Sandiganbayan junks TRO motion vs PNB-Allied Bank merger

MANILA, Philippines - The Sandiganbayan has junked a motion for a temporary restraining order (TRO) filed by the National Government against the planned merger of two banks owned by taipan Lucio Tan.

The motion for TRO or writ of preliminary injunction sought to stop the merger between Philippine National Bank (PNB) and Allied Banking Corp., which when consummated would result in the fifth largest commercial bank in the country.

Tan controls over 75-percent equity in Allied Bank and more than 60 percent in PNB.

The Sandiganbayan, in a resolution, denied the motion for a writ of preliminary injunction filed in December last year. Tan’s legal counsels Estelito Mendoza and Orlando Santiago said the state had no legal basis to meddle in the merger.

The Philipppine government, represented by the Office of the Solicitor General, said Tan took control of Allied Bank using public funds, and that it would be prejudicial to government’s further claims to the Allied shares if the Sandiganbayan rules against the TRO.

Tan’s legal team said government failed to prove their allegations over the disputed shares of stocks of Allied Bank for over 20 years.

However, the merger of PNB and Allied Bank continued to face delays despite the legal victory on the domestic front.

“It will still take time, but we are ready to start it (the merger) when the last obstacle is resolved,” Omar Byron T. Mier, PNB president and chief executive officer, said.

The original plan was for the two banks to completely merge operations by end 2008 after officially announcing the merger in the same year.

The delay is due to the inability of Allied Bank to sell its 28-percent stake in California-based Oceanic Bank. US monetary regulators want Allied Bank to divest of its Oceanic Bank holdings to avoid multi-ownership or cross ownership of financial institutions.

Nonetheless, PNB continue to work on the integration process with Allied Bank. PNB will emerge as the surviving entity when fully integrated, and all the branches will be retained.

When combined, the merged bank will have a branch network of 606, making it the fourth largest bank in that category.