mer , merg, merge, merger

Bank merger moved to third quarter ’09/BWorld/1.19.09

THE DELAYED merger of Philippine National Bank (PNB) and Allied Banking Corp., both controlled by tobacco and airline magnate Lucio Tan, is expected to push through in the third quarter, giving rise to the country’s fourth biggest bank in terms of assets.

PNB President Omar Byron Mier told reporters Friday night the two banks are now "working towards integration," which should hopefully be completed by the first quarter.

"The merger was moved to July from January because Allied Bank has not been able to dispose of shares in Oceanic Bank. We hope to finish this by the first quarter," he said.

The $564-million merger has been stalled since 2007 when the Presidential Commission on Good Government (PCGG) ordered the sequestration of Mr. Tan’s shares in Allied Bank, as well as in Fortune Tobacco and Foremost Farms and Shareholdings, Inc.

Merger moves resumed after the Supreme Court nullified the PCGG order in December 2007 but again hit a snag after the government revived the sequestration case. A US regulation also required Allied Bank to divest its holdings in California-based Oceanic Bank.

Mr. Tan last week asked the Sandiganbayan to stop the government from interfering in the merger.

Under the merger plan, PNB, which will be the surviving entity, will issue 457 million new shares at P55 per share to purchase all of Allied Bank’s common and preferred shares.

Mr. Mier also said PNB is planning to tap the debt market next month to raise P5 billion aimed at beefing up liquidity, expanding its loan portfolio and refinancing P3 billion worth of Tier 2 debt maturing in February.

"We hope to do this sometime in February if we get approval from the government," he said.

He also said loan growth could be slower this year from around 8%-10% last year due to tough market conditions but stressed banks would continue to make money as companies continue to borrow.

"There are still some loans. The business community in the Philippines has been through several crises in the past so the companies existing now are the survivors. So far we haven’t seen any major problem in loans. We feel confident that banks and companies are stable," he said. — Bernardette S. Sto. Domingo