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The
Philippine Deposit Insurance Corp. (PDIC), the banks’
bank of last resort, is in for a big headache. It cannot
seemingly enforce a financial pact it has drawn with the
owners of Philippine Bank of Communications (PBCom) for
the huge help it gave to the bank, which suffered a
liquidity crunch three years ago.
The PDIC
lifeline, amounting to P7.6 billion, was no pittance.
And it is now about to be enmeshed in a power play
involving the warring factions of the listed bank.
No less
than PDIC president Michael Osmeña demanded the
enforcement of the so-called Financial Assistance
Agreement (FAA) by the warring owners of PBCom. The bank
suffered from a serious liquidity problem that had
tycoon Lucio C. Tan announcing a personal bailout.
Mr.
Osmeña wanted the joint Nubla-Cheng group to cancel a
pledge of the bank shares to Philippine Trust owner
Emilio Yap, specifically the bulk of the shares that
were made part of the “collateral” for the grant of the
P7.6-billion rescue package.
The
Nubla-Cheng group is at loggerheads with the Luy group,
which has the biggest number of shares in the bank at 38
percent. The Luy group, led by PBCom director Enrique
Luy, is said to be amenable to a sale of the PBCom
shares to Mr. Tan, who is expected to merge the bank
with Allied Bank.
However,
the Nubla-Cheng group, led by Ralph Nubla Jr., is also
inclined to sell the PBCom shares to Mr. Yap. In fact,
it was reported that there was already a sale, although
Mr. Nubla clarified that there was still no transfer of
the shares.
The bank
shares cannot actually be sold as the PDIC, by virtue of
its financial package of P7.6 billion, has a lien on
part of the bank shares, specifically 36,194,406 shares.
This was pledged by the PBCom in exchange for the grant
of the financial rescue as the bank was weighed down by
a severe bank run that almost crippled it without the
PDIC rescue in 2004.
These
shares, that are the object of Mr. Osmeña’s
letter-demand, were earlier “pledged” to PDIC and were
already in the custody of the government-owned deposit
insurance corporation.
In a
letter dated
July 5, 2007, addressed to Ralph Nubla Jr., Osmeña said, “Demand is
hereby made that the aforesaid cancellation be
forthrightly undertaken, and that we be furnished
immediately a copy of the documents that would
sufficiently evidence the same.”
In his
letter, the PDIC president noted that Mr. Nubla had
admitted in a letter to PDIC that he had “inadvertently
included” the 36,194,406 PBCom shares earlier pledged to
PDIC in the list of 52.588 million shares pledged to
Philtrust.
Mr.
Nubla also informed PDIC that upon realizing the
mistake, he requested Philtrust to cancel the pledge
over the 36,194,406 shares.
Now,
there is an impasse in the bank, especially in light of
the resignation from the PBCom board of independent
director Guillermo Hernandez, who was earlier voted upon
during the elections of the bank’s board the other
month. Mr. Hernandez was one of the four that PDIC
nominated and who passed the nominations committee.
With the
resignation of Mr. Hernandez, the Luy and Nubla-Cheng
groups are in a stalemate, a worrying fact, considering
that this could throw a monkey wrench to the financial
pact that PDIC eked out from the PBCom owners.
The pact
involves the eventual sale of 67 percent of the bank’s
capital stock five years from the infusion of the
financial package for the then-bleeding bank. The PDIC
designed it this way to make sure that it will be
protected in its financial rescue of P7.6 billion,
clearly way above the buying offers for the bank’s
stocks.
The PDIC
will have a problem if the two warring factions continue
their wranglings to the detriment of the government
agency. As is usual in a court action, any agreed
financial agreement will have to await the resolution of
the owners’ disputes.
There is
panic at the PDIC as its timetable to get its hands on
the money it advanced is set two years from now. Thus,
Mr. Osmeña reminded Mr. Nubla that the “voluntary or
involuntary constitution of any lien, encumbrance of
security interest on any of the shares comprising the
controlling interest constitutes a serious violation of
the FAA. We, thus, expect your full cooperation on the
matter. Should you fail to comply with our directive, we
shall be constrained to impose upon each member of your
group the maximum daily penalty provided for under the
FAA.”
Whatever
the maximum daily penalty regarding the supposed
violation of the FAA, the PDIC is silent, so far. But it
is said that the auditors from the government agency has
uncovered certain financial numbers that the bank has
earlier touted as not necessarily “healthy.” But we
understand that the PDIC is just about ready to unravel
its findings to force the hands of the owners. Another
way for the resolution of the impasse is for an auction
of the bank stocks that could fetch a better price.
Under
the FAA, the stockholders were committed to put in their
share as collateral for the PDIC bailout. The trouble
started when Mr. Tan’s P1-billion “help,” made when the
bank suffered a debilitating run, was paid through a
loan from Mr. Yap’s Philtrust bank.
In
return, the Cheng-Nubla group pledged the bank shares to
Mr. Yap, pulling the rug from Mr. Tan’s initial
overtures for the sale of the bank.
The
proxy fight between Allied Bank and Philtrust for the
right to own PBCom is a looming headache for Mr. Osmeña,
who is said to be at wit’s end trying to unravel the
ensuing impasse.
With
this stalemate, the PDIC is at the losing end as the
board members are tied at seven-seven for the Nubla-Cheng
and Luy groups. At least within the year, the board
cannot resolve issues that would touch on the ongoing
proxy fight between Mr. Tan and Philtrust’s Mr. Yap.
With the votes tied, even the filling up of the vacant
board seat cannot be done since the two warring factions
would not want to lose their winning vote.
Meanwhile, as the proxy fight continues, PDIC will have
to look at the possibility of it being unable to get
back its financial rescue package, which is not a
comforting thought for Mr. Osmeña.
E-mail:hugagni@yahoo.com |
