This developed as the Privatization Management Office officially approved the reverse-privatization of the bank as part of its rehabilitation plan.
The PNB board of directors elected Tan as president and chief executive officer early yesterday morning, succeeding Feliciano L. Miranda Jr. who remains in the PNB board.
At 40-year-old Tan would be the youngest president in the bank’s 85-year history. Sources had expressed hope that youth and stamina would help in dealing with some P23-billion worth of foreclosed assets and settling its P25-billion emergency loan with the government.
Tan will lead PNB’s rehabilitation that involves an aggressive program to reduce its non-performing loans and restore the bank’s profitability for eventual sale to strategic investors.
PNB’s non-performing loan ratio is estimated to be around 38 percent, the highest in the commercial banking sector. Among its failed loans were such colossal failures as the National Steel Corp. and Tan Yu’s Asia World project where it has an exposure of up to P1 billion.
Tan’s election came on the heels of the approval of PNB’s reverse privatization which would involve the conversion of parts of its P25-billion loan into equity in the bank by the government.
PNB was originally privatized when it went public and had its shares listed at the Philippine Stock Exchange. This was followed by a long search for a private investors that would buy into the bank which ended with Lucio Tan now holding a 67-percent share.
According to Finance Secretary Jose Isidro Camacho, PNB’s rehabilitation would necessitate the acquisition of interest by the government through a debt-to-equity swap, essentially a dacion en pago covering portion of P.25 billion emergency loan to the extent of P7.8 billion.
Camacho said the privatization office approved the reverse-privatization although the terms would be determined after the Department of Justice makes a decision on the draft memorandum of agreement to be signed by the government and Lucio Tan. — Des Ferriols