Based on documents filed with the SEC, PNB reduced the par value of its shares from P60 to P40 apiece, thereby decreasing its authorized capital from P50 billion to P33.33 billion. Then it raised its capital to P50 billion consisting of 1.05 billion common shares and 195.17 million preferred shares, to reflect the new par value of its shares.
The decrease in capital forms part of a quasi-reorganization and equity restructuring that the bank is undertaking to wipe out part of PNB’s capital deficit incurred as of December 2001. The increase in capital, on the other hand, was made in view of the advances of the Philippine Deposit Insurance Corp. (PDIC) to the bank.
The move has effectively reduced the foreign ownership of the bank from 29 percent to 19 percent. The said amendments were cleared by the Bangko Sentral ng Pilipinas for registration with the SEC.
PNB had earlier settled its P10-billion loan with the PDIC with the signing of a dacion en pago agreement in compliance with a memorandum of agreement signed by bank president Lucio Tan and the National Government.
In the agreement, PNB ceded, transferred and conveyed to PDIC all the existing collaterals covering the loan, in the form of mortgages covering 22 selected government accounts and assets amounting to P10 billion.
PDIC extended the P10-billion loan to the PNB in October 2000 when the bank experienced heavy withdrawals. This was part of the P25-billion emergency loan extended jointly by the BSP and PDIC, which sits as a member of the board of directors.
The BSP has begun evaluating the proposed rehabilitation plan of PNB intended to bring the bank back on its feet within three to five years. The BSP’s approval is still needed before the rehabilitation can be implemented.
PDIC president Norberto Nazareno said that even before taipan Lucio Tan’s takeover, PNB was already experiencing liquidity problems and its capital was already below prescribed levels, thus requiring the infusion of additional capital in the bank which the government was unable to put up.
These liquidity and solvency problems were attributed partly to the financial crisis in 1997 causing major barrowers to default and management deficiencies when the bank was under government management.
The government and the Lucio Tan group have agreed to appoint JP Morgan Chase as escrow agent to supervise the sale of some 67 percent worth of shares in PNB should any one or both of them together decide to sell the shares.
Under the agreement, both parties would have the right to match the offer price of any third party that might wish to buy the shares or portion of the share.
Tan’s main strategy relies heavily on PNB’s top businesses, namely remittances from overseas Filipino workers (OFWs) and the liquidation of its various real and other properties owned or acquired (ROPOA) assets.
To maintain its dominant position in the remittance business, PNB is targeting a total of $3.7 billion in foreign exchange remittances through the establishment and additional branches and partnerships.
PNB generated roughly P700 million in revenues from handling the remittances of overseas contract workers last year.
It intends to put up new offices in the United States, Canada, Bahrain, South Germany, Rotterdam and sub-branch in Japan. The company likewise intends to appoint additional remittance agents and forge remittance tie-ups in Italy.