, or about 8% of its work force.  The
restructuring plan and a stock portfolio sale to cover
accumulated losses will be announced on Friday.

Tokyu will close its three remaining overseas outlets
within this year. The company opened its first foreign
store in Hawaii in 1959, but intensifying competition there
has lowered profitability. Tokyu operated seven stores
abroad in 1994, including outlets in Hong Kong and
Thailand, but has closed them one by one since 1998.

Domestically, two outlets in Yokohama will be converted
into retail food shops, and the remaining floor space
leased to other tenants within this year. At five other
locations, the floor space now allocated to unprofitable
merchandise will be leased to other retailers. A store in
Tokyo's Shibuya district that operates under the Toyoko
name will be renovated from this spring. (Nikkei  20-Jan-


DAEWOO GROUP: Gov't begins buyout of Daewoo bonds
Beginning February 8, the government will allow a 95%
redemption rate on Daewoo-issued bonds in order to prevent
a run on the bonds.

As chances of a possible rush has been mounting, the
government has decided to purchase a total of W18.6
trillion worth of unsecured corporate bonds issued by
Daewoo at W6.5 trillion. The Financial Supervisory
Commission convened a meeting Friday and made a decision to
ask the Korea Asset Management Corp, the nation's bad asset
disposal agency, to purchase Daewoo-related bonds at the
W6.5 trillion, which represents 35% of their book value.

An FSC official said the Korea Asset Management Corp. will
purchase ITCs' holdings of Daewoo's unguaranteed bonds
worth 18.6 trillion won in face value. For ITCs, the
recovery rate is 30 percent.  Within this month, the state-
run agency will spend 2.83 trillion won to buy unsecured
Daewoo bonds which ITCs have purchased with funds of
individual and corporate investors.

The agency will also purchase the remaining unsecured
Daewoo bonds worth 10.5 trillion won at the earliest date
possible from ITCs which want to dispose of their holdings,
the official said.  The commission in charge of the
nation's financial and industrial restructuring also
decided to urge institutional investors to buy 2 trillion
won worth of unguaranteed Daewoo bonds, he added.

In addition, the nation's two largest ITCs - Korea
Investment Trust Co. and Daehan Investment Trust Co. - will
also be permitted to increase the limits on their trust-
type securities savings accounts to 5 trillion won and 4.5
trillion won, respectively, said the official. The limit
hike will be in place by the end of this year.

The FSC decision is designed to prepare for a feared surge
in calls for redemptions of Daewoo bonds early next month.
Starting Feb. 8, investors in ITCs' bond-type beneficiary
certificates will be allowed to redeem 95 percent of their
investment money, up from the current 85 percent limit.

The projected hike in the redemption rate is feared to
prompt local investors to scramble to withdraw funds, which
may throw ITCs into liquidity shortages, thus leading to
financial chaos.  (Digital Chosun  18-Jan-2000, Korea
Herald  19-Jan-2000)

DAEWOO MOTOR: GM has other Asia options if loses Daewoo
General Motors Corp. Chairman Jack Smith said the company
has "other options" in Asia if its bid for Daewoo Motor Co.
fails, AP-Dow Jones reported yesterday from Detroit.

"We have other options on how we would grow in
Asia/Pacific," Smith was quoted as saying following a
speech to the Automotive News World Congress Monday night.

If the takeover bid succeeds, Smith said Daewoo Motor would
give GM the base in Asia it lacks, noting that the carmaker
is a low-cost producer with the capacity to build more than
one million cars.  The GM chairman said the Daewoo firm has
an excellent base in Korea and that Daewoo's products are
derived from GM products. "Frankly, we see a lot of synergy
and see ourselves as a natural partner," he was quoted as

But Smith reiterated GM's stance that it will not pay more
for Daewoo Motor than it thinks it is worth, according to
the report.  Saying that GM wants to do a reasonable deal,
Smith noted that Daewoo Motor is troubled with massive
debts and that the longer it takes to complete a deal, the
less the company's value will be.

The GM top manager added that GM is willing to shoulder a
certain part of the debt, but declined to elaborate on the
figures.  He also said GM's bid for Daewoo is for "most of
the company," but that there are some "international
operations that are not making it. We're not taking them;
they're hopeless." He declined to comment on the
seriousness of its rival Ford Motor's bid for Daewoo Motor.

Meanwhile, GM Executive Vice President Louis Hughes is
scheduled to arrive in Seoul this week to express his
company's intention of accepting a limited competitive
auction of the Daewoo carmaker, stepping back from earlier
demands for exclusive negotiating rights, industry sources
said yesterday.

Ford is expected to step up its bid for Daewoo Motor by
sending more staff to Seoul this week to conduct due
diligence on it.

In a separate development, Renault is also expected to send
a vice president-level official to Korea this week for
talks with Samsung Motor officials and the firm's
creditors. On Monday, a Renault working-level team arrived
in Seoul to conduct due diligence on Samsung's Pusan plant
and suppliers. (Korea Herald  19-Jan-2000)

HYUNDAI MOTOR CO.: South African ops continue to fail
South Korea's Hyundai Motor Co. said it has so far failed
to resuscitate its operations in South Africa after its
sole distributor went into liquidation last week with debts
of about $1.44 billion.

Hyundai spokesman Stephen Kitson said company
representatives and financiers had reached an impasse on
refinancing the operation as part of a broader
restructuring that will result in the appointment of a new
distributor. He confirmed a local report that Hyundai
Korea, as the South African operation is known, is facing
an ultimatum by financiers that the Korean company give
assurances by today to restart its South African operations
or face the prospect that creditors will liquidate seized
assets to recoup losses. (The Asian Wall Street Journal

SAMSUNG MOTORS: Renault's board gives green light to buy
Renault decided to buy Samsung Motors at a board of
directors meeting at the end of last month, industry and
banking sources said yesterday.

Renault's directors also agreed to consider taking over
Daewoo Motor's bus and truck operations for about 800
billion won ($714.2 million) as part of their Asian
strategy, said the sources.  Negotiations on Renault's
purchase of Samsung Motors may be concluded far earlier
than expected as the French automaker sent a high-level
inspection team to Seoul Monday, following its official
announcement of a Samsung bid Jan. 4, they said.

Renault offered a price of 400 billion won ($357 million),
a lower price than what Samsung and creditors were looking
for, but the bid may be negotiated upon in the course of
discussions and due diligence, they revealed. "Samsung and
Renault expect the talks to be closed by the end of next
month or the end of March at the latest," said an executive
at one of Samsung's creditor banks.

Renault also told Daewoo Motor creditors that it wants to
buy the Daewoo unit's bus and truck sector through an
indirect channel. The French automaker has offered between
220 billion won and 250 billion won for the bus division
and the total value placed on Daewoo's commercial vehicle
business, including truck sector, is expected to reach 800
billion won.

According to industry watchers, Daewoo Motor's bus and
truck operations are highly attractive purchases as the bus
sector is competitive and the truck factory in Kunsan,
North Cholla Province, is one of Korea's most highly
automated facilities. (The Korea Herald  20-Jan-2000,
Digital ChosunIlbo  19-Jan-2000)


TIME ENGINEERING: Losses force focus on Internet business
Time Engineering Bhd, a Malaysian telecommunications and
Internet company, expects to double the number of its
subscribers to 900,000 by the end of the year, boosted by
the nation's economic recovery.

Time dotCom Bhd, the main unit of Time and the owner of
Malaysia's biggest fibre optic network, expects to add
500,000 customers to its current subscriber base for fixed-
line, mobile, payphone and Internet services of 400,000

"We are evolving from just being a telco to a total
Internet business with the infrastructure to stay ahead,"
said Time dotCom in an advertisement published in The Star.
The advertisement is the latest sign that Time, taking
advantage of the increased Internet use, may be pushing
hard to convince investors it can pull out of its earnings
slump and debt woes on its own.

Time, which is saddled with 4.5 billion Malaysian ringgit
(S$2 billion) of debt, lost RM2.3 billion in 1998, hurt by
Malaysia's recession and decade-high interest rates. It
called for bids from investors interested in buying all or
part of the company. The call drew Singapore Technologies,
Maxis Communications Bhd, Malaysia's second biggest
cellular phone company, and property company Kejora Harta

On Tuesday, Time's creditors were advised by advisers N M
Rothschild & Sons (Singapore) to pick Singapore
Technologies as the preferred buyer over the other two
bidders, although analysts said this advice was likely to
be rejected by the Malaysian government on political

Over the weekend, Time dotCom named Renong Bhd chairman
Halim Saad and five others as directors as it looks to play
a greater role in reviving the company. Renong owns 46.7
per cent of Time. Time shares yesterday rose 39 to RM2.99s.
Some 27.9 million shares were traded. (Singapore Business
Times  20-Jan-2000)


EYCO GROUP: Creditors warn conservator committee
The consortium of creditors banks of the Eyco group of
companies said the conservator committee of the bankrupt
firm will be held liable if the creditors are left without
any assets to collect.

The banks led by Philippine National Bank have threatened
to file criminal or civil charges against members of the
conservator committee if they continue with their alleged
illegal disbursement of company funds.  In a letter sent to
conservator chairman Amado M. Santiago Jr., the banks
through their legal counsels him to "cease and desist from
further acting as a member of the now defunct conservator
committee, especially in disposing or causing the disposal
of the Eyco Group's assets."

Santiago, however, said that the committee continues to
discharges its functions because it has not been ordered to
turn over the assets of the corporation to a liquidator.
Santiago wants the Securities and Exchange Commission (SEC)
to issue guidelines as to whether it should step aside to
give way to an SEC-appointed liquidator of the company's
remaining assets. He said the receiver is at a lost right
now on how to go about the demand of the creditor banks.

Earlier, the creditor banks said the SEC should immediately
appoint a liquidator to stop the unauthorized disbursement
of company funds.  The bank are concerned that while the
SEC disapproved Eyco's petition for suspension of debt
payments along with its rehabilitation plan in its order
dated Sept. 14, 1999, the conservator committee, which
ceased to exist along with the order, continues to dispose
of substantial assets of the company.

The creditors have filed an urgent motion to appoint a
liquidator that will have the sole authority to oversee the
disposal of the company's assets and order payments of all
debts. (The Philippine Star  20-Jan-2000)

GOTESCO GROUP: Gives up property to settle P880-M UCPB loan
The beleagured Gotesco group has surrendered several prime
real estate property, including the plush Evercrest resort
in Nasugbu, Batangas, to wipe out an P880 million debt with
major creditor-bank United Coconut Planters Bank.

In a disclosure to the Philippine Stock Exchange yesterday,
Gotesco Land Inc. president Jose Go said several pieces of
property were transferred to UCPB in payment for its
outstanding obligations.  The Batangas assets were owned by
Nasugbu Resorts Inc., a subsidiary of Gotesco Land.

"As of the transfer date, NRI will have fully settled its
obligation with UCPB," Go said.

The total value of assets surrendered to UCPB amounted to
P1.6 billion to cover penalties and interests on top of the
P880 million worth of principal debt.  Go, who likewise
owned the defunct Orient Commercial Banking Corp., was an
aspiring taipan and real estate magnate before his
conglomerate was hit hard by the Asian currency turmoil.

His group had borrowed heavily to fund real estate
expansion and faced difficulties servicing these debts when
the currency crisis erupted.  The Chinese-Filipino real
estate developer and other Orient Bank officials were
earlier charged in court by the Bangko Sentral ng Pilipinas
and the Philippine Deposit Insurance Corp. for allegedly
diverting billions of funds from the bank to their other
business interests.

Orient Bank had collapsed due to some P6.1 billion in bad
debts, about P4.7 billion of which consisted of loans to
directors, officers, shareholders and related interests
(dosri).  The Evercrest resort in Batangas was high
flagship project in high-end real estate development before
the real estate slump. (Philippine Daily Inquirer  19-Jan-

PHILIPPINE NAT. BANK: World Bank questions Tan acquisition
The World Bank has expressed its concern about the entry of
tobacco and beer magnate Lucio Tan into Philippine National
Bank (PNB).  And such concern is likely to affect the
release of a $100-million loan for the government's banking
sector reform program.

"There were some concerns on the legality of Lucio Tan's
acquisition (of PNB shares)," a ranking government official
said, adding the World Bank wants to know the details of
the acquisition. World Bank officials, however, could not
be reached for comment as of press time yesterday.

Last year, Mr. Tan acquired a substantial stake in PNB,
said to be equivalent to 47% to 48%, primarily through a
stock rights offering. Mr. Tan was said to be the same
party who scooped up the 15.6% stake, which the government
forfeited when it passed the chance to subscribe to the
rights offering.

Thus, he is now the biggest stockholder of PNB with four
seats in the 11-man board of directors, equivalent to 35%.
Of the remaining equity, the government controls 30%,
foreign fund managers 18%, while the rest is held by other
parties, including those acquired through the Philippine
Stock Exchange.

But the Department of Finance has assured the World Bank
there was nothing "illegal" about Mr. Tan's acquisition of
PNB shares. "We do not find anything illegal (with the
purchase). It was acquired through the open market,"
Finance Undersecretary Joel A. Ba¤ares said in an interview

He added the World Bank "has already accepted that Lucio
Tan is already there," although it has asked for the
complete due diligence audit of PNB before it releases the
loan.  At the same time, it is waiting for the approval by
the Committee on Privatization (CoP) of PNB's full

"As long as we submit the final audit of report and CoP
approves the privatization plan, it will be a sufficient
reason for the release of the loan," Mr. Ba¤ares said.

But Former Finance Secretary Edgardo B. Espiritu had
earlier admitted the due diligence audit of PNB by
PriceWaterhouse Coopers and Lehman Brothers "was not very

As of the third quarter last year, the bank's non-
performing loans accounted for 28%, the highest among
commercial banks. It was capitalized at 24.405 billion
Philippine pesos (PhP) ($0.601 billion at PhP40.60 = $1) as
of the third quarter last year.

Mr. Espiritu added the entry of the Tan group "may limit
the number of participants to the public auction."

The government is under pressure to sell PNB, given its
previous commitments to to international lending agencies
like the International Monetary Fund and the World Bank, as
well as its own financial needs.  Divesting from PNB is a
condition for the release of the $100-milllion loan from
the World Bank this year.

The loan, the second tranche of the $300-million loan, will
be used for banking sector reforms, the DoF said. The
reform program will be co-financed by the Japan Bank for
International Cooperation, which will release another $100

Meanwhile, concerns about the transparency of any deal
between the government and Mr. Tan have derailed plans to
merge PNB with Allied Banking Corp.

"The government is worried that (the transaction) will not
be transparent," Bangko Sentral (Central Bank) Gov. Rafael
B. Buenaventura told reporters yesterday. "Whatever you do,
(critics) will ask, 'How did you value Allied Bank and how
did you value PNB?'"

He said the government's primary concern is that the
privatization of its remaining 30% stake in the bank be
done as fairly and as transparently as possible.  A merger
deal between Allied Bank and PNB is expected to be
criticized due to persistent charges about the return of
"crony capitalism" in the government.

"You'll never hear the end of it," Mr. Buenaventura said.
"The (newly installed) Secretary of Finance (Jose T. Pardo)
rejected it because we want an open bidding so that it's
more transparent."

Instead, he said, the government is leaving the deal up to
its two financial advisers, investment banks Lehman
Brothers and ING Barings, to recommend the best method of
disposal for the government's stake. (Business World, The
Philippine Star  19-Jan-2000)

PHILIPPINE NAT.BANK: Gov't rejects Tan merger plan
The Philippine government has rejected a proposal by
brewing and tobacco tycoon Lucio Tan to merge two banks -
Philippine National Bank, or PNB, and Allied Banking Corp.
- in which he has controlling interests.

Finance Secretary Jose Pardo told a congressional hearing
Mr. Tan's merger proposal was recently discussed by PNB''
board, but the government, which holds a 30% stake in PNB,
won'' sanction a merger between the two banks. Mr. Tan, who
holds more than 35% of PNB, wanted to merge the two banks
through a share swap, a move that would have created the
country's biggest bank.

However, the government's direct stake in PNB, valued at
around eight billion pesos ($197.2 million), would have
been diluted in the new institution.  As part of the
domestic-banking sector reform, the government must fully
privatize PNB by June. (The Asian Wall Street Journal  18-

RURAL BANK OF SAN MIGUEL: 'Prudence' found wanting
The Rural Bank of San Miguel (RBSM), the biggest rural bank
in Bulacan (Central Luzon), declared a bank holiday last
January 5, attributing its cash woes to people's paranoia
about the much-ballyhooed Year 2000 computer bug that
supposedly triggered panic withdrawals.  But the
explanation did not quite hold water with many industry
players and even for government regulators.

Bangko Sentral (Central Bank) Gov. Rafael Buenaventura said
in a Jan. 3 letter to Malaca¤ang there are "fundamental
problems" haunting the rural bank and that "prudence in its
operations have been found wanting" in the past few years,
making it necessary for the central bank to watch RBSM

Until early last December, the central bank kept mum about
problems in RBSM's operations, saying only that regulators
have been pressing the bank to take "the necessary
corrective measures."

Meanwhile, RBSM continued to accept deposits mainly from
farmers, fishpond operators and other small enterprises,
reportedly even dangling a whopping 12% interest to lure
depositors.  In an industry, however, where public trust is
the biggest capital, regulators and RBSM Bank officials
cannot blame the public and its 50,000 depositors if they
start asking: What really went wrong with Bulacan's No.1
bank? What happened after they entrusted their money to the

Answers to these questions should at least give both
depositors and regulators an idea of what their next action
should be. After all, the country has yet to recover fully
from the case of Orient Commercial Banking Corp., whose
owners were found to have milked the bank dry and
squandered people's hard-earned, life savings.

If the Y2K bug were to be blamed for RBSM's failure,
industry players wonder why the so-called paranoia over the
computer glitch problem did not afflict other Bulacan-based
banks.  In its statement a day after RBSM's doors finally
closed, RBSM's top executives said "a simple request for
financial assistance to shore up the bank's year-end
liquidity in anticipation of Y2K-related withdrawals
towards the end of the year" was leaked to the media by
central bank insiders.

The newspaper reports, the bank claimed, led to massive
withdrawals that weakened its liquidity position. It even
alleged that the Bangko Sentral's refusal to extend
financial assistance was the final nail on the bank's
coffin. By withholding its support, RBSM said the Bangko
Sentral is guilty of not preventing what could be a system-
wide problem.

But Bulacan Gov. Josefina de la Cruz, in an interview with
BusinessWorld, said among Bulacan-based banks, only RBSM
suffered severe withdrawals in December despite written
warnings by its officials the panic might become "a
nationwide banking crisis." "There was no major panic; only
in RBSM. Mukha ngang pakulo lang nila 'yon (It seems it was
just a ruse). They issued press releases which they used to
incite people against the Bangko Sentral because the
central bank did not come to their rescue," the governor

She also hinted the reasons for the bank's downfall may be
deeper than a simple Y2K bug paranoia. She said the bank
aggressively expanded, from a network of two to three
branches to 15. This, she said, could be one of the
possible reasons for its lack of liquidity.

"I think this may be mismanagement. They may have
overextended themselves," Ms. de la Cruz said.

Since its inception in 1962 by couple Dr. Tomas Q. Soriano
and Josefina P. Soriano, RBSM has been the fastest-growing
rural bank in Bulacan.  In 1995 alone, five branches were
put up. These branches, along with five built from 1991 to
1994, helped RBSM generate an annual deposit increase of 56
million Philippine pesos from 1991 to 1994, according to
documents provided by the bank.

In fact, RBSM's expansion was commended in the old Central
Bank's CB Review, a bimonthly magazine publication.
While RBSM's problems may be a classic argument against
bigness, some documents would reveal the bank may also be
suffering from problems aside from its costly expansion.

Documents on its financial performance from the Securities
and Exchange Commission and from RBSM itself provided
answers, but also raised more questions for regulators on
what went wrong.  RBSM said its main business was giving
out agricultural loans to farmers, fishpond operators, and
various small and medium-sized enterprises.

"A number of commercial and industrial businesses are also
being served by RBSM," it said, in a written reply to
questions provided by BusinessWorld.

A closer look at the bank's loans in mid-1997 would show,
however, that agricultural credit -- supposedly RBSM's main
business -- reached only 10.07% of its total portfolio.
The documents show industrial and commercial businesses
also ate up a small slice of its portfolio, at 16.67% and
11.02%, respectively.  Curiously, the category "Other
Loans" accounted for the bulk, or 62.22%, of the bank's
total loan portfolio. In documents filed with the SEC, the
bank did not explain where these "Other Loans" went.

Lawyer Pablo L.R. Ronquillo, chief operating officer of the
Rural Bankers Association of the Philippines (RBAP), said
rural banks after the crisis normally stepped up on their
salary and housing loan businesses because this is where
collection and payment continued to be promising.  These
loans are grouped under "Others," he explained.

Mr. Ronquillo, a former central bank examiner, explained
that when rural banks sourced most of their funds from the
central bank, they were constrained to put 40% of these
loans in agriculture, 30% in commercial businesses, 20%
in industries, and only 10% in "other loans."

But now that rural banks generate their own funds, Mr.
Ronquillo said most rural bankers believe they should be
allowed to decide where to lend in order to maximize their
resources.  Since 1983, the RBAP official said there has
been a trend among rural banks to report loans under
"others," specifically when they are salary and housing

Other industry players, however, pointed out that
categorizing 62.22% of a bank's total loan portfolio as
"other loans" should already be enough to raise the red
flag among banking regulators.  In RBSM's case, "other
loans" accounted for PhP439 million ($10.8 million at
PhP40.612 = $1) of its PhP706-million ($17.38-million)
portfolio as early as three years ago, the documents show.

The sources said state pension funds Government Service
Insurance System and the Social Security System could
provide salary and housing loans at more attractive rates
and longer maturities. "So why put it in RBSM?" they asked.

Bangko Sentral officials say they still have no idea if
RBSM officials have violated legal limits on insider loans
or loans to directors, officers, shareholders and related
interests (DOSRI).  But industry players stressed the
figures reported to the SEC have raised questions.

By end-1998, RBSM's audited financial statements filed with
the SEC show that the portion of "Other Loans" to total
loans increased further to 72.94% or PhP386.79 million
($9.52 million) of its PhP530-million ($13-million)
portfolio.  Agricultural loans took up an even lesser
portion of the pie, at 9.27%; commercial loans, 4.38%; and
industrial loans, 13.39%.

During the period, RBSM's bad loans steeply rose to 24.5%
of its total portfolio, as opposed to the already
relatively high 9.51% bad loans reported in mid-1997.
Loans lumped under "Others" in both periods accounted for
the biggest portion of past due accounts, at PhP35.49
million in mid-1997 and PhP62.22 million in end-1998.
Records for 1999 operations have yet to be released.

BusinessWorld tried to get an official statement from RBSM
president Hilario Soriano several times, but he declined to
comment, citing his unavailability.  Some insiders in the
rural bank sector said RBSM's bull run had already started
to fizzle out as early as in 1997.

The bank reported a net loss of PhP11.914 million on June
30, 1997 -- before the East Asian crisis struck -- a big
plunge from the PhP13.087-million earnings it reported in
the preceding six months, official documents show.
Ironically, the banking industry was experiencing a
phenomenal surge in economic activity at the time.

The figures also show that during the period, RBSM's
deposits swelled to PhP829.9 million, but there were
already brewing symptoms of trouble.  As of June 30, 1997,
RBSM's past due accounts already accounted for 9.51% of its
total portfolio, much higher than the 4.4% average reported
by other banks.

Although RBSM was able to turn its financial position
around by the end of 1997 and reported a net income of
PhP12.097 million through higher interest income and lower
interest expense on deposit liabilities, fate's mischievous
hand could no longer be denied in 1998.

That year, RBSM's positive financial position plunged to a
net loss of PhP11.499 million by year-end as provisions for
probable losses ate up a huge chunk of the bank's income,
or PhP19.1 million.  By that time, total deposits plunged
almost 40% from 1997 levels and bills payables (which
include payments for Bangko Sentral advances, rediscounts,
interbank borrowings and deposit substitutes) skyrocketed
by 2,377.48%.

While the bank's deposit liabilities crashed almost 40% in
1998, curiously, the interest the bank was paying on its
deposits rose 28.32% during the period.  One commercial
bank and some thrift banks employed the same strategy --
luring depositors with higher interest -- before they
declared a bank holiday. Orient Bank, for one, was
desperate to attract deposits and did so by advertising
interest rates that were above industry average, especially
on time deposits. Unsuspecting depositors, who did not know
any better, got hooked.

"It sounds Oriental to me," quipped one rural banker.

Clearly, RBSM was not just having liquidity hiccups.
Bulacan's No.1 was deeply in trouble as early as in 1997,
its financial records would show.  Even the Bangko Sentral
admitted that RBSM had been a consistent recipient of its
emergency loan window since March 1998.

By December last year, the bank has been overfed PhP375
million ($9.23 million) in cash. This may explain why the
bank's bills payables rose 2,377% in 1998 from the end-1997
level.  Justifying the central bank's decision to reject
further requests for financial assistance from RBSM
officials in December, Bangko Sentral's Mr. Buenaventura
pointed out this was already the maximum emergency loan
assistance allowed by law.

"Inclusive of its utilization of its overnight clearing
line from the Bangko Sentral, RBSM has fully exhausted the
maximum financial assistance that the Bangko Sentral could
extend under the law," said the monetary chief.

In addition, most of RBSM's assets, submitted as collateral
for more loans, have already been used up to secure the
emergency loans, the governor explained.   Gov. de la Cruz
and Sen. Blas Ople assured depositors the government is
committed to protecting them.

In a meeting right after the declaration of the bank
holiday, Ms. de la Cruz said the PDIC expressed its
willingness to step in and make sure depositors will get
their deposits up to the maximum insured amount of
PhP100,000 ($2,462).

In cases where violations of rules on insider lending are
also discovered, the Bangko Sentral's official line has
always been that perpetrators will not go unpunished.
But it was not a long time ago when such promises were
given to Orient Bank depositors.

Other banks have already followed Orient Bank's fate, but
depositors have remained in the dark as to what would
happen to their hard-earned life savings.  Until now,
errant bank owners -- such as Jose Go of Orient Bank --
find themselves out of jail, if at all, charged only with

So who's hurting the most?  His target: a world-class rural
bank.  At 38 years of age, Hilario "Larry" Soriano might
well be the youngest bank president in the country.
He is the president of the Rural Bank of San Miguel (RBSM),
Bulacan's (Central Luzon) erstwhile No.1 bank, which
succumbed to the pressure of heavy withdrawals last
December and immediately declared a holiday into the New

For a rural bank president, Mr. Soriano is among the most
exposed in media.  But per BusinessWorld's experience, he
would rather answer questions submitted on paper rather
than meet personally with reporters.

His exposure is mainly through one of the most aggressive
advertising campaigns launched by a rural bank throughout
the country.

BusinessWorld learned that people who have met him describe
him as good-looking and maporma (flashy). Some remember ads
along the highway to Bulacan with his picture rivaling the
size of famous movie actor Aga Mulach's Jollibee ads.

Mr. Soriano, through RBSM Foundation, also jointly produced
an anti-drugs music video with the Philippine Information
Agency, entitled: "Kalayaan ng Batang Filipino" (Freedom
for the Filipino Youth), featuring Jolina Magdangal and
Richard Marten.  One RBSM press release claimed Mr. Soriano
personally attended the shooting, recording and editing of
the music video, which earned him a Values Award from the
Philippine Association of National Advertisers and
accolades from President Estrada.

Mr. Soriano also complemented the music video with "the
largest rally ever organized against drugs spearheaded by
RBSM in Bulacan," the statement read.  His aggressive ad
campaigns can best be explained by his background. A middle
child born to a well-known, wealthy family in San Miguel,
Bulacan, Mr. Soriano is a Marketing major from the De La
Salle University.

Two years after he graduated, he took over the helm of
RBSM, which his parents put up barely a year after he was
born. He immediately proceeded to pump up the bank and make
it the largest in Bulacan.  According to Mr. Soriano's
official resum‚, one of his guiding principles in every
undertaking is: "What matters most is not the size of your
company but the size of your heart in doing noble deeds for
your countrymen."

When he was not trying to make his bank the largest, Mr.
Soriano said he went scuba diving, swimming, target
shooting and reading inspirational books.  Some rural
bankers felt Mr. Soriano was using the RBSM Foundation for
"image-building" prior to entry into politics, but others
dismissed such a view as pure speculation.

What is clear is that under his leadership, RBSM grew from
a one-branch bank to one with 15 branches, computerized and
advertised. Deposits increased to 251 million Philippine
pesos ($6.18 million at PhP40.612 = $1) from PhP11 million
in a span of 10 years.

Mr. Soriano said in a document earlier furnished
BusinessWorld he wanted to make RBSM a world-class rural
bank in the New Millennium.  Sadly, however, the first
thing the bank did at the start of the New Millennium was
to declare a holiday.

The Bangko Sentral (Central Bank) and the Philippine
Deposit Insurance Corporation have yet to determine exactly
why RBSM collapsed. While the bank points to heavy
withdrawals due to apprehensions over effects of the Y2K
bug, the Bangko Sentral says there are "fundamental"
problems plaguing it. Just what these problems are,
however, have yet to be disclosed by the central bank.

Mr. Soriano's only known other business interest now is
Soriano Holdings Corp.  The rural banking industry is also
aware of Mr. Soriano's long-standing tiff with his eldest
brother and ex-banker Antonio Soriano, who is contesting
the ownership of RBSM.

Documents filed with the courts show Antonio is accusing
Larry of forging documents that claim he (Antonio) had
waived his rights to over 1,500 shares. Larry has filed a
counter affidavit denying the charge, but is facing an
uphill battle due to an earlier ruling by the Securities
and Exchange Commission ruling in favor of Antonio.

Sources close to the family said the Soriano matriarch is
heartbroken over the animosity between the brothers, which
started when the Soriano patriarch died in 1988. Criminal
Case No. 97-160233 filed at the Manila Regional Trial Court
is a deeply buried pain for Josefina, the mother. (Business
World  19-Jan-2000)


BANGKOK METROPOLITAN BANK: Announces plan for 25% staff cut
Bangkok Metropolitan Bank (BMB) is going to streamline its
organization by cutting a fourth of its workforce in
addition to trimming non-performing loans NPLs down from 66
to 40 percent this year.

BMB said it plans to cut 1000 of its staff in an effort to
slash costs and increase efficiency in preparation for a
foreign takeover.  The personnel reduction - cutting the
bank's staff to 4,000 - will be implemented mainly through
a voluntary early retirement program which was introduced
last week and lasts till at the end of this month, said BMB
President Somchai Sakullrarat.

The cost-cutting is part of a preparation for new foreign
owner.  Somchai said an agreement with the new investor is
expected before the end of the month, HSBC is reported to
be the buyer for BMB, the country eighth largest commercial
bank.  He said the bank not only plans to improve its
personnel efficiency but also aims to reduce its NPLs down
by 26 percent, or 80 billion baht, from 66 percent by year
end.  As of September last year, BMB's NPLs stood at 128
billion baht or 70 percent of its total lending.

"In 1999 we had significantly lreduced our NPLs by 40
billion baht, and we are hoping to do the same this year,
especially while the economy is recovering," Somchai said.

In addition, BMB plans to improve its lending by extending
more loans to small and medium-size enterprises (SMEs),
importers and exporters, and house buyers, expecting its
lending to grow 8 percent or 10 billion baht.

Asked about an interest rate levels, he said after the new
owner takes control of the bank, he expects excessive
liquidity to ease, resulting in an increasing of interest
rate, probably by .25 percent in the third quarter.

"It is too soon to say what changes the new foreign owner
will bring after taking over. But I don't anticipate the
closing of any of our 177 branches," he said.  "We set our
own business targets for now, and when the new owner comes,
the targets will be adjusted to correspond with the new
funds that will be invested. The bank's condition has
improved, as seen by reduced levels of non-performing
loans," he said. (Business Day  19-Jan-2000)

BULONG OPERATIONS PTY LTD.: CreditWatch status remains
Standard & Poor's Ratings Agency said its triple-C rating
on Bulong Operations Pty. Ltd.' US$185 million senior
secured fixed-rate notes due in 2008 remains on CreditWatch
with developing implications, following a technical default
on the notes.

S&P said the technical default resulted from Bulong
Operations failure to replenish the debt-service reserve
account by Jan. 15, 2000. S&P said that Bulong Operations
is finalizing negotiations with noteholders and Barclays
Bank PLC to delay action under the default. Barclays Bank
provides hedgeing and a working capital facility to Bulong
Operations that rank equally with the notes and have cross
default provisions with the notes, S&P said.

The debt-service reserve account was fully drawn to cover
the interest payment of A$17.8 million (US$11.8 million) on
Dec. 15, 1999. As the debt service reserve account wasn't
replenished within the 30-day grace period, which expired
on Jan. 14, technically the notes have defaulted and can be
declared due and payable, S&P said. (The Asian Wall Street
Journal  19-Jan-2000)

KRUNG THAI BANK: To revamp corporate strategy, boost fees
Krung Thai Bank will revamp its business strategies by
boosting fee-based income to as much as 50% of revenue
because of the decline in lending.

Change is needed as increased business competition squeezes
interest margins for financial institutions, according to
Krit Umpote, senior executive vice-president of Krung Thai
Bank.  Interest spreads between lending and deposit rates
would narrow in the future, forcing local banks to look to
other means of supplementing their income away from
traditional lending, he said.

At the same time, market development would increase
opportunities for companies to raise funds besides bank
loans, such as the stock or bond markets.

"For international banks, you can see that investment
banking or fee-based income is the main driver of their
revenues," Mr Krit said.  "Banks will become involved in a
greater range of businesses, transforming more into holding
companies investing in subsidiaries to offer a fully-
integrated package of financial services to customers."

Indeed, a new Financial Institutions Act will carry the
theme of universal banking, offering local firms greater
leeway in offering services in anticipation of increased
competition and liberalisation in the future.  The act will
replace existing bank and finance laws, and is expected to
be passed later this year.

Last year, Krung Thai bought out existing shares in FBCB
Asset Management, at an auction held by the Financial
Sector Restructuring Authority, for 112 million baht.
New capital was injected in the firm to raise total funds
to 200 million baht, with the new Krung Thai Asset
Management solely owned by the bank.

At the same time, Krung Thai sold its 25% holding in Thai
Capital Management to Tisco, in order to comply with
regulations limiting bank holdings in more than one asset
management firm.  Krung Thai Asset Management now plans to
introduce several new funds, centred around a "lifestyle

"Our slogan will be funds with clear investment targets.
Not necessarily maximum yields, but rather giving investors
the funds to meet their long-term targets," Mr Krit said.

The funds, aimed at providing investors with funds for
retirement or children's education, will emphasise
relatively low-risk instruments such as government or state
enterprise bonds.  One advantage for Krung Thai Asset
Management is the opportunity to market products directly
to its parent bank's client base.

Krung Thai Bank has more than 10 million deposit accounts
and 620 branches nationwide.  Mr Krit said branch staff and
executives would be trained about the new investment
products to allow them to advise customers about which
funds best matched their needs.  Given the bank's 100%
ownership of the asset management firm, Mr Krit said
successful sales of fund products represented successful
sales for the bank. (Bangkok Post  19-Jan-2000)

NATURAL PARK PLC: Assets handed over to AMC
The Jaruthawees and Protpakorns have ended their ownership
in the listed company, Natural Park Plc, after giving
assets worth Bt10.89 billion to the state-owned Asset
Management Corporation (AMC), as part of the debt
restructuring process.

From now on, Natural Park -- which had developed a number
of property projects in the past 10 years for rent, lease
and sale -- is shaped to become a professional property
management firm.

In 1997, Natural Park, which was established by the two
families, succumbed to a huge debt of Bt11.14 billion
originating from expansive development, the slump in the
property sector as well as the devaluation of the baht. The
AMC became the major creditor of the company after it
bought the loans from the Financial Sector Restructuring

Among the 21 companies who are debtors of AMC, with debts
of more than Bt200 million and who agreed to sign debt-
restructuring contracts, Natural Park owed the largest
amount of debts. Total loans amount to Bt36.84 billion.

Prapat Srisatayakul, managing director of the AMC, said at
a press conference yesterday that under the debt-
restructuring agreement signed in August last year, Natural
Park will have to transfer 47 development projects to the
AMC as the payment for Bt11.14 billion loans.

"In return for the haircut valued at Bt6.47 billion,
Natural Park will need to manage the 47 property projects
and will have to give us Bt4.67 billion after five years.
The amount is inclusive of 13.50 per cent per annum," said

Thosapong Jaruthawee, managing director of Natural Park and
a former majority shareholder of the company, said the
company had relinquished its control to avoid legal

"Though we now own Bt100-Bt200 million of assets and
negative capital of Bt800 million, as a project manager,
Natural Park can continue its business," he said.

Currently, Natural Park is still listed. It has now been
transferred to the rehabilitation sector due to negative
net tangible assets.  From now on, Thosapong said Natural
Park will be a professional manager and it will continue
developing projects. However, no extensive investments are
planned, he said.

According to Thosapong, to manage each project, Natural
Park needs seed capital which will be mobilised from
financial institutions or partners.  He did not rule out
issuing more shares to raise funds. He said there is a
chance for that now that Natural Park has no debt burden.
Apart from Natural Park, more companies are to sign debt-
restructuring contracts with AMC during the year.

Analysts welcomed the move. "It's a good start and a credit
to the AMC, which is a key player in rehabilitating the
businesses of debt-ridden developers," one said.

Mr Prapat explained that with the transfer, the AMC would
become the landlord. If N-Park wants to retain its
business, it will be required to co-invest with the AMC to
develop the assets. N-Park will have to find funds to pour
into the developments on its own. The state agency will
also supervise N-Park's cashflow management every year over
the five-year period. If it cannot meet the projections,
AMC will seize back the assets.  (The Nation, Bangkok Post

SAWASDI HORRUNGRUANG: Signs Sri Racha Harbour debt deal
Signing a debt-restructuring agreement with creditors of
Sri Racha Harbour Ltd yesterday, steel tycoon Sawasdi
Horrungruang expressed confidence that creditors of two
other companies in his empire would soon approve debt-
restructuring plans.

Creditors of Nakornthai Strip Mill Plc should vote next
month on the company's plan to restructure Bt36 billion in
loans, he said. Furthermore, creditors of Nakornthai Steel
Plc (NTS) are expected to approve the restructuring of Bt18
billion of loans within two months, he added.

According to preliminary agreements, creditors of the two
steel companies agreed to restructure the loans via debt-
to-equity conversion, debt rescheduling and interest

"After the loan conversion, creditors can hold around 70 to
80 per cent in the two companies while my stakes (in the
two steel companies) will be diluted to lower than 20 per
cent," said Sawasdi.

The interest forgiveness is equivalent to around 10 to 20
per cent of the two companies' total debt burden, Sawasdi
said.  Although the deals contain a buy-back option, they
limit Sawasdi's stake in the two companies to just 25 per

Following the debt restructuring, NTS will be merged with
Bangkok Steel Industries Plc and the steel unit of Siam
Cement Plc, Sawasdi said. The merger will create a steel
company with capacity of two million tonnes per annum.

Sri Racha Harbour's debt restructuring involved loans
totalling Bt2.61 billion. Although the company's debt
burden is small, the restructuring could spark similar
moves in other companies in Sawasdi's empire, said
Thirachai Bhuvanartnaranubala, assistant governor of the
Bank of Thailand.

"If every company in his empire can restructure its loans,
that will immediately reduce the amount of non-performing
loans under the Corporate Debt Restructuring Advisory
Committee's supervision," he said.

Four main creditors holding 95.06 per cent of the company's
total debts approved the debt restructuring of Sri Racha
Harbour, which operates wharves in Sri Racha.  The four
creditors are Bangkok Bank, Krung Thai Bank, Siam City Bank
and Industrial Finance Corporation of Thailand.

Under the agreement, creditors with secured loans will be
repaid within 10 years, starting in 2002. Those with
unsecured loans will be repaid within 13 years, also
starting in 2002. The loans will carry the banks'
prime rate rather than a penalty rate.

A source from Bangkok Bank said he is confident that the
company will be able to generate income and repay loans.
Last year, Sri Racha Harbour's total revenue was Bt162
million. (The Nation  20-Jan-2000)

SIAM CITY BANK: Newbridge Group expected to win bid
US-based Newbridge Group is the likely winner in a bid for
a stake in Siam City Bank (SCIB) because it offered a
better price than its closest rival Ankar fund, also from
the US, said Phaithoon Kijsamrej, SCIBPresident, at a press
conference yesterday.

According to Phaithoon, is bid to acquire SCIB is expected
to be finalized before the end of March.  Neither Newbridge
with Singapore's Keppel Talee Bank as part of the
consortium, nor Ankar Group with DBS Bank of Singapore in
its camp, will be allowed to resell the SCIB shares for
short-term profit a minimum period of shareholding is
required as part of the bidding conditions.  Phaithoon said
Newbridge, had indicated that it would continue to employ
current personnel.

"Newbridge will invest in new technology, place emphasis on
small customers service through SCIB's 200 branches all
over Thailand," Phaithoon added.

SCIB's performance during the fourth quarter of 1999 was
lower than that of the third quarter of the same year,
because the bank had to write off bad debts.  SCIB's non-
performing loans (NPLs) as at the end of 1999 stood at 63
percent of the total of 270 billion baht credits.

In a separate interview, Bangkok Metropolitan Bank (BMB)
President Somchai Sakulsurat disclosed that the sale of 75
percent of BMB will be concluded in February this year.
UK-based Hong Kong and Shanghai Banking Corporation (HCBC)
is likely to acquire majority stake as it offered prices
between 14.0-20.0 billion baht, better than other potential
buyers' binding.

BOT sources indicated that the offered prices for BMB are
relatively high because of the bank's successful solutions
to its NPL problems.  The bank has 177 branches in the
country, with 83 branches located in Bangkok.  The source
commented that the selling price for SCIB is not high
because the bank still harbored many problems, including
too large staff and high NPLs.

Formerly, two state-owned banks - Nakornthon Bank and
Radanasin Bank, were sold to UK-based Standard Chartered
Bank and Singapore-based UOB Bank respectively. (Business
Day  19-Jan-2000)

S U B S C R I P T I O N  I N F O R M A T I O N

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