TO CREATE 4th LARGEST BANK
PNB, Allied merge in P25B
share swap
By MAX ESTAYO
Omar Byron Mier, president of Philippine
National Bank, said yesterday PNB is acquiring Allied Banking
Corp. through a share-swap arrangement that will create the
country’s fourth largest bank. Beer and tobacco magnate Lucio
Tan controls both banks.
Mier, in a press briefing, said PNB would
issue 457 million new shares at P55 per share to buy Allied Bank
shares.
Manuel Salak, country manager of ING, said
140 PNB shares would be swapped for every Allied common share
and 30.73 PNB shares for every Allied preferred share. He said
the transaction is valued at P25.3 billion. ING is advising both
banks for the deal.
Mier said the Lucio Tan Group would have 81
percent controlling share of the merged entity, which will
retain the PNB name.
Mier said both the board of directors of the
two banks approved of the transaction at their separate meetings
yesterday. He said PNB and Allied will start combining
operations starting in the third quarter of the year.
He said the share swap is still subject to
shareholders’ approval and those of the Bangko Sentral ng
Pilipinas and the Securities & Exchange Commission.
The merged bank will be the country’s fourth
largest by assets (P388 billion), loans (P141 billion) and
deposits (P297 billion), Mier said.
He said the combined entity would have total
branches of 626 nationwide, the third largest among private
domestic banks. It will also have total 614 ATMs.
"The merger brings together a combined
complementary client base ranging from large corporations, local
government units, government-owned and -controlled corporations,
overseas Filipino expatriates, the Chinese-Filipino community to
the provincial market," Mier said.
"The merged bank will also be able to
leverage and harness on the wide network of the Lucio Tan group.
Together, Allied and PNB will have a better platform to offer a
wide range of personal and corporate banking services and
products, and become the leading player in its chosen markets,"
he said.
Mier said PNB will keep all the branches but
some will be relocated.
"There are 10-12 locations where PNB and
Allied are operating at close range. We will give up one of the
branches but we will keep all the banking licenses," he said.
The merged entity will also keep the two
banks’ overseas branches, Mier said. PNB has six and Allied two.
Mier said no staff has yet been identified
for retrenchment but said "20 percent" is normally the casualty
for any merger. PNB has 5,000 employees and Allied, 3,000, he
said.
Mier said the merger will have a "negative
impact" on PNB’s profitability in the next 18 months but in
absolute terms, "net income will not go down."
PNB will be spending up to P1.3 billion to
integrate the banks, he said.
Mier said PNB expects to attain 4-6 percent
revenue enhancement on combined net interest income and 12
percent cost savings from the merger. In five years, he said the
bank hopes to increase return on equity to 15 percent.
The merged entity will also have a capital
adequacy ratio of 19-20 percent, Mier said.
The PNB-Allied merger is the latest after the
Chinabank-Manila Bank merger last year. The central bank is
expecting one to two mergers for the next two years from last
year.
The PNB-Allied merger cleared after the
Supreme Court on Dec. 7 dismissed the government’s sequestration
case on Lucio Tan companies including Allied Bank.