US Fed ruling paves way for PNB-Allied Bank merger

MANILA, Philippines - It is now all systems go for the long-delayed merger of Lucio Tan banks Philippine National Bank (PNB) and Allied Banking Corp. after obtaining the approval of the US Federal Revenue Board of a plan that will finally set their merger into motion.

Newly-installed PNB president and chief executive officer Carlos A. Pedrosa said that there are still some issues to be settled but they are just technical and regulatory in nature.

“Definitely, there will be another revaluation (of the two banks),” Pedrosa said, adding that local regulators, such as the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP) would be conducting a review of the two banks.

“But other than these issues, we hope that by late next year it (the merger) will be done,” he added.

The two banks are initiating a gradual integration of their operations These include synchronization of information technology (IT) systems; alignment of products and processes; human resources development; branch rationalization and expansion.

After the merger, PNB is expected to fortify its position as the fourth largest domestic bank in terms of total assets. It will have the most extensive distribution network with the largest international presence among local banks.

In 2010, PNB reported total resources worth P302 billion while Allied Bank has P190 billion. Both reported exceptional net income results for the period.

In 2010, PNB registered its highest income ever in recent years as net profits surged to P3.54 billion, surpassing the previous year’s level of P2.2 billion by a hefty 61 percent. Return-on-equity surged by a double-digit rate of 11 percent, up from seven percent a year ago.

It reported total deposits worth P226 billion, while loans and receivables stood at P110 billion.

Allied Bank on the other hand, reported a net income of P1.29 billion in 2010 from P1.19 billion in 2009.