Okay of PNB rehab plan seen in 2 wks

The government and Philippine National Bank (PNB) majority shareholder Lucio Tan are expected to come up in the next two weeks with a deal on how the bank should be rehabilitated.

"There should be an agreement as to the direction the bank will take," concurrent Philippine Deposit Insurance Corp. (PDIC) president and Philippine National Bank (PNB) chairman Norberto Nazareno said.

Nazareno said there are some concerns raised by both parties is that are still being threshed out. Thus far, the government and Tan have agreed that the ailing bank should be brought back soonest to profitability.

Nazareno however, was tight-lipped on whether Tan agreed to reduce his stake, give up management of the bank and for government to raise its interest while the bank is being rehabilitated.

Sources said government has yet to convince Tan to reduce his take in the bank, currently at 67 percent and allow management control to be done by government which has a 16-percent remaining interest in the bank.

The other issues that have to be worked out are the conversion plan and the pricing of the remaining stakes of both parties.

The government‘s plan is for state-insurer PDIC to convert about P5 billion of the P25-billion emergency loan to PNB into equity. The loan of P10 billion was provided by PDIC and another P15 billion by the Bangko Sentral ng Pilipinas last year when panicky depositors withdrew from PNB.

A portion of the loan will be used to offset some of the non-performing government loans from the bank, estimated at P13 billion. This is seen to reduce PNB’s loans which as of April stood at 41 percent of total loans.

The next move will be for BSP to transfer its PNB loan exposure to PDIC which on the other hand, will come up with a promissory note to pay the BSP loan. The loan will then be restructured as part of PNB‘s rehabilitation program.

The reduce government’s influence in the bank, government will cap its ownership to 50 percent. The debt-to-equity conversion will cover only 20 percent of the total loan from BSP and PDIC.

H1 performance

PNB president Feliciano L. Miranda Jr, reported improvements in the operations of the bank for the first six months of the year.

In a press statement, Miranda said deposits rose to P130.2 billion as of June 30, 2001, up by eight percent from the Dec. 31, 2000 level of P120.5 billion as concerted efforts of the bank‘s 32 on-line branches began to bear fruit. The bulk of the increase came from private deposits. In terms of deposit type, the biggest increase was accounted for by low-cost savings and demand deposits, the PNB president said.

Miranda also reported that PNB‘s inward dollar remittances totaled $1.79 billion surpassing last year’s figure of $1.53 billion by a hefty 16 percent PNB opened three overseas remittance centers this year bringing the total number of overseas branches and remittance centers to 79. The newly opened remittance centers are located in Vancouver, Canada, San Francisco and Virginia Beach in the USA. Scheduled to open later this year are remittance centers in Seattle and Maryland, USA.

The bank is continuing its aggressive disposal of acquired assets, selling P1.2 billion worth of properties in the first six months.

Miranda also reported a decline in operating expenses, particularly compensation and salaries which have gone down to P1.28 billion from last year’s P1.47 billion or a reduction 13 percent.