Government to sell 45% stake in PNB before September

The government has decided to sell its 45 percent interest in Philippine National Bank (PNB), one of the country’s biggest banks, before September this year, according to Finance Secretary Cesar V. Purisima.

He said the government is set to hire a financial adviser to help evaluate its options as well as peg the floor price for its shares in PNB.

Purisima said no ballpark value for government’s holdings in PNB has been set yet but the combined holdings of the Lucio Tan Group and the government has been estimated to be worth at least $400 million.

The government and the Tan group had signed a shareholder agreement about five years ago and this agreement is set to expire on Sept. 16 this year.

Signed by the Tan group and former Finance Secretary Jose Isidro Camacho, the contract stipulated that the government could exercise the option of initiating a joint sale of up to two-thirds of the combined holdings of the Tan group and the government.

"Since the agreement expires in September, we have evaluated our options to either extend the agreement or sell the holdings," Purisima said.

Purisima said, however, that since the government’s shares are in the form of preferred shares, its representation in the bank will be whittled down to 15 percent if the agreement is not extended.

According to Purisima, the option of extending the agreement has not been ruled out but hinted that the government is more inclined to sell its shares in PNB and leave the bank to full private control.

"We believe that PNB has been managed well for the past few years, we think that it’s a good time to invite other parties to make a bid for the block," Purisima said.

Under the agreement, Purisima said the Lucio Tan group is also entitled to participate in the public bidding for the government share and should it lose to another party, the group also has the right to match.

"If the Lucio Tan group ends up buying, then there will be little change," he said. "If another group takes over then they have to work it out among themselves," he said.

Purisima’s announcement is expected to drum up interest in the PNB shares until the government is ready to make the final decision on whether to sell the shares or not.

"Obviously, with this in the works, we have to see how much attention we will get and the kind of pricing such interests would generate," he said. "I think selling the holdings will be the best option–it will complete PNB’s privatization and the government will realize some revenues out of the sale at a time when it will go a long way," Purisima added.