Urban Bank, Inc.

July 21, 1998 PSE CIRCULAR FOR BROKERS NO. 1686-98 SUBJECT : Urban Bank, Inc . Urban Bank, Inc. ("URB") clarified to the Exchange, in a letter dated July 20, 1998, the attached news article published in the July 16, 1998 issue of the Manila Times captioned "Urban Bank puts up finance firm for housing loans". The article reported that URB has formed a new finance company which will service its loan programs and mortgage-backed securities. aisadc URB in said letter explained that: "Please be advised that said finance company was not put up by Urban Bank. The company's increase in capital that is now pending approval by the Securities and Exchange Commission is fully subscribed by Urbancorp Investments, Inc. . ." For your information. (SGD.) REYNOLD P. ONG Vice-President, Listings and Disclosure Group Urban Banks puts up finance firm for housing loans URBAN Bank has formed a new finance company which will specifically focus on the Urban Bank-Pag-IBIG Securitized Housing Loan Program (SHLP). Urban Bank said it had submitted to the securities and Exchange Commission an application for the increased capitalization of the finance company. The company, to be known as the Philippine Home Development Finance Corp. (PHDFC), will initially have a paid-up capital of P100 million. It will service the program loans as well as service the mortgage- backed securities (MBS). According to the bank, the SHLP aims to make home acquisition and financing available to Pag-IBIG's middle-income members by originating loans over P500,000 up to P3.5 million to qualified members. Urban Bank will then take out in turn and securitize these funds via the issuance of the MBS. prLL The underlying loans will be guaranteed by Home Insurance and Guarantee Corp. (HIGC) and the resulting MBS will be listed in the Philippine Stock Exchange (PSE). It will also be the first debt instrument to be listed in the PSE. Recently, the HIGC board of directors approved the P15-billion guarantee facility to cover the mortgage loans under this program.