SHAREHOLDERS of Philippine National Bank (PNB) and Allied Banking Corp. yesterday approved the banks’ merger, a corporate exercise that may cost as much as P1.3 billion.

The union between the banks—both controlled by business tycoon Lucio Tan—is expected to be completed by the second half of 2009.

In an interview at the close of PNB’s annual stockholders’ meeting, president and CEO Omer Byron Mier said his bank’s purchase of Allied Bank is expected to receive the central bank’s approval in September. He noted the merger might reach P1.3 billion.

Mier said the surviving entity would retain the name Philippine National Bank.

“[PNB and Allied Bank] complement each other. Allied Bank has the Filipino-Chinese market and PNB also has a large share of the market,” Mier said.

In April PNB acquired Allied Bank through a P25-billion share-swap deal where PNB issued 457 million new shares at P55 per share to cover the Allied Bank shares.

Under the deal, 140 PNB shares would be swapped for each common share of Allied Bank and 30.73 PNB shares for every preferred Allied Bank share.

This year PNB is looking at a 35-percent increase in profits, to P2 billion from P1.5 billion in 2007. The forecast reflects a slowdown in growth compared with an 83-percent growth posted over 2006.

The post-merger PNB will aim for a capital-adequacy ratio of 7.5 percent to 9.6 percent against the 10-percent central-bank benchmark.   

The public float, which shall consist of 25 percent of the new bank, will be the country’s fourth-largest bank in terms of assets.

The new PNB will have an asset base of P388 billion, a branch network of 626, and an automated teller machine network of 614.

The estimated loan portfolio of the two banks combined should reach P141 billion, while their combined deposits are expected reach P297 billion.

In preparation for the merger, PNB has raised P6 billion through a Lower Tier 2 offering, which was recently concluded. A chunk of the money will also be used to redeem an earlier IOU.

PNB also divested its 70-percent stake in Beneficial-PNB Life Insurance Co. to focus its bancassurance business with PNB Life Insurance Inc.

The bank said it is growing its loan portfolio by 15 percent this year, concentrating on lending to small and medium enterprises, consumer and corporate borrowers.  

Mier said in five years, PNB hopes to improve its return on equity by 15 percent.

The bank is not yet looking at the standard 20-percent staff layoff in mergers, Mier added. Allied Bank and PNB have a combined work force of 9,080, with 5,050 employed by PNB and 4,000 by Allied Bank. 

WHILE the International Monetary Fund (IMF) supports Manila’s decision to forgo a balanced budget this year, an IMF mission sent to the Philippines has expressed concern the country’s latest tax reforms may endanger the government’s fiscal targets for 2009.

PNB, Allied Bank stockholders approve merger

SHAREHOLDERS of Philippine National Bank (PNB) and Allied Banking Corp. yesterday approved the banks’ merger, a corporate exercise that may cost as much as P1.3 billion.

WB waits for RP move to tap financing facility

THE World Bank said it is waiting for the Philippine proposal to tap into the bank’s rapid financing facility to address the immediate needs of the people amid rising food and oil prices.

DOMESTIC interest rates can only go higher, experts said on Tuesday.

At the annual shareholders’ meeting of Philippine National Bank (PNB), officials said short-term interest rates are to move up “over the next 12 months.”

THE peso on Tuesday gained against the US dollar by five centavos on central bank intervention.

Traders took the cue by unloading long dollar positions, currency traders said.