PNB proposes scheme to settle part of P10-B emergency loan from PDIC

The Philippine National Bank (PNB) wants to settle a portion of its P10-billion emergency loan from the Philippine Deposit Insurance Corp. (PDIC) through an off-selling scheme.

The scheme being proposed calls for the bank to merely transfer to the PDIC an estimated P9 billion in so-called sub-performing loans or bad accounts it had incurred by lending to the national government when the state still owned the bank.

Finance Secretary Jose T. Pardo said that instead of outright payment of PNB’s receivables from the government, the bank wants the PDIC to just absorb the loans which are covered by sovereign guarantees.

"We are looking at a permanent solution to clean PNB’s balance sheets and the plan will help liquify PNB," Pardo said.

Pardo said he has already instructed PDIC President Norberto Nazareno and the Bangko Sentral ng Pilipinas to thoroughly review the quality of these receivables, some of which date back to the time of the late president Ferdinand Marcos and President Fidel V. Ramos.

The loans were granted to the government when the state still controlled PNB. Today about P6 billion of the P9-billion loans were given to the National Sugar Trading Corp. an attached agency of the Sugar Regulatory Administration while the remaining payables of government were loans advanced to the SGS and Philipine Airlines. – RCF