The government will divest 24 percent of its “economic interests” in Metro Rail Transit Corp. (MRTC) as soon as October this year in compliance to central bank rules on the ownership ceiling of state-controlled banks in a private corporation or consortium such as MRTC.

Land Bank of the Philippines and the Development Bank of the Philippines, which acquired 75 percent of MRTC in April for $600 million to save the government on huge interest costs, have exceeded the Bangko Sentral ng Pilipinas (BSP) exposure ceilings in specific sectors. But both banks have been assured of an exit plan through National Development Co. (NDC) after six to nine months from the time of the buyout.

Finance Secretary Margarito B. Teves has confirmed that the government is preparing the sale of the 24 percent preferred shares in MRTC in the next two months, but the extent of NDC participation is still under discussion.

The estimated value of the 24 percent preferred shares is $150 million to $200 million.

Finance department officials said one of the options is that NDC will float bonds to raise funds to buy MRTC shares held by government banks. NDC will then dispose of the shares through a re-privatization.

The same officials said the GFIs will be able to unload the full 75 percent ownership by mid-2010, later than what was expected, which was as early as January next year.

Land Bank and DBP took the center stage in buying out MRTC shares for a majority block. Both banks, on a directive from the DOF, paid $300 million each after the National Government provided them with an exit mechanism plan.

Land Bank president and CEO Gilda E. Pico said earlier that the divestment period only applies to equity holdings and excludes MRTC bonds.

Pico said the deadline is a “pressure” for them to sell the equity stake in MRTC which is funded from their investment budget.

In the meantime Teves said NDC will rejoin the government in its “temporary” re-nationalization of MRTC to prepare for its eventual privatization.

The NDC, which is the investment arm of the Department of Trade and Industry, had to be named as the exit mechanism of Land Bank and DBP as a requirement of the Monetary Board for the investment of the state owned banks in MRTC.