3 prequalify for PNB bidding

Three bidders, a local bank and two foreign groups -- beat the deadline for the June 9 sale of the combined 80 percent stake of taipan Lucio Tan and the government in Philippine National Bank (PNB), Finance Secretary Jose Pardo disclosed yesterday.

Pardo said Rizal Commercial Banking Corp. (RCBC), of the Yuchengco group, an American company and a European consortium submitted their formal offers to bid for PNB, beating the May 22 deadline set by the government.

Bangko Sentral ng Pilipinas (BSP) Gov. Rafael B. Buenaventura said one of the two foreign bidders is based in the United States, but declined to give more details.

Banking sources, however, identified the US bidder as Beatrice Foods Corp., a US-based conglomerate led by a high-profile Filipina chief executive, Loida Nicolas Lewis, widow of Beatrice founder Reginald Lewis. Loida Lewis has been described as one of America's top lady CEOs.

Analysts said that if RCBC succeeds in acquiring PNB, it will become the country's third largest bank with assets totaling P320 billion.

They also cited the fact that only three groups showed interest in PNB, highlighting the lack of interest in the bank.

"It is (lack of interest) probably due to the short due diligence period, its balance that is in bad state, and they have to capitalize it again," an analyst from a foreign bank said. He said PNB has among the highest non-performing loan (NPL) ratio in the industry at 31 percent as of end-April.

"The bank's finances is among the worst among its peer banks," another analyst from a local securities firm said. "It has sustained losses for the past 15 months."

Pardo said the huge capital outlay estimated at $1 billion has turned off other prospective buyers, including Metropolitan Bank and Trust Co., which earlier expressed interest in the bank.

Just to buy out the existing shareholders, Pardo said, investors will have to shell out $500 million. Another $500 million, he said, is needed just to recapitalize the bank so that it could revert back to profitability after months of sustained losses.

On June 9, the government will auction off its 30 percent stake in PNB, along with the 46 percent equity of Tan and a 3.8 percent stake held by a PNB pension fund.

The sale was originally set for late May but was postponed to attract more bidders.

PNB's privatization was among the conditions set by the International Monetary Fund under a standby borrowing program that gave the government access to $1.4 billion in credit. The IMF program which was to end March 31, was extended to June 30.