PNB president and chief executive officer Omar Byron Mier said in a press statement "there are no discriminatory provisions in the documents covering the agreement; PNB and the BSP have been transparent regarding the provisions of the MOA as well as the way these are being implemented."
Mier added that the loans of the sugar clients are supported by duly executed documents spelling out specific terms and conditions mutually accepted by all parties concerned.
"We are moving on the loan settlement arrangement the way it had been legally provided for by Republic Act 7202," Mier said.
The sugar loans are agricultural sugar crop loans granted by the Republic Planters Bank (RPB) in the 1980s. RPB was then the primary lending government bank of the sugar industry. In 1991, through a bidding process, RPB was privatized and became a PNB subsidiary known as PNB-RB. In 1998, PNB-RB was sold to Maybank, and PNB assumed jurisdiction over the sugar loans under the MOA as the collecting agent of the P3-billion obligations that the BSP acquired through a dacion en pago arrangement in 1994.
As collecting agent, PNB was tasked by BSP to collect from the sugar industry borrowers and immediately remit all its collections to BSP which placed the money in an escrow fund that is supposed to settle the BSP loan as soon as the fund hits the P3-billion mark.
Failure as well as to collect will require PNB to remit the entire amount to the BSP pay for whatever shortfall between the amount in escrow and P3 bill on obligation, he added.
As of December 2004, the escrow fund had a balance of P1.6 billion, slightly more than half of the amount that PNB has to collect on or before June 2013. – TPT