PNB to accept report of Pricewaterhouse

The Philippine National Bank (PNB) is ready to accept "with reservations" the audit findings of Pricewaterhouse Coopers, paving the way for the privatization of the bank in the next couple of months.

This was announced yesterday by PNB president Feliciano Miranda who said that taipan Lucio Tan has assured the government that he is willing to sign an investor's agreement that would bind Tan to selling his 46-percent shares in PNB as a block with the government's 30-percent share.

Miranda said that while PNB is ready to accept the Pricewaterhouse Coopers audit, PNB is taking some "exceptions" to the audit findings.

The reason for PNB's reservations and exceptions, Miranda explained, is due to the accounting method used in the Pricewaterhouse Copper audit report.

Pricewaterhouse Coopers' audit uses the International Accounting Standard (IAS) which is more stringent than the Philippine Generally-accepted Accounting Procedure (PhilGAP).

Sources said PNB is taking exceptions with regard to the level of non-performing loans (NPL) which, based on PhilGAP standards is only 29 percent. But using the IAS, PNB's bad debt ratio soared to as high as 40 percent.

Under the IAS measurement, loans classified as substandard are already classified as non-performing. Under PhilGAP, a loan is classified non-performing after it has been past due for three months.

While PNB is now willing to accept with reservation the Pricewaterhouse audit, another audit will still be conducted for the period 1999 up to the first quarter of this year.

Finance Secretary Jose T. Pardo said that SGV has been asked to do another audit even though PNB's present auditor is Punongbayan and Araullo.

Miranda, together with Tan and PNB director Enrique Filamor, met with Pardo yesterday to discuss the investors' agreement.

Tan is willing to sell his shares together with that of the government as a block provided that the minimum selling price is set at P160 per share.