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.