HERE is a brief look at the history of two banks through a retiree who was both a GenBanker and an Allied Banker. He was a survivor of a takeover 31 years ago but is no longer an insider to witness the death of the GenBank through merger. He turned 60 last year and retired in accordance with the bank’s policy. Had he been younger, he would have witnessed—and experienced as an insider—another major corporate restructuring called merger.

Lito Bagay—or Pablito to his high-school teachers at St. Lawrence Academy at Balagtas, Bulacan—was 27 years old when he started working at General Banking and Trust Co. in 1974. An accounting graduate of Far Eastern University (FEU), he was with GenBank when the bank suffered liquidity problem and was ordered liquidated by the Supreme Court. As a result, the Yujuico family lost their bank to a group of corporate messiahs composed of businessman Lucio C. Tan, now 73, and five of his allies, who are still with him until today —Willie S. Co, now 75, vice chairman; Reynaldo A. Maclang, 70, president; Mariano C. Tanenglian, 67, treasurer; Manuel T. Gonzalez, 70, senior executive vice-president; and Alfredo C. Chua, 79, director . Incidentally, they are also the bank’s highest-paid executives, along with chairman Panfilo O. Domingo. As a group, they received P33.348 million in 2007; P34.758 million in 2006; and P30.370 million in 2005. This year, Allied Bank estimated their pay and perks at P36.680 million.

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The new owners of GenBank, renamed Allied Bank, retained Bagay, who retired in February 2007, and his coworkers at GenBank. Those who are still with the bank must be few years younger than he is but may soon follow him into retirement in a year of two, or perhaps three years. Bagay served Allied Bank for 30 years, 27 of them as branch manager. His last post was at the bank’s Cubao branch. Retiring as branch manager was probably the pinnacle of success for a working student who, many years ago, used to walk to and from a rented room at Sampaloc, Manila, to FEU. But what if he is only 59 today and not 61? Perhaps, he could get more if Mr. Tan were to offer early retirement to “excess” executives and rank-and-file employees and pay them their regular retirement pay and perks plus a premium as an added incentive for possible takers? (As of December 31, 2007, Allied Bank had 3,979 employees including 337 employed by its various subsidiaries, while PNB had 5,606-1,934 officers and 3,672 rank-and-file employees.) Sorry Lito, you were born earlier.

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For years after taking control of PNB, there have been persistent rumors and speculations about the possible merger of Allied Bank and PNB and which of the two lenders would be the surviving entity. Some believed Allied Bank would be the new and bigger bank because it was Tan’s first bank and speculated on the demise of the corporate existence of PNB, which was established as a government-owned bank in 1916. The title of one of the topics in this column then was “Time for Mr. Tan to bid PNB good-bye?” The final announcement last week proved this corner’s speculation wrong.

With Allied Bank merging with PNB, the Philippine Stock Exchange is losing a “listed company.” But the market is also bound to gain despite the increase in Tan’s postmerger majority ownership in PNB to 80.7 percent from 69.87 percent. At first glance, the market would have to contend with a “smaller” public float —available shares for public trading—of 19.3 percent, down from 30.13 percent, of outstanding common shares. The percentages here may be deceiving. Tan group now owns 69.87-percent ownership equivalent to 462.711 million PNB shares, while the public’s 30.13 percent is equivalent to 199.534 million shares. The two computations are based on 662.246 million issued and outstanding shares.

Under the merger, PNB will issue 140 shares for every Allied Bank common share held by the latter’s stockholders and 30.73 shares for every Allied Bank preferred share. As a result, PNB will have outstanding shares of 1.119 billion shares. This will consist of PNB’s existing outstanding shares of 662.246 million shares plus 62.341 million shares, the equivalent of Allied Bank’s 445,295 outstanding Allied Bank shares; and 1.536 million shares swapped with Allied Bank’s 50,000 preferred shares.

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In addition, PNB will issue 392.98 million shares to holders of Allied Bank’s $50-million Tier capital, which will be converted into 2.807 million Allied Bank shares before the merger. With PNB’s expanded outstanding common shares, the public’s stake of 19.3 percent would be equivalent to 215.992 million shares. Tan will own 903.139 million shares, or 80.70 percent.

At first glance, the merger of Allied Bank with PNB is a complicated process. It may not be easy to discern how PNB will end up with 1.119 billion outstanding common shares when it has only 1.055 million common shares in its authorized capital stock. But Tan’s lawyers know how and through filings with regulators they told the public that PNB only has to reclassify its 195.175 million preferred shares into common. By doing so, the bank will have authorized common shares of 1.25 billion, which will be more than enough to cover the exchange of shares between PNB and Allied Bank.

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HERE is a brief look at the history of two banks through a retiree who was both a GenBanker and an Allied Banker.