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Business

BSP asks PNB to submit rehab plan

- by Jun Ebias -

The group of Lucio Tan, who controls 46 percent of Philippine National Bank (PNB), is confident they can reverse the bank's financial condition in the next few months even as the Bangko Sentral ng Pilipinas (BSP) has asked the losing bank to submit a rehabilitation plan before the scheduled June 9 bidding.

"They have to submit a rehabilitation plan because it will be looked at by the new investors," BSP Gov. Rafael Buenaventura said yesterday, adding that "we are giving them time but we hope they can submit it before the bidding."

The rehabilitation plan, he said will include the measures that the bank will undertake to reverse its losses, how much capital is needed to clean-up its balance sheet, detailed reorganization and streamlining of the firm, and how it plans to cut its rising non-performing loans (NPLs).

BSP Deputy Gov. Alberto Reyes said the submission of the plan is part of the monitoring system that the BSP has imposed on banks which have been losing money from its operations and a deteriorating asset quality. Last year, PNB incurred a net loss of P9 billion and about P933 million in the first quarter.

"We want to know what is their action plan," Reyes said.

Both Buenaventura and Reyes said the rehabilitation plan will be useful especially if the bidding fails, thus, management of the bank will remain with the group of Lucio Tan, who controls 46 percent of the bank.

Tan will be selling his stake in the bank along with the government's 30 percent and PNB Pension Fund's four percent, or a combined 80 percent by June 9. Three groups have been pre-qualified to join the bidding.

Reyes admitted that the present management of the bank under Tan is having difficulties drafting the plan since they are not sure if they will stay in the bank after its bidding.

"They (Tan's group) might not do it. They are still in limbo," he said.

PNB President Feliciano Miranda said that is why it is important that the ownership issue of the bank is settled sooner through the bidding.

"We want the ownership issue settled as soon as possible. So that if the bidding fails and we retain ownership, then we can submit a long-term rehabilitation plan," Miranda said.

While the bank has consistently incurred losses for the past 15 months, he said it can be turned profitable in the next few months. He said once its books have been cleaned and its loan portfolio have been improved, then it can plow back to its capital the P21 billion in loan loss provision it has set aside for NPLs, now at 31 percent of its total loans.

He said if the economy continues to improve, the bank can also start liquidating its over P30 billion of repossessed assets, bulk of which or 80 percent were in real estate. In fact, he said the bank was able to sell around P5 billion of these assets last year.

The bank, Miranda said remains the most attractive in the country with P32 billion deposits from the national government alone or more than one-third of its total P116 billion deposits. He said it has 324 branches all over the Philippines, six branches abroad, and 74 remittance offices around the world. The remittance business alone, he said accounts for 50 percent of the remittance market.

ALBERTO REYES

BANGKO SENTRAL

BANK

BIDDING

BOTH BUENAVENTURA AND REYES

DEPUTY GOV

LUCIO TAN

MIRANDA

PLAN

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